______________________________________________________________________
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) February 27, 1998
CWABS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of February 20, 1998, providing for
the issuance of the CWABS, INC., Asset-Backed
Certificates, Series 1998-1).
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
- ---------------------- ----------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 225-3240
----- --------
_____________________________________________________________________
Item 5. Other Events.
- ---- ------------
Description of the Certificates and the Mortgage Pool<F*>
- -----------------------------------------------------
On February 27, 1998, CWABS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of February 20, 1998 (the "Pooling and
Servicing Agreement"), by and among the Company, as depositor, Countrywide
Home Loans, Inc. ("CHL"), as seller and as master servicer, and The Bank of
New York, as trustee (the "Trustee"), providing for the issuance of the
Company's Asset-Backed Certificates, Series 1998-1. The Pooling and
Servicing Agreement is annexed hereto as Exhibit 99.1.
____________________________
[FN]
<F*> Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus dated February 20, 1998 and
the Prospectus Supplement dated February 23, 1998, of CWABS, Inc.,
relating to its Asset-Backed Certificates, Series 1998-1.
</FN>
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.
MORTGAGE LOAN STATISTICS
FIXED RATE LOANS
Number of Mortgage Loans: 1,170
Lien Status: First Liens: 89.542%
Second Liens: 10.458%
Aggregate Unpaid Principal Balance: 84,016,603.92
Aggregate Original Principal Balance: 84,238,703.86
Weighted Average Gross Coupon: 9.917
Gross Coupon Range: 7.000 - 15.750
Average Unpaid Principal Balance: 71,809.06
Average Original Principal Balance: 71,998.89
Maximum Unpaid Principal Balance: 488,132.52
Minimum Unpaid Principal Balance: 10,000.00
Maximum Original Principal Balance: 490,000.00
Minimum Original Principal Balance: 10,000.00
Weighted Avg. Stated Rem. Term 298.306
Stated Rem Term Range: 116 - 360
Weighted Average Age (First Pay
thru Paid Thru Date): 2.05
Age Range: 0 - 12
Weighted Average Original Term: 300.318
Original Term Range: 120 - 360
Weighted Average Original LTV: 65.799
Original LTV Range: 2.66 - 90.00
Weighted Average CLTV: 72.049
CLTV Range: 6.62 - 100.00
Zip Code Max Concentration per Zone: 0.61%
The Earliest First Payment Date 05/01/1997
The Latest Maturity Date: 03/01/2028
GROSS MORTGAGE INTEREST RATE RANGE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Gross Mortgage Number of Unpaid Aggregate
Interest Rate Mortgage Principal Principal
Range Loans Balance Balance
<S> <C> <C> <C>
6.751-7.000 2 268,802.95 0.32
7.001-7.250 1 49,534.15 0.06
7.251-7.500 1 134,000.00 0.16
7.501-7.750 3 302,631.11 0.36
7.751-8.000 11 1,283,486.06 1.53
8.001-8.250 20 1,636,798.56 1.95
8.251-8.500 51 5,211,094.30 6.20
8.501-8.750 64 6,154,911.85 7.33
8.751-9.000 111 11,674,332.96 13.90
9.001-9.250 54 5,669,654.76 6.75
9.251-9.500 88 8,189,975.00 9.75
9.501-9.750 76 6,646,922.50 7.91
9.751-10.000 109 8,855,344.67 10.54
10.001-10.250 41 3,352,287.51 3.99
10.251-10.500 59 4,530,964.48 5.39
10.501-10.750 46 3,360,258.66 4.00
10.751-11.000 25 1,343,043.97 1.60
11.001-11.250 26 1,354,170.31 1.61
11.251-11.500 29 1,303,333.45 1.55
11.501-11.750 82 3,251,993.48 3.87
11.751-12.000 60 2,360,545.61 2.81
12.001-12.250 25 930,944.33 1.11
12.251-12.500 56 1,983,237.71 2.36
12.501-12.750 31 899,208.03 1.07
12.751-13.000 36 1,033,063.20 1.23
13.001-13.250 20 823,872.68 0.98
13.201-13.500 8 326,445.06 0.39
13.501-13.750 14 441,949.74 0.53
13.751-14.000 8 196,325.21 0.23
14.001-14.250 2 34,862.28 0.04
14.251-14.500 1 17,299.80 0.02
14.501-14.750 4 219,261.21 0.26
14.751-15.000 2 76,115.47 0.09
15.251-15.500 2 56,606.32 0.07
15.501-15.750 2 43,326.54 0.05
Total . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
LOAN SUMMARY STRATIFIED BY
LAST PAYMENT DATE
<TABLE>
<CAPTION>
Percentage of
Cut-Off Date
Aggregate Unpaid Aggregate Principal
Number of Mortgage Loans Principal Balance Balance
<S> <C> <C> <C>
12/01/1997 3 364,929.93 0.43
01/01/1998 51 2,951,655.88 3.51
02/01/1998 990 71,534,779.61 85.14
03/01/1998 120 8,849,824.82 10.53
04/01/1998 4 213,652.00 0.25
05/01/1998 1 58,248.63 0.07
01/01/1999 1 43,513.05 0.05
Total . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
COMBINED LOAN-TO VALUE
<TABLE>
<CAPTION>
Percentage of
Cut-Off Date
Aggregate
Number of Aggregate Unpaid Principal
Mortgage Loans Principal Balance Balance
<S> <C> <C> <C>
5.001-10.000 1 12,250.00 0.01
10.001-15.000 4 115,398.33 0.14
15.001-20.000 8 369,384.26 0.44
20.001-25.000 3 77,467.08 0.09
25.001-30.000 15 487,479.95 0.58
30.001-35.000 20 1,111,465.61 1.32
35.001-40.000 23 1,150,961.22 1.37
40.001-45.000 23 1,409,283.18 1.68
45.001-50.000 45 2,129,794.98 2.53
50.001-55.000 56 3,844,586.48 4.58
55.001-60.000 62 3,540,389.82 4.21
60.001-65.000 84 5,502,054.88 6.55
65.001-70.000 149 9,812,306.63 11.68
70.001-75.000 178 14,136,023.20 16.83
75.001-80.000 262 23,723,025.69 28.24
80.001-85.000 182 14,077,902.89 16.76
85.001-90.000 19 1,229,410.59 1.46
90.001-95.000 17 526,192.00 0.63
95.001-100.000 19 761,227.13 0.91
Total . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of
Cut-Off Date
Aggregate Unpaid Principal Aggregate Principal
Number of Mortgage Loans Balance Balance
<S> <C> <C> <C>
109-120 25 537,257.86 0.64
169-180 537 27,031,089.83 32.17
229-240 4 164,487.31 0.20
349-360 604 56,283,768.92 66.99
Total . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
ORIGINAL LOAN-TO VALUE
<TABLE>
<CAPTION>
Percentage of Cut-Off
Original Number of Mortgage Aggregate Unpaid Date Aggregate
Loan-To-Value Ratio Loans Principal Balance Principal Balance
<S> <C> <C> <C>
0.001-5.000 5 117,557.04 0.14
5.001-10.000 40 1,017,971.53 1.21
10.001-15.000 89 2,807,158.74 3.34
15.001-20.000 71 2,368,311.36 2.82
20.001-25.000 37 1,440,885.38 1.72
25.001-30.000 37 1,391,901.77 1.66
30.001-35.000 26 1,408,198.69 1.68
35.001-40.000 27 1,308,432.33 1.56
40.001-45.000 23 1,428,843.43 1.70
45.001-50.000 36 1,934,642.85 2.30
50.001-55.000 45 3,585,073.45 4.27
55.001-60.000 52 3,267,978.44 3.89
60.001-65.000 72 5,201,754.56 6.19
65.001-70.000 124 9,206,052.77 10.96
70.001-75.000 148 12,826,604.61 15.27
75.001-80.000 214 21,930,515.71 26.10
80.001-85.000 117 11,931,629.17 14.20
85.001-90.000 7 843,092.09 1.00
Total . . . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
CURRENT MORTGAGE LOAN AMOUNTS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Current Number of Unpaid Aggregate
Mortgage Loan Mortgage Principal Principal
Principal Balance Loans Balance Balance
<S> <C> <C> <C>
5000.01-10000.00 2 20,000.00 0.02
10000.01-15000.00 52 738,662.75 0.88
15000.01-20000.00 79 1,412,932.02 1.68
20000.01-25000.00 77 1,748,336.19 2.08
25000.01-30000.00 76 2,138,173.35 2.54
30000.01-35000.01 76 2,498,364.56 2.97
35000.01-40000.00 64 2,418,825.13 2.88
40000.01-45000.00 50 2,151,181.69 2.56
45000.01-50000.00 63 3,008,228.02 3.58
50000.01-55000.00 65 3,427,013.91 4.08
55000.01-60000.00 63 3,628,294.65 4.32
60000.01-65000.00 41 2,582,984.11 3.07
65000.01-70000.00 42 2,853,052.49 3.40
70000.01-75000.00 30 2,184,467.81 2.60
75000.01-80000.00 30 2,332,411.37 2.78
80000.01-85000.00 33 2,734,399.53 3.25
85000.01-90000.00 22 1,931,483.76 2.30
90000.01-95000.00 24 2,232,000.60 2.66
95000.01-100000.00 38 3,733,841.34 4.44
100000.01-105000.00 10 1,028,043.93 1.22
105000.01-110000.00 15 1,623,892.09 1.93
110000.01-115000.00 22 2,493,689.49 2.97
115000.01-120000.00 18 2,122,152.37 2.53
120000.01-125000.00 15 1,845,218.51 2.20
125000.01-130000.00 19 2,418,203.80 2.88
130000.01-135000.00 11 1,455,154.65 1.73
135000.01-140000.00 10 1,375,366.93 1.64
140000.01-145000.00 11 1,568,439.30 1.87
145000.01-150000.00 10 1,492,030.58 1.78
150000.01-200000.00 50 8,622,157.32 10.26
200000.01-250000.00 24 5,351,811.92 6.37
250000.01-300000.00 14 3,897,378.62 4.64
300000.01-350000.00 10 3,303,865.19 3.93
350000.01-400000.00 2 735,845.68 0.88
400000.01-450000.00 1 420,567.74 0.50
450000.01-500000.00 1 488,132.52 0.58
Total . . . . . . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Number of Mortgage Aggregate Unpaid Cut-Off Date Aggregate Principal
State Loans Principal Balance Balance
<S> <C> <C> <C>
CA 259 25,806,869.89 30.72
FL 88 5,043,568.69 6.00
WA 67 4,709,033.64 5.60
HI 17 3,650,403.21 4.34
OH 58 3,209,821.77 3.82
AZ 42 2,894,376.13 3.45
UT 40 2,668,224.85 3.18
MI 48 2,522,481.23 3.00
OR 26 2,441,209.96 2.91
IN 48 2,372,374.23 2.82
LA 45 2,249,171.28 2.68
NY 24 2,246,680.33 2.67
TX 36 2,125,209.51 2.53
TN 27 1,845,909.70 2.20
GA 29 1,785,360.46 2.13
CO 29 1,759,242.73 2.09
PA 31 1,722,148.01 2.05
WI 26 1,445,657.87 1.72
MT 22 1,376,666.40 1.64
NJ 11 1,175,635.98 1.40
MA 19 970,948.61 1.16
ID 19 967,366.43 1.15
IL 11 853,711.84 1.02
MO 22 837,322.30 1.00
VA 9 765,379.41 0.91
NV 6 748,287.12 0.89
KY 17 729,731.74 0.87
OK 10 697,113.88 0.83
NM 14 660,844.10 0.79
WY 11 645,355.26 0.77
MD 6 602,103.74 0.72
NC 13 494,990.93 0.59
RI 5 321,350.92 0.38
MS 5 252,466.24 0.30
AL 2 195,991.72 0.23
AR 5 177,010.18 0.21
SC 4 164,060.79 0.20
IA 4 155,130.35 0.18
MN 2 135,130.63 0.16
NE 2 130,762.51 0.16
WV 1 127,787.98 0.15
NH 3 121,503.58 0.14
CT 3 88,184.59 0.10
DE 2 83,205.62 0.10
DC 1 23,927.50 0.03
KS 1 16,890.08 0.02
1,170 84,016,603.92 100.00
</TABLE>
LOAN SUMMARY STRATIFIED BY
LOAN PURPOSE
<TABLE>
<CAPTION>
Percentage of Cut-Off
Aggregate Unpaid Date Aggregate Principal
Number of Mortgage Loans Principal Balance Amount
<S> <C> <C> <C>
PURCHASE 133 10,490,060.17 12.49
REFINANCE 1,037 73,526,543.75 87.51
Total . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
DISTRIBUTION OF PREPAYMENT PENALTIES ON MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of Cut-Off
Aggregate Unpaid Date Aggregate Principal
Number of Mortgage Loans Principal Balance Amount
<S> <C> <C> <C>
N 303 16,309,965.83 19.41
Y 867 67,706,638.09 80.59
Total . . . . . . . . . . 1,170 84,016,603.92 100.00%
</TABLE>
MORTGAGE LOAN STATISTICS
ADJUSTABLE RATE LOANS
Number of Mortgage Loans:
Index: 6 Month Libor: 99.70%
1 Yr CMT: 0.30%
Lien Status: First Liens
Aggregate Unpaid Principal Balance: 178,037,734.96
Aggregate Original Principal Balance: 178,312,190.00
Weighted Average Coupon (Gross) 8.967
Gross Coupon Range: 4.625 - 14.200
Weighted Average Margin (Gross) 6.224
Gross Margin Range: 2.750 -9.700
Weighted Average Life Cap (Gross): 15.871
Gross Life Cap Range: 11.625 - 20.875
Weighted Average Life Floor (Gross): 8.966
Gross Life Floor Range: 4.625 - 14.200
Average Unpaid Principal Balance: 104,237.55
Average Original Principal Balance: 104,398.24
Maximum Unpaid Principal Balance: 695,000.00
Minimum Unpaid Principal Balance: 11,250.00
Maximum Original Principal Balance: 695,000.00
Minimum Original Principal Balance: 11,250.00
Weighted Avg. Stated Rem. Term 358.116
Stated Rem Term Range: 175 - 360
Weighted Average Age (First Pay thru Paid Thru): 1.34
Age Range: 0 - 11
Weighted Average Original Term: 359.461
Original Term Range: 180 - 360
Weighted Average Original LTV: 74.847
Original LTV Range: 4.15 - 94.82
Weighted Average Periodic Interest Cap: 1.452
Periodic Interest Cap Range: 1.00 - 2.00
Weighted Average Months to Interest Roll: 18.850
Months to Interest Roll Range: 1 - 48
Weighted Average Interest Roll Frequency: 6.018
Interest Frequency Range: 6 - 12
Zip Code Max Concentration per zone: 0.50%
6 Month Libor Loans
Percent of loans rolling every 6 months: 21.86
Percent of loans rolling 2/28: 77.42
Percent of loans rolling 3/27: 0.42
1 Year CMT Loans
Percent of loans rolling every 12 months: 0.23
Percent of loans rolling 5/1: 0.07
The Earliest First Payment Date 03/01/1997
The Latest Maturity Date: 03/01/2028
GROSS MORTGAGE INTEREST RATE RANGE
<TABLE>
<CAPTION>
Gross Mortgage Number of Aggregate Percentage of
Interest Rate Mortgage Unpaid Cut-Off Date
Range Loans Principal Aggregate
Balance Principal
Balance
<S> <C> <C> <C>
4.501- 4.750 1 64,912.07 0.04
4.751- 5.000 7 737,016.92 0.41
5.001- 5.250 3 241,501.35 0.14
5.251- 5.500 2 245,900.00 0.14
5.501- 5.750 14 1,577,765.06 0.89
5.751- 6.000 6 510,350.00 0.29
6.001- 6.250 22 2,780,394.69 1.56
6.251- 6.500 26 3,246,277.18 1.82
6.501- 6.750 26 3,047,021.97 1.71
6.751- 7.000 26 4,523,017.40 2.54
7.001- 7.250 27 3,120,143.01 1.75
7.251- 7.500 40 4,530,782.96 2.54
7.501- 7.750 41 4,775,525.90 2.68
7.751- 8.000 85 9,644,629.97 5.42
8.001- 8.250 69 7,466,704.08 4.19
8.251- 8.500 120 14,354,481.93 8.06
8.501- 8.750 136 16,504,268.79 9.27
8.751- 9.000 136 15,066,677.76 8.46
9.001- 9.250 124 13,056,981.43 7.33
9.251- 9.500 133 16,813,410.59 9.44
9.501- 9.750 137 13,101,462.36 7.36
9.751- 10.000 120 11,379,862.52 6.39
10.001- 10.250 78 6,202,590.97 3.48
10.251- 10.500 78 6,517,253.61 3.66
10.501- 10.750 61 5,007,244.86 2.81
10.751- 11.000 76 5,903,683,28 3.32
11.001- 11.250 30 2,245,521.63 1.26
11.251- 11.500 23 1,530,189.35 0.86
11.501- 11.750 21 1,582,775.54 0.89
11.751- 12.000 12 849,490.75 0.48
12.001- 12.250 4 249,493.32 0.14
12.251- 12.500 10 484,855.77 0.27
12.501- 12.750 7 393,333.81 0.22
12.751- 13.000 3 73,570.00 0.04
13.001- 13.250 1 26,600.00 0.01
13.251- 13.500 1 30,000.00 0.02
13.751- 14.000 1 118,300.00 0.07
14.001- 14.250 1 33,744.13 0.02
Total.................. 1,708 178,037,734.96 100.00%
</TABLE>
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Number of Aggregate Percentage of
Mortgage Unpaid Cut-Off Date
Loans Principal Aggregate
Balance Principal
Balance
<S> <C> <C> <C>
169- 180 6 532,843.87 0.30
337- 348 1 129,850.23 0.07
349- 360 1,701 177,375,040.86 99.63
Total........ 1,708 178,037,734.96 100.00%
</TABLE>
LOAN SUMMARY STRATIFIED BY
LAST PAYMENT DATE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
<S> <C> <C> <C>
12/01/1997 13 909,815.55 0.51
01/01/1998 64 7,198.351.16 4.04
02/01/1998 1370 145,033,764.66 81.46
03/01/1998 256 24,364,672.83 13.69
04/01/1998 5 531,130.76 0.30
Total...... 1,708 178,037,734.96 100.00%
</TABLE>
LOAN SUMMARY STRATIFIED BY
LOAN PURPOSE
<TABLE>
<CAPTION>
Number of Aggregate Percentage of
Mortgage Unpaid Cut-Off Date
Loans Principal Aggregate
Balance Principal
Balance
<S> <C> <C> <C>
PURCHASE 581 57,860,627.41 32.50
REFINANCE 1,127 120,177,107.55 67.50
Total........ 1,708 178,037,734.96 100.00%
</TABLE>
ORIGINAL LOAN-TO-VALUE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Original Number of Unpaid Aggregate
Loan-To-Value Mortgage Principal Principal
Ratio Loans Balance Balance
<S> <C> <C> <C>
0.001- 5.000 1 207,500.00 0.12
10.001- 15.000 1 35,000.00 0.02
15.001- 20.000 3 50,946.05 0.03
20.001- 25.000 4 158,844.82 0.09
25.001- 30.000 8 588,691.91 0.33
30.001- 35.000 9 696,250.31 0.39
35.001- 40.000 15 926,333.48 0.52
40.001- 45.000 11 898,706.81 0.50
45.001- 50.000 37 2,707,800.00 1.52
50.001- 55.000 38 3,678,149.11 2.07
55.001- 60.000 75 6,223,066.11 3.50
60.001- 65.000 124 10,443,449.45 5.87
65.001- 70.000 260 22,899,391.33 12.86
70.001- 75.000 354 35,429,772.19 19.90
75.001- 80.000 485 57,942,746.82 32.55
80.001- 85.000 219 27,078,466.23 15.21
85.001- 90.000 63 8,019,559.51 4.50
90.001- 95.000 1 53,060.83 0.03
Total...... 1,708 178,037,734.96 100.00%
</TABLE>
DISTRIBUTION OF
MARGINS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Margin Loans Balance Balance
<S> <C> <C> <C>
2.501- 3.000 1 129,850.23 0.07
4.001- 4.500 7 722,802.79 0.41
4.501- 5.000 78 8,646,849.42 4.86
5.001- 5.500 213 22,301,795.90 12.53
5.501- 6.000 463 54,481,982.06 30.60
6.001- 6.500 411 45,200,743.02 25.39
6.501- 7.000 260 25,172,960.38 14.14
7.001- 7.500 165 11,641,011.62 6.54
7.501- 8.000 83 7,286,643.92 4.09
8.001- 8.500 25 2,037,450.96 1.14
8.501- 9.000 1 381,900.53 0.21
9.501- 10.000 1 33,744.13 0.02
Total...... 1,708 178,037,734.96 100.00%
</TABLE>
LOAN SUMMARY STRATIFIED BY
LIFECAP
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Life Cap Loans Balance Balance
<S> <C> <C> <C>
11.501- 12.000 8 801,928.99 0.45
12.001- 12.500 5 487,401.35 0.27
12.501- 13.000 21 2,217,965.29 1.25
13.001- 13.500 48 6,026,671.87 3.39
13.501- 14.000 57 8,008,996.58 4.50
14.001- 14.500 75 8,792,601.81 4.94
14.501- 15.000 149 18,426,389.98 10.35
15.001- 15.500 207 23,980,292.27 13.47
15.501- 16.000 272 30,196,254.92 16.96
16.001- 16.500 248 28,588,648.28 16.06
16.501- 17.000 238 22,327,507.65 12.54
17.001- 17.500 153 11,470,535.71 6.44
17.501- 18.000 123 9,590,064.33 5.39
18.001- 18.500 49 3,644,080.60 2.05
18.501- 19.000 31 2,343,976.91 1.32
19.001- 19.500 12 612,732.27 0.34
19.501- 20.000 8 313,042.02 0.18
20.001- 20.500 3 90,344.13 0.05
20.501- 21.000 1 118,300.00 0.07
Total.... 1,708 178,037,734.96 100.00%
</TABLE>
LOAN SUMMARY STRATIFIED BY
LIFE FLOOR
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Life Floor Loans Balance Balance
<S> <C> <C> <C>
4.501- 5.000 8 801,928.99 0.45
5.001- 5.500 5 487,401.35 0.27
5.501- 6.000 20 2,088,115.06 1.17
6.001- 6.500 48 6,026,671.87 3.39
6.501- 7.000 53 7,631,537.30 4.29
7.001- 7.500 67 7,650,925.97 4.30
7.501- 8.000 125 14,358,657.94 8.06
8.001- 8.500 189 21,821,186.01 12.26
8.501- 9.000 272 31,570,946.55 17.73
9.001- 9.500 258 29,900,310.73 16.79
9.501- 10.000 256 24,451,406.17 13.73
10.001- 10.500 156 12,719,844.58 7.14
10.501- 11.000 137 10,910,928.14 6.13
11.001- 11.500 53 3,775,710.98 2.12
11.501- 12.000 33 2,432,266.29 1.37
12.001- 12.500 14 734,349.09 0.41
12.501- 13.000 10 466,903.81 0.26
13.001- 13.500 2 56,600.00 0.03
13.501- 14.000 1 118,300.00 0.07
14.001- 14.500 1 33,744.13 0.02
Total.... 1,708 178,037,734.96 100.00%
</TABLE>
<TABLE>
<CAPTION>
Percentage of
NON-2/28 ARM LOANS Aggregate Cut-Off Date
NEXT INTEREST ROLLDATE DATE Number of Unpaid Aggregate
Mortgage Principal Principal
Next Roll Date Loans Balance Balance
<S> <C> <C> <C>
03/01/1998 23 2,489,973.47 1.40
04/01/1998 36 4,313,142.36 2.42
05/01/1998 47 5,593,776.80 3.14
06/01/1998 46 4,687,635.35 2.63
07/01/1998 71 8,610,321.57 4.84
08/01/1998 67 10,336,978.00 5.81
09/01/1998 32 2,894,915.00 1.63
11/01/1998 2 403,801.98 0.23
12/01/2000 2 397,572.57 0.22
01/01/2001 2 346,810.06 0.19
02/01/2002 1 129,850.23 0.07
Total....... 329 40,204,777.39 22.58
</TABLE>
2/28 ARM LOANS
NEXT INTEREST ROLLDATE DATE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Next Roll Date Loans Balance Balance
<S> <C> <C> <C>
04/01/1998 1 99,151.02 0.06
11/01/1998 1 112,772.95 0.06
08/01/1999 12 1,348,246.27 0.76
09/01/1999 63 5,861,086.75 3.29
10/01/1999 102 10,028,980.90 5.63
11/01/1999 134 11,794,325.87 6.62
12/01/1999 162 18,008,010.93 10.11
01/01/2000 191 21,704,006.88 12.19
02/01/2000 561 53,884,886.00 30.27
03/01/2000 152 14,991,490.00 8.42
Total...... 1,379 137,832,957.57 77.42
</TABLE>
DISTRIBUTION OF PREPAYMENT PENALTIES ON MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
<S> <C> <C> <C>
N 600 63,413,967.23 35.62
Y 1,108 114,623,767.73 64.38
Total....... 1,708 178,037,734.96 100.00%
</TABLE>
CURRENT MORTGAGE LOAN AMOUNTS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Current Number of Unpaid Aggregate
Mortgage Loan Mortgage Principal Principal
Principal Balance Loans Balance Balance
<S> <C> <C> <C>
10000.01- 15000.00 6 79,671.05 0.04
15000.01- 20000.00 22 392,876.12 0.22
20000.01- 25000.00 30 688,410.17 0.39
25000.01- 30000.00 32 911,638.98 0.51
30000.01- 35000.00 45 1,491,306.05 0.84
35000.01- 40000.00 74 2,798,044.17 1.57
40000.01- 45000.00 76 3,285,412.34 1.85
45000.01- 50000.00 78 3,731,695.58 2.10
50000.01- 55000.00 73 3,843,011.16 2.16
55000.01- 60000.00 77 4,430,455.90 2.49
60000.01- 65000.00 76 4,792,326.13 2.69
65000.01- 70000.00 78 5,273,257.02 2.96
70000.01- 75000.00 62 4,494,977.24 2.52
75000.01- 80000.00 69 5,371,658.85 3.02
80000.01- 85000.00 45 3,735,945.74 2.10
85000.01- 90000.00 77 6,755,001.41 3.79
90000.01- 95000.00 54 5,004,332.96 2.81
95000.01- 100000.00 50 4,905,895.17 2.76
100000.01- 105000.00 58 5,956,007.81 3.35
105000.01- 110000.00 38 4,085,694.90 2.29
110000.01- 115000.00 57 6,421,419.47 3.61
115000.01- 120000.00 47 5,555,831.14 3.12
120000.01- 125000.00 50 6,150,893.09 3.45
125000.01- 130000.00 31 3,955,578.18 2.22
130000.01- 135000.00 26 3,445,423.57 1.94
135000.01- 140000.00 26 3,590,499.20 2.02
140000.01- 145000.00 27 3,859,864.99 2.17
145000.01- 150000.00 32 4,739,153.18 2.66
150000.01- 200000.00 127 21,850,835.44 12.27
200000.01- 250000.00 73 16,331,290.34 9.17
250000.01- 300000.00 50 13,757,516.28 7.73
300000.01- 350000.00 18 5,780,915.35 3.25
350000.01- 400000.00 10 3,678,950.71 2.07
400000.01- 450000.00 3 1,280,887.28 0.72
450000.01- 500000.00 7 3,304,944.12 1.86
500000.01- 550000.00 2 1,058,786.26 0.59
550000.01- 600000.00 1 552,327.61 0.31
650000.01- 700000.00 1 695,000.00 0.39
Total..... 1,708 178,037,734.96 100.00%
</TABLE>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
<S> <C> <C> <C>
CA 239 39,813,305.90 22.36
WA 96 11,989,865.05 6.73
MI 110 9,732,009.29 5.47
FL 11 9,593,484.20 5.39
OH 137 9,540,394.80 5.36
UT 81 9,013,373.34 5.06
IL 78 8,631,798.90 4.85
WI 106 8,505,743.06 4.78
CO 63 6,933,302.89 3.89
TX 64 5,324,080.86 2.99
AZ 48 4,779,719.07 2.68
IN 53 4,281,209.48 2.40
NJ 32 4,086,006.43 2.30
ID 41 3,956,153.87 2.22
PA 51 3,706,623.52 2.08
NC 33 3,415,785.17 1.92
MO 52 3,239,645.98 1.82
GA 28 2,790,241.62 1.57
TN 25 2,672,695.89 1.50
LA 33 2,610,722.50 1.47
OR 20 2,546,933.55 1.43
NV 19 2,128,377.53 1.20
NY 11 1,984,962.32 1.11
NM 19 1,568,672.27 0.88
MA 13 1,448,828.47 0.81
CT 7 1,368,466.17 0.77
KS 20 1,221,250.26 0.69
MT 12 1,144,299.40 0.64
MN 14 1,047,286.65 0.59
HI 5 992,024.15 0.56
KY 16 963,137.63 0.54
WY 10 925,867.98 0.52
NH 5 725,276.49 0.41
DE 4 689,970.15 0.39
SC 6 609,199.33 0.34
VA 3 576,330.98 0.32
OK 8 575,816.75 0.32
MD 5 470,375.22 0.26
VT 2 394,049.70 0.22
AR 4 320,821.43 0.18
RI 3 299,484.75 0.17
IA 6 275,351.11 0.15
AK 1 227,868.82 0.13
WV 5 178,737.21 0.10
DC 1 160,300.00 0.09
MS 2 143,625.00 0.08
ND 1 142,195.47 0.08
ME 1 102,935.10 0.06
SD 1 73,368.43 0.04
NE 2 71,750.00 0.04
AL 1 44,010.82 0.02
1,708 178,037,734.96 100.00%
</TABLE>
Item 7. Financial Statements, Pro Forma Financial
- ---- -----------------------------------------
Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of February 20,
1998, by and among the Company, CHL and the Trustee.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CWABS, INC.
By: /s/ David Walker
---------------------------
David Walker
Vice President
Dated: February 27, 1998
Exhibit Index
-------------
Exhibit Page
- ------- ----
99.1. Pooling and Servicing Agreement,
dated as of February 20, 1998, by
and among, the Company, CHL
and the Trustee.
Exhibit 99.1
------------
CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of February 20, 1998
______________________________________
ASSET-BACKED CERTIFICATES, SERIES 1998-1
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . I-1
-------------
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Amount Held for Future Distribution . . . . . . . . . . . . . . . . I-2
Applied Realized Loss Amount . . . . . . . . . . . . . . . . . . . . I-2
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds Cap . . . . . . . . . . . . . . . . . . . . . . . . I-2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . I-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Group . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Principal Balance . . . . . . . . . . . . . . . . . . . I-4
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . I-4
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-1 Certificate Principal Balance . . . . . . . . . . . . . . I-4
Class AF-1 Current Interest . . . . . . . . . . . . . . . . . . . . I-5
Class AF-1 Interest Carryforward Amount . . . . . . . . . . . . . . I-5
Class AF-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-5
Class AF-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-2 Certificate Principal Balance . . . . . . . . . . . . . . I-5
Class AF-2 Current Interest . . . . . . . . . . . . . . . . . . . . I-5
Class AF-2 Interest Carryforward Amount . . . . . . . . . . . . . . I-5
Class AF-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-5
Class AF-3 Certificate . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-3 Certificate Principal Balance . . . . . . . . . . . . . . I-6
Class AF-3 Current Interest . . . . . . . . . . . . . . . . . . . . I-6
Class AF-3 Interest Carryforward Amount . . . . . . . . . . . . . . I-6
Class AF-3 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-6
Class AF-4 Certificate . . . . . . . . . . . . . . . . . . . . . . . I-6
Class AF-4 Certificate Principal Balance . . . . . . . . . . . . . . I-6
Class AF-4 Current Interest . . . . . . . . . . . . . . . . . . . . I-6
Class AF-4 Interest Carryforward Amount . . . . . . . . . . . . . . I-6
Class AF-4 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-6
Class AF-4 Principal Distribution Amount . . . . . . . . . . . . . . I-6
Class AF-4 PDA Factor . . . . . . . . . . . . . . . . . . . . . . . I-7
Class AV-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . I-7
Class AV-1 Certificate Principal Balance . . . . . . . . . . . . . . I-7
Class AV-1 Interest Carryover Amount . . . . . . . . . . . . . . . . I-7
Class AV-1 Current Interest . . . . . . . . . . . . . . . . . . . . I-7
Class AV-1 Interest Carryforward Amount . . . . . . . . . . . . . . I-8
Class AV-1 Margin . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Class AV-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-8
Class B-IO Certificates . . . . . . . . . . . . . . . . . . . . . . I-8
Class BF Applied Realized Loss Amount . . . . . . . . . . . . . . . I-8
Class BF Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-8
Class BF Certificate Principal Balance . . . . . . . . . . . . . . . I-8
Class BF Current Interest . . . . . . . . . . . . . . . . . . . . . I-8
Class BF Interest Carryforward Amount . . . . . . . . . . . . . . . I-8
Class BF Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . I-9
Class BF Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . I-9
Class BF-IO Certificates . . . . . . . . . . . . . . . . . . . . . . I-9
Class BF-IO Distributable Amount . . . . . . . . . . . . . . . . . . I-9
Class BV Applied Realized Loss Amount . . . . . . . . . . . . . . . I-9
Class BV Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-9
Class BV Certificate Principal Balance . . . . . . . . . . . . . . . I-9
Class BV Current Interest . . . . . . . . . . . . . . . . . . . . . I-9
Class BV Interest Carryforward Amount . . . . . . . . . . . . . . . I-9
Class BV Interest Carryover Amount . . . . . . . . . . . . . . . . I-10
Class BV Margin . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Class BV Pass-Through Rate . . . . . . . . . . . . . . . . . . . . I-10
Class BV Unpaid Realized Loss Amount . . . . . . . . . . . . . . . I-10
Class BV-IO Certificates . . . . . . . . . . . . . . . . . . . . . I-10
Class BV-IO Distributable Amount . . . . . . . . . . . . . . . . . I-10
Class MF-1 Applied Realized Loss Amount . . . . . . . . . . . . . I-11
Class MF-1 Certificate . . . . . . . . . . . . . . . . . . . . . . I-11
Class MF-1 Certificate Principal Balance . . . . . . . . . . . . . I-11
Class MF-1 Current Interest . . . . . . . . . . . . . . . . . . . I-11
Class MF-1 Interest Carryforward Amount . . . . . . . . . . . . . I-11
Class MF-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . I-11
Class MF-1 Unpaid Realized Loss Amount . . . . . . . . . . . . . . I-11
Class MF-2 Applied Realized Loss Amount . . . . . . . . . . . . . I-11
Class MF-2 Certificate . . . . . . . . . . . . . . . . . . . . . . I-11
Class MF-2 Certificate Principal Balance . . . . . . . . . . . . . I-12
Class MF-2 Current Interest . . . . . . . . . . . . . . . . . . . I-12
Class MF-2 Interest Carryforward Amount . . . . . . . . . . . . . I-12
Class MF-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . I-12
Class MF-2 Unpaid Realized Loss Amount . . . . . . . . . . . . . . I-12
Class MV-1 Applied Realized Loss Amount . . . . . . . . . . . . . I-12
Class MV-1 Certificate . . . . . . . . . . . . . . . . . . . . . . I-12
Class MV-1 Certificate Principal Balance . . . . . . . . . . . . . I-12
Class MV-1 Current Interest . . . . . . . . . . . . . . . . . . . I-12
Class MV-1 Interest Carryforward Amount . . . . . . . . . . . . . I-13
Class MV-1 Interest Carryover Amount . . . . . . . . . . . . . . . I-13
Class MV-1 Margin . . . . . . . . . . . . . . . . . . . . . . . . I-13
Class MV-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . I-13
Class MV-1 Unpaid Realized Loss Amount . . . . . . . . . . . . . . I-13
Class MV-2 Applied Realized Loss Amount . . . . . . . . . . . . . I-13
Class MV-2 Certificate . . . . . . . . . . . . . . . . . . . . . . I-13
Class MV-2 Certificate Principal Balance . . . . . . . . . . . . . I-14
Class MV-2 Current Interest . . . . . . . . . . . . . . . . . . . I-14
Class MV-2 Interest Carryforward Amount . . . . . . . . . . . . . I-14
Class MV-2 Interest Carryover Amount . . . . . . . . . . . . . . . I-14
Class MV-2 Margin . . . . . . . . . . . . . . . . . . . . . . . . I-14
Class MV-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . I-14
Class MV-2 Unpaid Realized Loss Amount . . . . . . . . . . . . . . I-15
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Combined Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . I-15
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . I-15
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . I-15
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . I-15
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . I-16
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . I-16
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . I-16
Delay Delivery Mortgage Loans . . . . . . . . . . . . . . . . . . I-16
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-16
Delinquent . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Depository Agreement . . . . . . . . . . . . . . . . . . . . . . . I-17
Depository Participant . . . . . . . . . . . . . . . . . . . . . . I-17
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . I-17
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . I-17
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . I-17
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . I-18
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
ERISA Restricted Certificate . . . . . . . . . . . . . . . . . . . I-18
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Extra Master Servicing Fee . . . . . . . . . . . . . . . . . . . . I-19
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Group I Certificate Principal Balance . . . . . . . . . . . . . . I-19
Group I Certificates . . . . . . . . . . . . . . . . . . . . . . . I-19
Group I Class A Certificate Principal Balance . . . . . . . . . . I-19
Group I Class A Certificates . . . . . . . . . . . . . . . . . . . I-19
Group I Class A Current Interest . . . . . . . . . . . . . . . . . I-20
Group I Class A Interest Carryforward Amount . . . . . . . . . . . I-20
Group I Class A Principal Distribution Amount . . . . . . . . . . I-20
Group I Class B Principal Distribution Amount . . . . . . . . . . I-20
Group I Class MF-1 Principal Distribution Amount . . . . . . . . . I-21
Group I Class MF-2 Principal Distribution Amount . . . . . . . . . I-21
Group I Extra Principal Distribution . . . . . . . . . . . . . . . I-21
Group I Interest Funds . . . . . . . . . . . . . . . . . . . . . . I-22
Group I Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . I-22
Group I Net Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Group I Principal Distribution Amount . . . . . . . . . . . . . . I-22
Group I Principal Funds . . . . . . . . . . . . . . . . . . . . . I-22
Group I Stepdown Date . . . . . . . . . . . . . . . . . . . . . . I-23
Group I Subordinated Certificates . . . . . . . . . . . . . . . . I-23
Group II Certificate . . . . . . . . . . . . . . . . . . . . . . . I-24
Group II Certificate Principal Balance . . . . . . . . . . . . . . I-24
Group II Class A Certificate Principal Balance . . . . . . . . . . I-24
Group II Class A Principal Distribution Amount . . . . . . . . . . I-24
Group II Class B Principal Distribution Amount . . . . . . . . . . I-24
Group II Class MV-1 Principal Distribution Amount . . . . . . . . I-25
Group II Class MV-2 Principal Distribution Amount . . . . . . . . I-25
Group II Extra Principal Distribution . . . . . . . . . . . . . . I-26
Group II Interest Funds . . . . . . . . . . . . . . . . . . . . . I-26
Group II Mortgage Loans . . . . . . . . . . . . . . . . . . . . . I-26
Group II Net Rate . . . . . . . . . . . . . . . . . . . . . . . . I-26
Group II Principal Distribution Amount . . . . . . . . . . . . . . I-26
Group II Principal Funds . . . . . . . . . . . . . . . . . . . . . I-27
Group II Stepdown Date . . . . . . . . . . . . . . . . . . . . . . I-27
Group II Subordinated Certificates . . . . . . . . . . . . . . . . I-27
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Initial Adjustment Date . . . . . . . . . . . . . . . . . . . . . I-28
Initial Certificate Account Deposit . . . . . . . . . . . . . . . I-28
Initial Certificate Principal Balance . . . . . . . . . . . . . . I-28
Initial Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . I-28
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . I-29
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Interest Determination Date . . . . . . . . . . . . . . . . . . . I-29
Latest Possible Maturity Date . . . . . . . . . . . . . . . . . . I-29
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . I-29
Liquidated Loan . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . I-29
Loan Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . I-30
Master Servicer Advance Date . . . . . . . . . . . . . . . . . . . I-30
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Maximum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . I-30
Minimum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . I-30
Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . I-30
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Mortgage Loan Repurchase Price . . . . . . . . . . . . . . . . . . I-31
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . I-31
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Mortgage Pool . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . I-32
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . I-32
Non-Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . I-32
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . I-32
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . I-33
One-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . I-33
Optional Termination . . . . . . . . . . . . . . . . . . . . . . . I-33
Optional Termination Date . . . . . . . . . . . . . . . . . . . . I-34
Original Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-34
Original Value . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-34
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . I-34
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . I-34
Periodic Rate Cap . . . . . . . . . . . . . . . . . . . . . . . . I-35
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . I-35
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . I-37
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-38
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . I-38
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . I-38
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . I-38
Prepayment Period . . . . . . . . . . . . . . . . . . . . . . . . I-39
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . I-39
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . I-39
PUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Reference Bank Rate
Reference Banks . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Refinancing Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-41
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . I-41
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Replacement Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-41
Request for Release . . . . . . . . . . . . . . . . . . . . . . . I-42
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . I-43
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . I-43
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . I-43
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . I-43
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-43
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . I-43
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . I-43
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . I-43
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . I-44
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-44
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-44
Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . I-44
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . I-44
Substitution Amount . . . . . . . . . . . . . . . . . . . . . . . I-44
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . I-45
Tax Matters Person Class R Certificate . . . . . . . . . . . . . . I-45
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-45
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-45
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-45
2/28 Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . I-45
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . I-45
Weighted Maximum Rate Cap . . . . . . . . . . . . . . . . . . . . I-46
SECTION 1.02. Certain REMIC-Related Defined Terms . . . . . . . . I-46
-----------------------------------
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-55
REMIC 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-55
REMIC 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-55
REMIC 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-55
REMIC 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-55
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . I-55
Upper Tier REMIC . . . . . . . . . . . . . . . . . . . . . . . . . I-55
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . II-1
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans . . . . II-5
SECTION 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Seller . . . . . . . . . . II-8
SECTION 2.04. Representations and Warranties of the Depositor . . II-23
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases . . . . . . . . . . . II-25
SECTION 2.06. Authentication and Delivery of Certificates . . . . II-25
SECTION 2.07. Covenants of the Master Servicer . . . . . . . . . II-26
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans . . . . . III-1
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Master Servicer . . . . . . . . . . . . . . . . . . III-2
SECTION 3.03. Rights of the Depositor, the Trustee in Respect of
the Master Servicer . . . . . . . . . . . . . . . . III-3
SECTION 3.04. Trustee to Act as Master Servicer . . . . . . . . . III-3
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account . . . . . . . . . . . III-4
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts . . . . . . . . . . . . . . . . . . III-7
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . III-8
SECTION 3.08. Permitted Withdrawals from the Certificate Account,
Distribution Account . . . . . . . . . . . . . . . III-8
SECTION 3.09. (Reserved . . . . . . . . . . . . . . . . . . . . III-11
SECTION 3.10. Maintenance of Hazard Insurance . . . . . . . . . III-11
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements . . . . . . . . . . . . . . . . . . . III-12
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized
Losses; Repurchase of Certain Mortgage Loans . . III-14
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files . III-17
SECTION 3.14. Documents, Records and Funds in Possession of
Master Servicer to be Held for the Trustee . . . III-19
SECTION 3.15. Servicing Compensation . . . . . . . . . . . . . III-19
SECTION 3.16. Access to Certain Documentation . . . . . . . . . III-20
SECTION 3.17. Annual Statement as to Compliance . . . . . . . . III-20
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements . . . . . . . . . III-21
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances . . . . . . . . . . . . . . . . . . . . . IV-1
SECTION 4.02. Reduction of Servicing Compensation in Connection
with Prepayment Interest Shortfalls . . . . . . . . IV-2
SECTION 4.04 Distributions . . . . . . . . . . . . . . . . . . . IV-2
SECTION 4.05 Monthly Statements to Certificateholders . . . . . IV-8
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates . . . . . . . . . . . . . . . . . . V-1
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates . . . . . . . . . . . . . . V-2
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . V-7
SECTION 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . V-7
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . V-8
SECTION 5.06. Book-Entry Certificates . . . . . . . . . . . . . . . V-8
SECTION 5.07. Notices to Depository . . . . . . . . . . . . . . . . V-9
SECTION 5.08. Definitive Certificates . . . . . . . . . . . . . . . V-9
SECTION 5.09. Maintenance of Office or Agency . . . . . . . . . . V-10
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
SECTION 6.01. Respective Liabilities of the Depositor, the Master
Servicer and the Seller . . . . . . . . . . . . . . VI-1
SECTION 6.02. Merger or Consolidation of the Depositor, the
Master Servicer or the Seller . . . . . . . . . . . VI-1
SECTION 6.03. Limitation on Liability of the Depositor, the
Seller, the Master Servicer and others . . . . . . VI-1
SECTION 6.04. Limitation on Resignation of Master Servicer . . . VI-2
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds . . VI-3
ARTICLE VII
DEFAULT; TERMINATION OF MASTER SERVICER
SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . . VII-1
SECTION 7.02. Trustee to Act; Appointment of Successor . . . . . VII-3
SECTION 7.03. Notification to Certificateholders . . . . . . . . VII-4
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee . . . . . . . . . . . . . . . . VIII-1
SECTION 8.02. Certain Matters Affecting the Trustee . . . . . . VIII-2
SECTION 8.03. Trustee Not Liable for Mortgage Loans . . . . . . VIII-3
SECTION 8.04. Trustee May Own Certificates . . . . . . . . . . VIII-4
SECTION 8.05. Master Servicer to Pay Trustee's Fees and
Expenses . . . . . . . . . . . . . . . . . . . . VIII-4
SECTION 8.06. Eligibility Requirements for Trustee . . . . . . VIII-5
SECTION 8.07. Resignation and Removal of Trustee . . . . . . . VIII-5
SECTION 8.08. Successor Trustee . . . . . . . . . . . . . . . . VIII-6
SECTION 8.09. Merger or Consolidation of Trustee . . . . . . . VIII-7
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . VIII-7
SECTION 8.11. Tax Matters . . . . . . . . . . . . . . . . . . . VIII-9
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans . . . . . . . . . . . . . . . . . . IX-1
SECTION 9.02. Final Distribution on the Certificates . . . . . . IX-1
SECTION 9.03. Additional Termination Requirements . . . . . . . . IX-3
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . X-1
SECTION 10.02. Recordation of Agreement; Counterparts . . . . . . . X-3
SECTION 10.03. Governing Law . . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.04. Intention of Parties . . . . . . . . . . . . . . . . X-3
SECTION 10.05. Notices . . . . . . . . . . . . . . . . . . . . . . . X-4
SECTION 10.06. Severability of Provisions . . . . . . . . . . . . . X-5
SECTION 10.07. Assignment . . . . . . . . . . . . . . . . . . . . . X-5
SECTION 10.08. Limitation on Rights of Certificateholders . . . . . X-5
SECTION 10.09. Inspection and Audit Rights . . . . . . . . . . . . . X-6
SECTION 10.10. Certificates Nonassessable and Fully Paid . . . . . . X-7
POOLING AND SERVICING AGREEMENT, dated as of February 20, 1998,
among CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation (in its capacity as
seller hereunder, the "Seller", and in its capacity as master servicer
hereunder, the "Master Servicer"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates.
As provided herein, the Trustee shall elect that the Trust Fund be treated
for Federal income tax purposes as four separate real estate mortgage
investment conduits (each a "REMIC" or, in the alternative,"REMIC 1","REMIC
2","REMIC 3", and "REMIC 4", respectively, REMIC 4 also being referred to as
the "Upper Tier REMIC." The Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class MF-1, Class MF-2, Class BF, Class AV-1, Class MV-1, Class MV-2, Class
BV, Class BF-IO, and Class BV-IO Certificates represent ownership of all of
the regular interests in REMIC 4. The Class R4 Interest represents the sole
class of "residual interest" in REMIC 4 for purposes of the REMIC provisions.
Each of the Class R-1, Class R-2, and Class R-3 Interests represent the sole
class of residual interest in REMIC 1, REMIC 2, and REMIC 3, respectively,
for purposes of the REMIC provisions. Under this Agreement, there are also
six classes of uncertificated REMIC 1 regular interests issued (the Class T1-
F1, Class T1-F2, Class T1-F3, Class T1-V1, Class T1-V2, and Class T1-V3
Interests), eight classes of uncertificated REMIC 2 regular interests issued
(the Class T2-F1, Class T2-F2, Class T2-F3, Class T2-F4, Class T2-V1, Class
T2-V2, Class T2-V3, and Class T2-V4 Interests), seventeen classes of
uncertificated REMIC 3 regular interests issued (the Class T3-F1, Class T3-
F2, Class T3-F3, Class T3-F4, Class T3-F5, Class T3-F6, Class T3-F7, Class
T3-F8, Class T3-F9, Class T3-F10, Class T3-V1, Class T3-V2, Class T3-V3,
Class T3-V4, Class T3-V5, Class T3-V6, and Class T3-V7 Interests), and
twenty-two classes of uncertificated REMIC 4 regular interests issued (Class
T4-F1, Class T4-F2, Class T4-F3, Class T4-F4, Class T4-F5, Class T4-F6, Class
T4-F7, Class T4-F8, Class T4-F9, Class T4-F10, Class T4-F11, Class T4-F12,
Class T4-F13, Class T4-F14, Class T4-V1, Class T4-V2, Class T4-V3, Class T4-
V4, Class T4-V5, Class T4-V6, Class T4-V7, and Class T4-V8 Interests). The
REMIC 1 Regular Interests will be held as assets of REMIC 2, the REMIC 2
Regular Interests will be held as assets of REMIC 3, and the REMIC 3 Regular
Interests will be held as assets of REMIC 4. The "latest possible maturity
date" for federal income tax purposes of all interests created hereby will be
the Latest Possible Maturity Date.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
-------------
In addition to those defined terms defined in Section 1.02,
whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accrual Period: With respect to the Group I Certificates and any
--------------
Distribution Date, the calendar month immediately preceding such Distribution
Date. With respect to the Group II Certificates and any Distribution Date,
the period commencing on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date) and ending on the
day immediately preceding such Distribution Date. All calculations of
interest on the Group I Certificates will be made on the basis of a 360-day
year consisting of twelve 30-day months, and all calculations of interest on
the Group II Certificates will be made on the basis of the actual number of
days elapsed in the related Accrual Period and in a 360 day year.
Adjustable Rate Certificate Carryover: With respect to any
-------------------------------------
Distribution Date, an amount equal to the sum of (i) the Class AV-1 Interest
Carryover Amount for such Distribution Date (if any), (ii) the Class MV-1
Carryover Amount for such Distribution Date (if any), (iii) the Class MV-2
Interest Carryover Amount for such Distribution Date (if any) and (iv) the
Class BV Carryover Amount for such Distribution Date (if any); provided that
when the term Adjustable Rate Certificate Carryover is used with respect to
one Class of Group II Certificates, it shall mean such carryover amount
listed in clauses (i), (ii), (iii) or (iv), as applicable, with the same
Class designation.
Adjustment Date: As to each Group II Mortgage Loan, each date on
---------------
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
-------
Master Servicer with respect to any Distribution Date pursuant to
Section 4.01, the amount of any such advances being equal to the sum of
(A) the aggregate of payments of principal and interest (net of the Servicing
Fees) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date and
(B) with respect to each REO Property that has not been liquidated, an amount
equal to the excess, if any, of (x) one month's interest (adjusted to the Net
Mortgage Rate) on the Stated Principal Balance of the related Mortgage Loan
over (y) the net monthly rental income (if any) from such REO Property
deposited in the Certificate Account for such Distribution Date pursuant to
Section 3.12, less the aggregate amount of any such delinquent payments that
the Master Servicer has determined would constitute a Nonrecoverable Advance
were an advance to be made with respect thereto.
Agreement: This Pooling and Servicing Agreement and any and all
---------
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date,
-----------------------------------
the aggregate amount held in the Certificate Account at the close of business
on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage
Loans due after the related Due Date and (ii) Principal Prepayments and
Liquidation Proceeds received in respect of such Mortgage Loans after the
last day of the related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution
----------------------------
Date, the sum of the Realized Losses with respect to the Mortgage Loans which
are to be applied in reduction of the Certificate Principal Balance of the
Certificates pursuant to this Agreement, which shall on any such Distibution
Date equal the amount, if any, by which, (i) with respect to the Group I
Certificates, the Group I Certificate Principal Balance (after all
distributions of principal on such Distribution Date) exceeds the Stated
Principal Balance of the Group I Mortgage Loans as of the preceding Due Date,
and (ii) with respect to the Group II Certificates, the Group II Certificate
Principal Balance (after all distributions of principal on such Distribution
Date) exceeds the Stated Principal Balance of the Group II Mortgage Loans as
of the preceding Due Date.
Appraised Value: The appraised value of the Mortgaged Property
---------------
based upon the appraisal made for the Seller by a fee appraiser at the time
of the origination of the related Mortgage Loan, or the sales price of the
Mortgaged Property at the time of such origination, whichever is less, or
with respect to any Mortgage Loan originated in connection with a
refinancing, the appraised value of the Mortgaged Property based upon the
appraisal made at the time of such refinancing.
Available Funds Cap: As of any Distribution Date and the Group II
-------------------
Certificates, a per annum rate equal to twelve times the quotient of (x) the
total scheduled interest collected or Advanced on the Mortgage Loans in the
related Loan Group based on the Mortgage Rates in effect on the related Due
Date less the related Servicing Fee for such Distribution Date divided by (y)
the Certificate Principal Balance of the Group II Certificates.
Bankruptcy Code: Title 11 of the United States Code.
---------------
Book-Entry Certificates: Any of the Certificates that shall be
-----------------------
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with
the rules of the Depository and as described in Section 5.06). As of the
Closing Date, each Class of Regular Certificates (other than the Class B-IO
Certificates) constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
------------
(ii) a day on which banking institutions in the City of New York, New York or
the city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
Carryover Reserve Fund: The separate Eligible Account created and
----------------------
initially maintained by the Trustee pursuant to Section 4.08 in the name of
the Trustee for the benefit of the Group II Certificateholders and designated
"The Bank of New York in trust for registered holders of CWABS, Inc., Asset-
Backed Certificates, Series 1998-1". Funds in the Carryover Reserve Fund
shall be held in trust for the Group II Certificateholders for the uses and
purposes set forth in this Agreement.
Certificate: Any one of the certificates of any Class executed and
-----------
authenticated by the Trustee in substantially the forms attached hereto as
exhibits.
Certificate Account: The separate Eligible Account created and
-------------------
initially maintained by the Trustee pursuant to Section 3.05(b) in the name
of the Trustee for the benefit of the Certificateholders and designated "The
Bank of New York in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 1998-1". Funds in the Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
this Agreement.
Certificate Group: Either of the Group I Certificates or the
-----------------
Group II Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than
-----------------------------
any Class B-IO Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (i) all
----
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant
to Section 4.04, and (ii) any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to (i) Section 4.04(k)
for the Group I Certificates and (ii) Section 4.04(l) for the Group II
Certificates. References herein to the Certificate Principal Balance of a
Class of Certificates or a Certificate Group shall mean the Certificate
Principal Balances of all Certificates in such Class or all Certificates in
such Certificate Group, as the case may be.
Certificate Register: The register maintained pursuant to
--------------------
Section 5.02 hereof.
Certificateholder or Holder: The person in whose name a
----------------- ------
Certificate is registered in the Certificate Register (initially, Cede & Co.,
as nominee for the Depository, in the case of any Class of Regular
Certificates (other than the Class B-IO Certificates), except that solely for
the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Depositor or any affiliate of the Depositor
shall be deemed not to be Outstanding and the Voting Interest evidenced
thereby shall not be taken into account in determining whether the requisite
amount of Voting Interests necessary to effect such consent has been
obtained; provided that if any such Person (including the Depositor) owns
100% of the Voting Interests evidenced by a Class of Certificates, such
Certificates shall be deemed to be Outstanding for purposes of any provision
hereof that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor
or any affiliate of the Depositor in determining which Certificates are
registered in the name of an affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set
-----
forth in Section 5.01 hereof.
Class AF-1 Certificate: Any Certificate designated as a
----------------------
"Class AF-1 Certificate" on the face thereof, in the form of Exhibit A-1
hereto, representing the right to distributions as set forth herein.
Class AF-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AF-1
Certificates.
Class AF-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-1 Certificate Principal Balance during the
related Accrual Period at the Class AF-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-1 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-1 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-1 Pass-
Through Rate for the related Accrual Period.
Class AF-1 Pass-Through Rate: 6.45% per annum.
----------------------------
Class AF-2 Certificate: Any Certificate designated as a
----------------------
"Class AF-2 Certificate" on the face thereof, in the form of Exhibit A-2
hereto, representing the right to distributions as set forth herein.
Class AF-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AF-2
Certificates.
Class AF-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-2 Certificate Principal Balance during the
related Accrual Period at the Class AF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-2 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-2 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted under applicable law) at the Class AF-2
Pass-Through Rate for the related Accrual Period.
Class AF-2 Pass-Through Rate: 6.27% per annum.
----------------------------
Class AF-3 Certificate: Any Certificate designated as a
----------------------
"Class AF-3 Certificate" on the face thereof, in the form of Exhibit A-3
hereto, representing the right to distributions as set forth herein.
Class AF-3 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AF-3
Certificates.
Class AF-3 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-3 Certificate Principal Balance during the
related Accrual Period at the Class AF-3 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-3 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-3 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-3 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-3 Pass-
Through Rate for the related Accrual Period.
Class AF-3 Pass-Through Rate: 6.79% per annum.
----------------------------
Class AF-4 Certificate: Any Certificate designated as a
----------------------
"Class AF-4 Certificate" on the face thereof, in the form of Exhibit A-4
hereto, representing the right to distributions as set forth herein.
Class AF-4 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AF-4
Certificates.
Class AF-4 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-4 Certificate Principal Balance during the
related Accrual Period at the Class AF-4 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-4 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-4 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-4 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-4 Pass-
Through Rate for the related Accrual Period.
Class AF-4 Pass-Through Rate: 6.39% per annum.
----------------------------
Class AF-4 Principal Distribution Amount: As of any Distribution
----------------------------------------
Date, an amount equal to the product of (i) a fraction, the numerator of
which is the Certificate Principal Balance of the Class AF-4 Certificates on
such Distribution Date and the denominator of which is the Group I Class A
Certificate Principal Balance, (ii) the Group I Class A Principal
Distribution Amount for such Distribution Date and (iii) the Class AF-4 PDA
Factor for such Distribution Date.
Class AF-4 PDA Factor: As of any Distribution Date set forth
---------------------
below, the percentage set forth across from such Distribution Date:
<TABLE>
<CAPTION>
Distribution Date Percentage
<S> <C>
March 1998-February 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
March 2001-February 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45%
March 2003-February 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80%
March 2004-February 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
March 2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300%
</TABLE>
Class AV-1 Certificate: Any Certificate designated as a
----------------------
"Class AV-1 Certificate" on the face thereof, in the form of Exhibit A-9
hereto, representing the right to distributions as set forth herein.
Class AV-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AV-1
Certificates.
Class AV-1 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class AV-1 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class AV-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated
as the sum of One-Month LIBOR and the applicable Class AV-1 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class AV-1 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class AV-1 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to
Section 4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class AV-1 Margin for such Distribution
Date.
Class AV-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AV-1 Certificate Principal Balance during the
related Accrual Period at the Class AV-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AV-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AV-1 Current Interest with
respect to prior Distribution Dates (excluding any AV-1 Interest Carryover
Amount) over (b) the amount actually distributed to the Class AV-1
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class AV-1 Pass-Through Rate for
the related Accrual Period.
Class AV-1 Margin: As of any Distribution Date on or prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.21% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.42% per
annum.
Class AV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.84281% per annum. As of any Distribution Date thereafter, the least of
(i) One-Month LIBOR plus the Class AV-1 Margin, (ii) the Weighted Maximum
Rate Cap and (iii) the Available Funds Cap for such Distribution Date.
Class B-IO Certificates: Either or both of the Class BF-IO
-----------------------
Certificates and the Class BV-IO Certificates, as the context may require.
Class BF Applied Realized Loss Amount: As of any Distribution
-------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class BF Certificates.
Class BF Certificate: Any Certificate designated as a "Class BF
--------------------
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
Class BF Certificate Principal Balance: As of any date of
--------------------------------------
determination, the Certificate Principal Balance of the Class BF
Certificates.
Class BF Current Interest: As of any Distribution Date, the
-------------------------
interest accrued on the Class BF Certificate Principal Balance during the
related Accrual Period at the Class BF Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class BF Interest Carryforward Amount: As of any Distribution
-------------------------------------
Date, the sum of (i) the excess of (a) the Class BF Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class BF Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class BF Pass-
Through Rate for the related Accrual Period.
Class BF Pass-Through Rate: The lesser of (i) 7.58% per annum and
--------------------------
(ii) the weighted average Net Mortgage Rate for Group I Mortgage Loans for
the related Due Period.
Class BF Unpaid Realized Loss Amount: As of any Distribution Date,
------------------------------------
the excess of (i) the Class BF Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BF Applied Realized Loss
Amount on all previous Distribution Dates.
Class BF-IO Certificates: Any Certificate designated as a "Class
------------------------
BF-IO Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing ownership of the Class T4-F8, Class T4-F9, Class T4-F10, Class
T4-F11, Class T4-F12, Class T4-F13, and Class T4-F14 Interests.
Class BF-IO Distributable Amount: With respect to any Distribution
--------------------------------
Date, the sum of the amounts distributable on the Class T4-F8, Class T4-F9,
Class T4-F10, Class T4-F11, Class T4-F12, Class T4-F13, and Class T4-F14
Interests.
Class BV Applied Realized Loss Amount: As of any Distribution
-------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group II Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class BV Certificates.
Class BV Certificate: Any Certificate designated as a "Class BV
--------------------
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class BV Certificate Principal Balance: As of any date of
--------------------------------------
determination, the Certificate Principal Balance of the Class BV
Certificates.
Class BV Current Interest: As of any Distribution Date, the
-------------------------
interest accrued on the Class BV Certificate Principal Balance during the
related Accrual Period at the Class BV Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class BV Interest Carryforward Amount: As of any Distribution
-------------------------------------
Date, the sum of (i) the excess of (a) the Class BV Current Interest with
respect to prior Distribution Dates (excluding any Class BV Interest
Carryover Amount) over (b) the amount actually distributed to the Class BV
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class BV Pass-Through Rate for the
related Accrual Period.
Class BV Interest Carryover Amount: As of any Distribution Date,
----------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class BV Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class BV Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated
as the sum of One-Month LIBOR and the applicable Class BV Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class BV Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class BV Interest Carryover Amount for
all previous Distribution Dates not previously paid pursuant to
Section 4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class BV Margin for such Distribution
Date.
Class BV Margin: For any Distribution Date on or prior to the
---------------
Optional Termination Date for the Group II Certificates, 1.20% per annum and,
as of any Distribution Date after such Optional Termination Date, 1.80% per
annum.
Class BV Pass-Through Rate: For the first Distribution Date,
--------------------------
6.83281% per annum. As of any Distribution Date thereafter, the least of
(i) One-Month LIBOR plus the Class BV Margin, (ii) the Weighted Maximum Rate
Cap and (iii) the Available Funds Cap for such Distribution Date.
Class BV Unpaid Realized Loss Amount: As of any Distribution Date,
------------------------------------
the excess of (i) the Class BV Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BV Applied Realized Loss
Amounts on all previous Distribution Dates.
Class BV-IO Certificates: Any Certificate designated as a "Class
------------------------
BV-IO Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing ownership of the Class T4-V5, Class T4-V6, Class T4-V7, and
Class T4-V8 Interests.
Class BV-IO Distributable Amount: With respect to any Distribution
--------------------------------
Date, the aggregate of the amounts distributable on the Class T4-V5, Class
T4-V6, Class T4-V7, and Class T4-V8 Interests.
Class MF-1 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-1 Certificates.
Class MF-1 Certificate: Any Certificate designated as a
----------------------
"Class MF-1 Certificate" on the face thereof, in the form of Exhibit A-5
hereto, representing the right to distributions as set forth herein.
Class MF-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class MF-1
Certificates.
Class MF-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MF-1 Certificate Principal Balance during the
related Accrual Period at the Class MF-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MF-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MF Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class MF Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class MF-1 Pass-
Through Rate for the related Accrual Period.
Class MF-1 Pass-Through Rate: 6.97% per annum.
----------------------------
Class MF-1 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MF Applied Realized Loss Amount over
(ii) the sum of all distributions in reduction of the Class MF-1 Applied
Realized Loss Amount on all previous Distribution Dates.
Class MF-2 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-2 Certificates.
Class MF-2 Certificate: Any Certificate designated as a
----------------------
"Class MF-2 Certificate" on the face thereof, in the form of Exhibit A-6
hereto, representing the right to distributions as set forth herein.
Class MF-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class MF-2
Certificates.
Class MF-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MF-2 Certificate Principal Balance during the
related Accrual Period at the Class MF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MF-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MF-2 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class MF-2 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class MF-2 Pass-
Through Rate for the related Accrual Period.
Class MF-2 Pass-Through Rate: 7.24% per annum.
----------------------------
Class MF-2 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MF-2 Applied Realized Loss Amount over
(ii) the sum of all distributions in reduction of the Class MF-2 Applied
Realized Loss Amount on all previous Distribution Dates.
Class MV-1 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Realized Losses with respect to the Group II Mortgage
Loans which have been applied to the reduction of the Certificate Principal
Balance of the Class MV-1 Certificates.
Class MV-1 Certificate: Any Certificate designated as a
----------------------
"Class MV-1 Certificate" on the face thereof, in the form of Exhibit A-10
hereto, representing the right to distributions as set forth herein.
Class MV-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class MV-1
Certificates.
Class MV-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MV Certificate Principal Balance during the
related Accrual Period at the Class MV Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MV Current Interest with
respect to prior Distribution Dates (excluding any Class MV-1 Interest
Carryover Amount) over (b) the amount actually distributed to the Class MV-1
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-1 Pass-Through Rate for
the related Accrual Period.
Class MV-1 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-1 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class MV-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated
as the sum of One-Month LIBOR and the applicable Class MV-1 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class MV-1 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class MV-1 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to
Section 4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class MV-1 Margin for such Distribution
Date.
Class MV-1 Margin: As of any Distribution Date on or prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.40% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.60% per
annum.
Class MV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
6.03281% per annum. As of any Distribution Date thereafter, the least of
(i) One-Month LIBOR plus the Class MV-1 Margin, (ii) the Weighted Maximum
Rate Cap and (iii) the Available Funds Cap for such Distribution Date.
Class MV-1 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MV-1 Applied Realized Loss Amount over
(ii) the sum of all distributions in reduction of the Class MV-1 Applied
Realized Loss Amounts on all previous Distribution Dates.
Class MV-2 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Realized Losses with respect to the Group II Mortgage
Loans which have been applied to the reduction of the Certificate Principal
Balance of the Class MV-2 Certificates.
Class MV-2 Certificate: Any Certificate designated as a
----------------------
"Class MV-2 Certificate" on the face thereof, in the form of Exhibit A-11
hereto, representing the right to distributions as set forth herein.
Class MV-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class MV-2
Certificates.
Class MV-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MV-2 Certificate Principal Balance during the
related Accrual Period at the Class MV-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MV-2 Current Interest with
respect to prior Distribution Dates (excluding any Class MV-2 Interest
Carryover Amount) over (b) the amount actually distributed to the Class MV-2
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-2 Pass-Through Rate for
the related Accrual Period.
Class MV-2 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-2 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class MV-2 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated
as the sum of One-Month LIBOR and the applicable Class MV-2 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class MV-2 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class MV-2 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to
Section 4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class MV-2 Margin for such Distribution
Date.
Class MV-2 Margin: As of any Distribution Date on or prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.61% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.915% per
annum.
Class MV-2 Pass-Through Rate: For the first Distribution Date,
----------------------------
6.24281% per annum. As of any Distribution Date thereafter, the least of
(i) One-Month LIBOR plus the Class MV-2 Margin, (ii) the Weighted Maximum
Rate Cap and (iii) the Available Funds Cap for such Distribution Date.
Class MV-2 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MV-2 Applied Realized Loss Amount over
(ii) the sum of all distributions in reduction of the Class MV-2 Applied
Realized Loss Amounts on all previous Distribution Dates.
Class R Certificate: Any one of the Class R Certificates executed
-------------------
and authenticated by the Trustee in substantially the form set forth in
Exhibits D and E hereto, and evidencing ownership of the Class R-1, Class R-
2, Class R-3, and Class R-4 Interests.
Closing Date: February 27, 1998.
------------
Code: The Internal Revenue Code of 1986, including any successor
----
or amendatory provisions.
Combined Loan-to-Value Ratio: The fraction, expressed as a
----------------------------
percentage, the numerator of which is the sum of (x) the original principal
balance of the related Mortgage Loan and (y) the outstanding principal
balance at the date of origination of the Mortgage Loan of any senior
mortgage loan, or in the case of an open-ended senior mortgage loan (if any),
the maximum available line of credit with respect to such mortgage loan,
regardless of any lesser amount actually outstanding at the date of
origination of the Mortgage Loan, and the denominator of which is the
Appraised Value of the related Mortgaged Property.
Compensating Interest: With respect to any Mortgage Loan, an
---------------------
amount equal to one-half of the Servicing Fee, to be applied to the interest
portion of a Prepayment Interest Shortfall on such Mortgage Loan pursuant to
Section 4.02 hereof.
Corresponding Certificate: With respect to each REMIC 4 Regular
-------------------------
Interest, the Certificate that evidences ownership of that REMIC 4 Regular
Interest.
Corporate Trust Office: The designated office of the Trustee in
----------------------
the State of New York where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office
at the date of the execution of this Agreement is located at 101 Barclay
Street, 12E, New York, New York 10286 (Attention: Corporate Trust MBS
Administration), telephone: (212) 815-2793, facsimile: (212) 815-5309.
Cut-off Date: February 20, 1998.
------------
Cut-off Date Principal Balance: As to any Mortgage Loan, the
------------------------------
unpaid principal balance thereof as of the close of business on the calendar
day immediately preceding the Cut-off Date after application of all payments
of principal due prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-Off Date, but without giving
effect to any installments of principal received in respect of Due Dates on
and after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
----------------------
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a
-------------------
valuation by a court of competent jurisdiction of the Mortgaged Property in
an amount less than the then outstanding indebtedness under such Mortgage
Loan, or any reduction in the amount of principal to be paid in connection
with any Scheduled Payment that results in a permanent forgiveness of
principal, which valuation or reduction results from an order of such court
that is final and non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
-----------------------
Delay Delivery Mortgage Loans: The Mortgage Loan identified on the
-----------------------------
Schedule of Mortgage Loans set forth on Exhibit F-2 hereof for which a
related Mortgage File is not delivered to Trustee on the Closing Date.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
---------------------
by a Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
----------
thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the day such payment is scheduled to be due. A Mortgage Loan
is "30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding
day (e.g., as when a 30-day month follows a 31-day month in which a payment
was due on the 31st day of such month), then on the last day of such
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
Denomination: With respect to each Certificate, the amount set
------------
forth on the face thereof as the "Initial Principal Balance of this
Certificate".
Depositor: CWABS, Inc., a Delaware corporation, or its successor
---------
in interest.
Depository: The initial Depository shall be The Depository Trust
----------
Company ("DTC"), the nominee of which is Cede & Co., or any other
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository shall initially
be the registered Holder of the Book-Entry Certificates. The Depository
shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Class of Book-Entry
--------------------
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of
Exhibit 0.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the
------------------
15th day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and designated "The Bank of New
York, in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 1998-1". Funds in the Distribution Account shall be
held in trust for the Certificateholders for the uses and purposes set forth
in this Agreement.
Distribution Date: The 25th day of each calendar month after the
-----------------
initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in March 1998.
Due Date: With respect to any Distribution Date, the first day of
--------
the month in which the related Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
----------
beginning on the second day of the calendar month preceding the calendar
month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, beginning on the Cut-off Date) and ending on the Due Date
in the month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained
----------------
with a federal or state chartered depository institution or trust company,
the long-term unsecured debt obligations and short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, so long as Moody's is not a Rating
Agency) are rated by each Rating Agency in one of its two highest long-term
and its highest short-term rating categories respectively, at the time any
amounts are held on deposit therein, or (ii) an account or accounts in a
depository institution or trust company in which such accounts are insured by
the FDIC (to the limits established by the FDIC) and the uninsured deposits
in which accounts are otherwise secured such that, as evidenced by an Opinion
of Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or
a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution or trust company in which such account is maintained, or (iii) a
trust account or accounts maintained with the corporate trust department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity or (iv) any other account acceptable to the Rating Agencies.
Eligible Accounts may bear interest, and may include, if otherwise qualified
under this definition, accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
-----
amended.
ERISA Restricted Certificate: Each of the Class MF-1, Class MF-2,
----------------------------
Class BF, Class MV-1, Class MV-2, Class BV, Class B-IO and Class R
Certificates.
Event of Default: As defined in Section 7.01 hereof.
----------------
Excess Proceeds: With respect to any Liquidated Loan, any
---------------
Liquidation Proceeds that are in excess of the sum of (i) the unpaid
principal balance of such Liquidated Loan as of the date of such liquidation
plus (ii) interest at the Mortgage Rate from the Due Date as to which
interest was last paid or advanced to Certificateholders (and not reimbursed
to the Master Servicer) up to the Due Date in the month in which such
Liquidation Proceeds are required to be distributed on the Stated Principal
Balance of such Liquidated Loan outstanding during each Due Period as to
which such interest was not paid or advanced.
Extra Master Servicing Fee: The Extra Master Servicing Fee payable
--------------------------
pursuant to Sections 4.07 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
-----
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
------
Enforcement Act of 1989.
FNMA: The Federal National Mortgage Association, a federally
----
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Gross Margin: The percentage set forth in the related Mortgage
------------
Note for the Group II Mortgage Loans to be added to the Index for use in
determining the Mortgage Rate on each Adjustment Date, and which is set forth
in the Mortgage Loan Schedule for the Group II Mortgage Loans.
Group I Certificate Principal Balance: The sum of the Class AF-1
-------------------------------------
Certificate Principal Balance, the Class AF-2 Certificate Principal Balance,
the Class AF-3 Certificate Principal Balance, the Class AF-4 Certificate
Principal Balance, the Class MF-1 Certificate Principal Balance, the
Class MF-2 Certificate Principal Balance and the Class BF Certificate
Principal Balances.
Group I Certificates: Any of the Class AF-1, Class AF-2,
--------------------
Class AF-3, Class AF-4, Class MF-1, Class MF-2, Class BF and/or Class BF-IO
Certificates.
Group I Class A Certificate Principal Balance: The sum of the
---------------------------------------------
Class AF-1 Certificate Principal Balance, the Class AF-2 Certificate
Principal Balance, the Class AF-3 Certificate Principal Balance and the
Class AF-4 Certificate Principal Balance.
Group I Class A Certificates: Any of the Class AF-1, Class AF-2,
----------------------------
Class AF-3 and/or Class AF-4 Certificates.
Group I Class A Current Interest: Any one or more of the following
--------------------------------
(as the context requires): Class AF-1 Current Interest, Class AF-2 Current
Interest, Class AF-3 Current Interest and/or Class AF-4 Current Interest.
Group I Class A Interest Carryforward Amount: Any one or more of
--------------------------------------------
the following (as the context requires): Class AF-1 Interest Carryforward
Amount, Class AF-2 Interest Carryforward Amount, Class AF-3 Interest
Carryforward Amount and/or Class AF-4 Interest Carryforward Amount.
Group I Class A Principal Distribution Amount: With respect to
---------------------------------------------
(i) any Distribution Date prior to the Group I Stepdown Date or Distribution
Date on which a Group I Trigger Event has occurred, 100% of the Group I
Principal Distribution Amount for such Distribution Date and (ii) any
Distribution Date on or after the Group I Stepdown Date where a Group I
Trigger Event has not occurred, the excess of (A) the Group I Class A
Certificate Principal Balance immediately prior to such Distribution Date
over (B) the lesser of (I) 74.00% of the Stated Principal Balance of the
Group I Mortgage Loans on the preceding Due Date and (II) the Stated
Principal Balance of the Group I Mortgage Loans on the preceding Due Date
less approximately $420,000.
Group I Class B Principal Distribution Amount: With respect to any
---------------------------------------------
Distribution Date on or after the Group I Stepdown Date and as long as a
Group I Trigger Event has not occurred and continuing, the excess of (i) the
sum of (A) the Group I Class A Certificate Principal Balance (after taking
into account distribution of the Group I Class A Principal Distribution
Amount on such Distribution Date), (B) the Class MF-1 Certificate Principal
Balance (after taking into account distribution of the Group I Class MF-1
Distribution Amount on such Distribution Date), (C) the Class MF-2
Certificate Principal Balance (after taking into account distribution of the
Group I Class MF-2 Principal Distribution Amount for such Distribution Date),
and (D) the Class BF Certificate Principal Balance immediately prior to such
Distribution Date over (ii) the lesser of (A) 98.00% of the Stated Principal
Balance of the Group I Mortgage Loans on the preceding Due Date and (B) the
Stated Principal Balance of the Group I Mortgage Loans on the preceding Due
Date less $420,000; provided that after the Group I Class A Certificate
Principal Balance, the Class MF-1 Certificate Principal Balance and the
Class MF-2 Certificate Principal Balance has been reduced to zero, the
Group I Class B Principal Distribution Amount for such Distribution Date will
equal 100% of the Group I Principal Distribution Amount for such Distribution
Date.
Group I Class MF-1 Principal Distribution Amount: With respect to
------------------------------------------------
any Distribution Date on or after the Group I Stepdown Date, 100% of the
Group I Principal Distribution Amount for such Distribution Date if the
Group I Class A Certificate Principal Balance has been reduced to zero and a
Group I Trigger Event has occurred and is continuing, or, if any of the
Class AF-1, Class AF-2, Class AF-3 or Class AF-4 Certificates are still
outstanding and as long as a Group I Trigger Event has not occurred and is
not continuing, the excess of (i) the sum of (A) the Group I Class A
Certificate Principal Balance (after taking into account distributions of the
Group I Class A Principal Distribution Amount on such Distribution Date) and
(B) the Class MF-1 Certificate Principal Balance immediately prior to such
Distribution Date over (ii) the lesser of (A) 84.00% of the Stated Principal
Balance of the Group I Mortgage Loans on the preceding Due Date and (B) the
Stated Principal Balance of the Group I Mortgage Loans on the preceding Due
Date less approximately $420,000.
Group I Class MF-2 Principal Distribution Amount: With respect to
------------------------------------------------
any Distribution Date on or after the Group I Stepdown Date, 100% of the
Group I Principal Distribution Amount for such Distribution Date if the
Group I Class A Certificate Principal Balance and the Class MF-1 Certificate
Principal Balance have been reduced to zero and a Group I Trigger Event has
occurred and is continuing, or, if any of the Class AF-1, Class AF-2,
Class AF-3, Class AF-4 or Class MF-1 Certificates are still outstanding and
as long as a Group I Trigger Event has not occurred and is not continuing,
the excess of (i) the sum of (A) the Group I Class A Certificate Principal
Balance (after taking into account distributions of the Group I Class A
Principal Distribution Amount on such Distribution Date), (B) the Class MF-1
Certificate Principal Balance (after taking into account distributions of the
Group I Class MF-1 Principal Distribution Amount on such Distribution Date)
and (C) the Class MF-2 Certificate Principal Balance immediately prior to
such Distribution Date over (ii) the lesser of (A) 91.00% of the Stated
Principal Balance of the Group I Mortgage Loans on the preceding Due Date and
(B) the Stated Principal Balance of the Group I Mortgage Loans on the
preceding Due Date less approximately $420,000.
Group I Excess Cashflow: With respect to any Distribution Date,
-----------------------
the aggregate remaining amounts constituting Group I Excess Cashflow for such
Distribution Date pursuant to Sections 4.04(a)(v) and 4.04(c)(v).
Group I Extra Principal Distribution: With respect to any
------------------------------------
Distribution Date, the lesser of (i) the excess, if any, of the Group I
Specified Overcollateralization Amount for such Distribution Date over the
Group I Overcollateralization Amount for such Distribution Date (after giving
effect to distributions of principal on the Group I Certificates other than
any Group I Extra Principal Distribution Amount) and (ii) the sum of the
Group I Excess Cashflow and Group II Remainder Excess Cashflow for such
Distribution Date available therefor in the priority set forth in
Section 4.04.
Group I Interest Funds: With respect to Group I Mortgage Loans and
----------------------
any Master Servicer Advance Date, the sum, without duplication, of (i) all
scheduled interest collected during the related Due Period with respect to
the Group I Mortgage Loans less the Servicing Fee, (ii) all Advances relating
to interest with respect to the Group I Mortgage Loans, (iii) all
Compensating Interest with respect to the Group I Mortgage Loans and
(iv) Liquidation Proceeds with respect to the Group I Mortgage Loans (to the
extent such Liquidation Proceeds relate to interest) less all Nonrecoverable
Advances relating to interest reimbursed during the related Due Period.
Group I Mortgage Loans: The pool of Mortgage Loans identified in
----------------------
the related Schedules of Mortgage Loans as having a Mortgage Rate which is
fixed for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Group I Net Rate: The weighted average Net Mortgage Rate for Group
----------------
I Mortgage Loans.
Group I Overcollateralization Amount: With respect to any
------------------------------------
Distribution Date, the excess, if any, of the Stated Principal Balance of the
Group I Mortgage Loans as of the preceding Due Date over the Certificate
Principal Balances of all Group I Certificates on such date (after taking
into account the payment of principal other than any Group I Extra Principal
Distribution Amount, on such Certificates on such Distribution Date).
Group I Principal Distribution Amount: With respect to each
-------------------------------------
Distribution Date, the sum of (i) the Group I Principal Funds for such
Distribution Date and (ii) any Group I Extra Principal Distribution Amount
for such Distribution Date.
Group I Principal Funds: With respect to the Group I Mortgage
-----------------------
Loans, the sum, without duplication, of (i) the scheduled principal collected
during the related Due Period or Advanced on or before the related Master
Servicer Advance Date, (ii) prepayments collected in the related Prepayment
Period, (iii) the Stated Principal Balance of each Mortgage Loan that was
repurchased by the Seller or the Master Servicer, (iv) the amount, if any, by
which the aggregate unpaid principal balance of any Replacement Mortgage Loan
is less than the aggregate unpaid principal balance of the related Deleted
Mortgage Loans delivered by the Seller in connection with a substitution of a
Mortgage Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds
collected during the related Due Period (to the extent such Liquidation
Proceeds related to principal) less all Nonrecoverable Advances relating to
principal reimbursed during the related Due Period.
Group I Remainder Excess Cashflow: With respect to any Distribution
---------------------------------
Date, the Group I Excess Cashflow for such Distribution Date remaining after
the applications set forth in Section 4.04(f)(i) through (vii).
Group I Specified Overcollateralization Amount: Prior to the Group
----------------------------------------------
I Stepdown Date, 1.0% of the Stated Principal Balance of the Group I Mortgage
Loans as of the Cut-off Date, and on and after the Group I Stepdown Date,
2.0% of the Stated Principal Balance of the Group I Mortgage Loans as of the
preceding Due Date, subject to a minimum of 0.50% of the Stated Principal
Balance of the Group I Mortgage Loans as of the Cut-off Date; provided that,
if on any Distribution Date a Group I Trigger Event has occurred, the Group I
Specified Overcollateralization Amount shall not be reduced to the applicable
percentage of the then current Stated Principal Balance of the Group I
Mortgage Loans until the Distribution Date on which a Group I Trigger Event
no longer exists.
Group I Stepdown Date: With respect to Group I Mortgage Loans, the
---------------------
later to occur of (i) the Distribution Date in March 2001 or (ii) the first
Distribution Date on which the Group I Class A Certificate Principal Balance
is less than or equal to 74.00% of the State Principal Balances of the
Group I Mortgage Loans as of the preceding Due Date.
Group I Subordinated Certificates: The Class MF-1, MF-2 and
---------------------------------
Class BF Certificates.
Group I Trigger Event: With respect to any Distribution Date after
---------------------
the Group I Stepdown Date, (1) the product of (i) two times (ii) the quotient
of (A) the Stated Principal Balance of all Group I Mortgage Loans 60 or more
days delinquent (including Group I Mortgage Loans in foreclosure and REO
Properties) and (B) the Stated Principal Balance of the Group I Mortgage
Loans as of the preceding Master Servicer Advance Date (2) equals or exceeds
the Required Percentage.
Group II Adjusted Overcollateralization Amount: For any
----------------------------------------------
Distribution Date, the excess of (c) the Stated Principal Balance of the
Group II Mortgage Loans as of the preceding Due Date over (d) the aggregate
principal balance of the Class T3-V1, Class T3-V2, Class T3-V3, and the Class
T3-V4 Interests.
Group II Adjusted Overcollateralization Release Amount: For any
------------------------------------------------------
Distribution Date, the lesser of the (a) the Group II Principal Distribution
Amount, and (b) the amount, if any, by which the Group II Adjusted
Overcollateralization Amount exceeds the sum of the Stated Principal Balance
of the Group II Mortgage Loans and the Group II Specified
Overcollateralization Amount.
Group II Certificates: Any of the Class AV-1, Class MV-1,
---------------------
Class MV-2, Class BV and/or Class BV-IO Certificates.
Group II Certificate Principal Balance: The sum of the Class AV-1,
--------------------------------------
Class MV-1, Class MV-2 and Class BV Certificate Principal Balances.
Group II Class A Certificate Principal Balance: The Class AV-1
----------------------------------------------
Certificate Principal Balance.
Group II Class A Principal Distribution Amount: With respect to
----------------------------------------------
(i) any Distribution Date prior to the Group II Stepdown Date or Distribution
Date on which a Group II Trigger Event has occurred, 100% of the Group II
Principal Distribution Amount for such Distribution Date and (ii) any
Distribution Date on or after the Group II Stepdown Date where a Group II
Trigger Event has not occurred, the excess of (A) the Group II Class A
Certificate Principal Balance immediately prior to such Distribution Date
over (B) the lesser of (I) 67.00% of the Stated Principal Balance of the
Group II Mortgage Loans on the immediately preceding Due Date and (II) the
Stated Principal Balance of the Group II Mortgage Loans on the immediately
preceding Due Date less approximately $890,000.
Group II Class B Principal Distribution Amount: With respect to
----------------------------------------------
any Distribution Date on or after the Group II Stepdown Date and as long as a
Group II Trigger Event has not occurred and continuing, the excess of (i) the
sum of (A) the Group II Class A Certificate Principal Balance (after taking
into account distribution of the Group II Class A Principal Distribution
Amount on such Distribution Date), (B) the Class MV-1 Certificate Principal
Balance (after taking into account distribution of the Group II Class MV-1
Distribution Amount on such Distribution Date), (C) the Class MV-2
Certificate Principal Balance (after taking into account distribution of the
Group II Class MV-2 Principal Distribution Amount for such Distribution
Date), and (D) the Class BV Certificate Principal Balance immediately prior
to such Distribution Date over (ii) the lesser of (A) 97.00% of the Stated
Principal Balance of the Group II Mortgage Loans on the preceding Due Date
and (B) the Stated Principal Balance of the Group II Mortgage Loans on the
preceding Due Date less $890,000 provided that after the Group II Class A
Certificate Principal Balance, the Class MV-1 Certificate Principal Balance
and the Class MV-2 Certificate Principal Balance has been reduced to zero,
the Group II Class B Principal Distribution Amount for such Distribution Date
will equal 100% of the Group II Principal Distribution Amount for such
Distribution Date.
Group II Class MV-1 Principal Distribution Amount: With respect
-------------------------------------------------
to any Distribution Date on or after the Group II Stepdown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the
Group II Class A Certificate Principal Balance has been reduced to zero and a
Group II Trigger Event has occurred and is continuing, or, if any of the
Class AV-1 Certificates are still outstanding and as long as a Group II
Trigger Event has not occurred and is not continuing, the excess of (i) the
sum of (A) the Group II Class A Certificate Principal Balance (after taking
into account distributions of the Group II Class A Principal Distribution
Amount on such Distribution Date) and (B) the Class MV-1 Certificate
Principal Balance immediately prior to such Distribution Date over (ii) the
lesser of (A) 79.00% of the Stated Principal Balance of the Group II Mortgage
Loans on the preceding Due Date and (B) the Stated Principal Balance of the
Group II Mortgage Loans on the preceding Due Date less approximately
$890,000.
Group II Class MV-2 Principal Distribution Amount: With respect
-------------------------------------------------
to any Distribution Date on or after the Group II Stepdown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the
Group II Class A Certificate Principal Balance and the Class MV-1 Certificate
Principal Balance have been reduced to zero and a Group II Trigger Event has
occurred and is continuing, or, if any of the Class AV-1 or Class MV-1
Certificates are still outstanding and as long as a Group II Trigger Event
has not occurred and is not continuing, the excess of (i) the sum of (A) the
Group II Class A Certificate Principal Balance (after taking into account
distributions of the Group II Class A Principal Distribution Amount on such
Distribution Date), (B) the Class MV-1 Certificate Principal Balance (after
taking into account distributions of the Group II Class MV-1 Principal
Distribution Amount on such Distribution Date) and (C) the Class MV-2
Certificate Principal Balance immediately prior to such Distribution Date
over (ii) the lesser of (A) 90.00% of the Stated Principal Balance of the
Group II Mortgage Loans on the preceding Due Date and (B) the Stated
Principal Balance of the Group II Mortgage Loans on the preceding Due Date
less approximately $890,000.
Group II Excess Cashflow: With respect to any Distribution Date,
------------------------
the aggregate remaining amounts constituting Group II Excess Cashflow for
such Distribution Date pursuant to Sections 4.04(b)(v) and 4.04(e)(v).
Group II Extra Principal Distribution: With respect to any
-------------------------------------
Distribution Date, the lesser of (i) the excess, if any, of the Group II
Specified Overcollateralization Amount for such Distribution Date over the
Group II Overcollateralization Amount for such Distribution Date (after
giving effect to distributions of principal on the Group II Certificates
other than any Group II Extra Principal Distribution Amount) and (ii) the sum
of the Group II Excess Cashflow and Group I Remainder Excess Cashflow for
such Distribution Date available therefor in the priority set forth in
Section 4.04.
Group II Interest Funds: With respect to Group II Mortgage Loans
-----------------------
and any Master Servicer Advance Date, the sum, without duplication, of
(i) all scheduled interest collected during the related Due Period with
respect to the Group II Mortgage Loans less the Servicing Fee, (ii) all
Advances relating to interest with respect to the Group II Mortgage Loans,
(iii) all Compensating Interest with respect to the Group II Mortgage Loans
and (iv) Liquidation Proceeds with respect to the Group II Mortgage Loans (to
the extent such Liquidation Proceeds relate to interest)less all
Nonrecoverable Advances relating to interest reimbursed during the related
Due Period.
Group II Mortgage Loans: The pool of Mortgage Loans identified in
-----------------------
the related Schedules of Mortgage Loans as having a Mortgage Rate which is
adjustable for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Group II Net Rate: The weighted average Net Mortgage Rate for
-----------------
Group II Mortgage Loans.
Group II Overcollateralization Amount: With respect to any
-------------------------------------
Distribution Date, the excess, if any, the Stated Principal Balance of the
Group II Mortgage Loans as of the preceding due date over the Certificate
Principal Balances of all Group II Certificates on such date (after taking
into account the payment of principal other than any Group II Extra Principal
Distribution Amount, on such Certificates on such Distribution Date).
Group II Principal Distribution Amount: With respect to each
--------------------------------------
Distribution Date, the sum of (i) the Group II Principal Funds for such
Distribution Date and (ii) any Group II Extra Principal Distribution Amount
for such Distribution Date.
Group II Principal Funds: With respect to the Group II Mortgage
------------------------
Loans, the sum, without duplication, of (i) the scheduled principal collected
during the related Due Period or Advanced on or before the related Master
Servicer Advance Date, (ii) prepayments collected in the related Prepayment
Period, (iii) the Stated Principal Balance of each Mortgage Loans that was
repurchased by the Seller or the Master Servicer, (iv) the amount, if any, by
which the aggregate unpaid principal balance of any Replacement Mortgage Loan
is less than the aggregate unpaid principal balance of the related Deleted
Mortgage Loans delivered by the Seller in connection with a substitution of a
Mortgage Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds
collected during the related Due Period (to the extent such Liquidation
Proceeds related to principal) less all Nonrecoverable Advances relating to
principal reimbursed during the related Due Period.
Group II Remainder Excess Cashflow: With respect to any
----------------------------------
Distribution Date, the Group II Excess Cashflow for such Distribution Date
remaining after the applications set forth in Section 4.04(g)(i) through
(vii).
Group II Specified Overcollateralization Amount: Prior to the Group
-----------------------------------------------
II Stepdown Date, 1.5% of the Stated Principal Balance of the Group II
Mortgage Loans as of the Cut-off Date, and on and after the Group II
Stepdown Date, 3.0% of the Stated Principal Balance of the Group II Mortgage
Loans as of the preceding Due Date, subject to a minimum of 0.50% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date; provided that, if on any Distribution Date a Group II Trigger Event has
occurred, the Group II Specified Overcollateralization Amount shall not be
reduced to the applicable percentage of the then current Stated Principal
Balance of the Group II Mortgage Loans until the Distribution Date on which a
Group II Trigger Event no longer exists.
Group II Stepdown Date: With respect to Group II Mortgage Loans,
----------------------
the later to occur of (i) the Distribution Date in March 2001 or (ii) the
first Distribution Date on which the Group II Class A Certificate Principal
Balance is less than or equal to 67.00% of the Stated Principal Balance of
Group II Mortgage Loans as of the preceding Due Date.
Group II Subordinated Certificates: The Class MV-1, MV-2 and
----------------------------------
Class BV Certificates.
Group II Trigger Event: With respect to any Distribution Date
----------------------
after the Group II Stepdown Date, (1) the product of (i) 2.5 times (ii) the
quotient of (A) the Stated Principal Balance of all Group I Mortgage Loans 60
or more days delinquent (including Group I Mortgage Loans in foreclosure and
REO Properties) and (B) the Stated Principal Balance of the Group I Mortgage
Loans as of the preceding Master Servicer Advance Date (2) equals or exceeds
the Required Percentage.
Index: As to any Group II Mortgage Loan on any Adjustment Date
-----
related thereto, the index for the adjustment of the Mortgage Rate set forth
as such in the related Mortgage Note, such index in general being either (i)
the average of the London interbank offered rates for six-month U.S. dollar
deposits in the London market, as set forth in The Wall Street Journal, or,
-----------------------
if the Index ceases to be published in The Wall Street Journal or becomes
-----------------------
unavailable for any reason, then the Index shall be a new index selected by
the Trustee, as holder of the Mortgage Note, based on comparable information
or (ii) is the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year, as made available by the Board
of Governors of the Federal Reserve System, in the case of both (i) and (ii)
above as most recently announced as of a date 45 days prior to such
Adjustment Date. The Master Servicer hereby agrees that should the Index
become unavailable, the Master Servicer, on behalf of the Trustee, will
select a new index that is based upon comparable information.
Initial Adjustment Date: As to any Group II Mortgage Loan, the
-----------------------
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the
-----------------------------------
aggregate of all amounts in respect of (i) principal of the Mortgage Loans
due on or after the Cut-off Date and received by the Master Servicer before
the Closing Date and not applied in computing the Cut-off Date Principal
Balance thereof and (ii) interest on the Mortgage Loans due on and after the
Cut-off Date and received by the Master Servicer before the Closing Date.
Initial Certificate Principal Balance: With respect to any
-------------------------------------
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
---------------------
in effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in
----------------
the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
------------------
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Master Servicer or the trustee under the deed of trust and
are not applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account,
in each case other than any amount included in such Insurance Proceeds in
respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
----------------
other insurance policy with respect to the Mortgage Loans.
Interest Determination Date: With respect to the Group II
---------------------------
Certificates for the first Accrual Period, February 25, 1998. With respect
to the Group II Certificates and any Accrual Period thereafter, the second
LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Rate Cap Agreement: The interest rate cap contract
---------------------------
referred to in the last paragraph of Section 8.11 and all related provisions
of this Agreement.
Latest Possible Maturity Date: The Distribution Date following the
-----------------------------
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of London,
------------------
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a
---------------
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as
provided by applicable law governing the real property subject to the related
Mortgage and any security agreements and as to which the Master Servicer has
certified (in accordance with Section 3.12) in the related Prepayment Period
that it has received all amounts it expects to receive in connection with
such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
--------------------
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Advances, Servicing Fees and
Servicing Advances.
Loan Group: Either of the Group I Mortgage Loans or the Group II
----------
Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
-------------------
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Master Servicer Advance Date: As to any Distribution Date, the
----------------------------
Business Day immediately preceding such Distribution Date.
Master Servicer: Countrywide Home Loans, Inc., a New York
---------------
corporation, and its successors and assigns, in its capacity as master
servicer hereunder.
Maximum Mortgage Rate: With respect to each Group II Mortgage
---------------------
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note.
Minimum Mortgage Rate: With respect to each Group II Mortgage
---------------------
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.
Monthly Statement: The statement delivered to the
-----------------
Certificateholders pursuant to Section 4.05.
Mortgage: The mortgage, deed of trust or other instrument creating
--------
a first lien on or first priority ownership interest, or creating a second
lien on or second priority ownership interest, as applicable, in an estate in
fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the Group I Mortgage Loans and Group II
--------------
Mortgage Loans transferred and assigned to the Trustee pursuant to the
provisions hereof as from time to time are held as a part of the Trust Fund
(including any REO Property), the mortgage loans so held being identified in
the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition
of title of the related Mortgaged Property. Any mortgage loan that was
intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason including, without limitation, a breach of the representation
contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan
hereunder until the Purchase Price with respect thereto has been paid to the
Trust Fund.
Mortgage Loan Repurchase Price: The price, calculated as set forth
------------------------------
in Section 9.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 9.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time
----------------------
to time amended by the Master Servicer to reflect the deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Exhibit F-1, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) (Reserved);
(iii) the Appraised Value;
(iv) the Initial Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio, as
applicable, at origination;
(xi) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(xii) a code indicating whether the residential dwelling is either
(a) a detached single family dwelling (b) a condominium unit or (c) a
two- to four-unit residential property;
(xiii) with respect to each Group II Mortgage Loan;
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin; and
(xiv) the purpose of the Mortgage Loan.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
-------------
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified in
-------------
the Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage
-------------
Note from time to time.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan.
Mortgagor: The obligors on a Mortgage Note.
---------
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the
-----------------
per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Non-Book-Entry Certificate: Any Certificate other than a Book
--------------------------
Entry Certificate.
Nonrecoverable Advance: Any portion of an Advance previously made
----------------------
or proposed to be made by the Master Servicer that, in the good faith
judgment of the Master Servicer, will not or, in the case of a current
delinquency, would not, be ultimately recoverable by the Master Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise.
Officer's Certificate: A certificate (i) signed by the Chairman
---------------------
of the Board, the Vice Chairman of the Board, the President, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the assistant treasurers or assistant secretaries of the
Depositor or the Master Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers
and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with a
particular subject) or (ii), if provided for in this Agreement, signed by a
Servicing Officer, as the case may be, and delivered to the Depositor, the
Seller and the Trustee, as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
---------------
determined by the Trustee on the related Interest Determination Date on the
basis of the rate for U.S. dollar deposits for one month that appears on
Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that the parties hereto acknowledge that One-
Month LIBOR calculated for the first Accrual Period shall equal 5.63281% per
annum. 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 One-Month LIBOR or comparable rates as may
be reasonably selected by the Trustee), One-Month LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained by the Trustee and no Reference Bank Rate is available, One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period.
Opinion of Counsel: A written opinion of counsel, who may be
------------------
counsel for the Depositor or the Master Servicer, reasonably acceptable to
each addressee of such opinion; provided that with respect to Section 6.04 or
10.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Depositor and the Master
Servicer, (ii) not have any direct financial interest in the Depositor or the
Master Servicer or in any affiliate of either, and (iii) not be connected
with the Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Optional Termination: The termination of either Loan Group created
--------------------
hereunder pursuant to the purchase of the related Mortgage Loans pursuant to
the last sentence of Section 9.01 hereof.
Optional Termination Date: With respect to either Loan Group, the
-------------------------
Distribution Date on which the Stated Principal Balance of the Mortgage Loans
in such Loan Group is equal to or less than 10% of the Stated Principal
Balance of the Mortgage Loans in such Loan Group as of the Cut-off Date.
Original Mortgage Loan: The mortgage loan refinanced in connection
----------------------
with the origination of a Refinancing Mortgage Loan.
Original Value: The value of the property underlying a Mortgage
--------------
Loan based, in the case of the purchase of the underlying Mortgaged Property,
on the lower of an appraisal satisfactory to the Master Servicer or the sales
price of such property or, in the case of a refinancing, on an appraisal
satisfactory to the Master Servicer.
OTS: The Office of Thrift Supervision.
---
Outstanding: With respect to the Certificates as of any date of
-----------
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
-------------------------
Loan with a Stated Principal Balance greater than zero that was not the
subject of a Principal Prepayment in full, and that did not become a
Liquidated Loan, prior to the end of the related Prepayment Period.
Ownership Interest: As to any Certificate, any ownership interest
------------------
in such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Percentage Interest: With respect to:
-------------------
(i) any Class, the percentage interest in the undivided
beneficial ownership interest in the related Certificate Group evidenced
by such Class which shall be equal to the Class Certificate Principal
Balance of such Class divided by the Class Principal Balance of all
Classes in such Certificate Group; and
(ii) any Certificate, the Percentage Interest evidenced thereby
of the related Class shall equal the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the Denominations
of all Certificates of such Class.
Periodic Rate Cap: As to each Group II Mortgage Loan and the
-----------------
related Mortgage Note, the provision therein that limits permissible
increases and decreases in the Mortgage Rate on any Adjustment Date to not
more than one and one-half percentage points.
Permitted Investments: At any time, any one or more of the
---------------------
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates, or such lower rating as will not result in the downgrading
or withdrawal of the ratings then assigned to the Certificates by each
such Rating Agency;
(iii) (Reserved);
(iv) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each such
Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency;
(v) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
long term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institution in
a holding company system, the commercial paper or long-term unsecured
debt obligations of such holding company, but only if Moody's is not a
Rating Agency) are then rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency for such securities,
or such lower ratings as will not result in the downgrading or withdrawal
of the rating then assigned to the Certificates by any such Rating Agency;
(vi) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any such Rating Agency;
(viii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency (except if the Rating
Agency is Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities), or such lower rating as will
not result in the downgrading or withdrawal of the rating then assigned
to the Certificates by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency;
(x) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable long term
rating by each such Rating Agency or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each such Rating Agency;
(xi) short term investment funds sponsored by any trust company
or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each such Rating Agency in their respective highest
applicable rating category or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency; and
(xii) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to each Rating
Agency as will not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any such Rating Agency, as
evidenced by a signed writing delivered by each such Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (vii) above);
provided further that no amount beneficially owned by any REMIC (including,
without limitation, any amounts collected by the Master Servicer but not yet
deposited in the Certificate Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Master Servicer shall receive an Opinion of Counsel, at
the expense of Master Servicer, to the effect that such investment will not
adversely affect the status of any such REMIC as a REMIC under the Code or
result in imposition of a tax on any such REMIC. Permitted Investments that
are subject to prepayment or call may not be purchased at a price in excess
of par.
Permitted Transferee: Any person other than (i) the United States,
--------------------
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in
section 521 of the Code) that is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) on any excess inclusions (as defined in section
860E(c)(1) of the Code) with respect to any Class R Certificate, (iv) rural
electric and telephone cooperatives described in section 1381(a)(2)(C) of the
Code, and (v) a Person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
or an estate whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within
the United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States trustees have authority to control all substantial
decisions of the trust, unless such Person has furnished the transferor and
the Trustee with a duly completed Internal Revenue Service Form 4224. The
terms "United States," "State" and "International Organization" shall have
the meanings set forth in section 7701 of the Code or successor provisions.
A corporation will not be treated as an instrumentality of the United States
or of any State or political subdivision thereof for these purposes if all of
its activities are subject to tax and, with the exception of the Federal Home
Loan Mortgage Corporation, a majority of its board of directors is not
selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Prepayment Assumption: The applicable rate of prepayment, as
---------------------
described in the Prospectus Supplement relating to the Certificates in a
Certificate Group.
Prepayment Interest Excess: With respect to any Distribution Date,
--------------------------
for each Mortgage Loan that was the subject of a Principal Prepayment during
the period from the second day through the fifteenth day of the month of such
Distribution Date, any payment of interest received in connection therewith
(net of any applicable Servicing Fee) representing interest accrued for any
portion of such month of receipt.
Prepayment Interest Shortfall: With respect to any Distribution
-----------------------------
Date, for each Mortgage Loan that was the subject of a partial Principal
Prepayment, a Principal Prepayment in full, or that became a Liquidated Loan
during the period from the sixteenth day of the month preceding such
Distribution Date through the first day of the month in which such
Distribution Date occurs, or in the case of the first Distribution Date, from
the Cut-off Date through and including the fifteenth day of the month of such
Distribution Date, (other than a Principal Prepayment in full resulting from
the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or
9.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of
a partial Principal Prepayment on the amount of such prepayment (or
liquidation proceeds) exceeds (ii) the amount of interest paid or collected
in connection with such Principal Prepayment or such liquidation proceeds.
Prepayment Period: As to any Distribution Date, the time period
-----------------
beginning with the opening of business on the sixteenth day of the calendar
month preceding the month in which such Distribution Date occurs (or, with
respect to the first Distribution Date, the period from the Cut-off Date) and
ending on the close of business on the fifteenth day of the month in which
such Distribution Date occurs.
Principal Prepayment: Any Mortgagor payment or other recovery of
--------------------
(or proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 3.12 and 9.01
hereof) that is received in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of
prepayment. Partial Principal Prepayments shall be applied by the Master
Servicer in accordance with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated February
---------------------
23, 1998 relating to the public offering of the Group I Certificates and the
Group II Certificates.
PUD: A Planned Unit Development.
---
Purchase Price: With respect to any Mortgage Loan (x) required to
--------------
be repurchased by the Seller or purchased by the Master Servicer, as
applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof or (2) the
Depositor pursuant to Section 2.04 hereof or (y) that the Master Servicer has
a right to purchase pursuant to Section 3.12 hereof, an amount equal to the
sum of (i) 100% of the unpaid principal balance (or, if such purchase or
repurchase, as the case may be, is effected by the Seller (and the Seller is
the Master Servicer) or by the Master Servicer, the Stated Principal Balance)
of the Mortgage Loan as of the date of such purchase and (ii) accrued
interest thereon at the applicable Mortgage Rate (or, if such purchase or
repurchase, as the case may be, is effected by the Seller (and the Seller is
the Master Servicer) or by the Master Servicer, at the Net Mortgage Rate)
from (a) the date through which interest was last paid by the Mortgagor (or,
if such purchase or repurchase, as the case may be, is effected by the Seller
(and the Seller is the Master Servicer) or by the Master Servicer, the date
through which interest was last advanced and not reimbursed by the Master
Servicer) to (b) the Due Date in the month in which the Purchase Price is to
be distributed to Certificateholders.
Rating Agency: Moody's Investors Service, Inc. ("Moody's"), and
-------------
Fitch IBCA, Inc. ("Fitch"). If any such organization or its successor is no
longer in existence, "Rating Agency" shall be a nationally recognized
statistical rating organization, or other comparable Person, designated by
the Depositor, notice of which designation shall be given to the Trustee.
References herein to a given rating category of a Rating Agency shall mean
such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Loan, an amount
-------------
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of such Liquidated Loan as of the date of such liquidation, minus
(ii) the Liquidation Proceeds, if any, received in connection with such
liquidation during the month in which such liquidation occurs, to the extent
applied as recoveries of principal of the Liquidated Loan. With respect to
each Mortgage Loan that has become the subject of a Deficient Valuation, (a)
if the value of the related Mortgaged Property was reduced below the
principal balance of the related Mortgage Note, the amount by which the value
of the Mortgaged Property was reduced below the principal balance of the
related Mortgage Note, (b) if the principal amount due under the related
Mortgage Note has been reduced, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the principal balance of the Mortgage Loan as reduced by the
Deficient Valuation plus any reduction in the interest component of the
Scheduled Payments. With respect to each Mortgage Loan that has become the
subject of a Debt Service Reduction and any Distribution Date, the amount, if
any, by which the related Scheduled Payment was reduced.
Record Date: With respect to any Distribution Date, the close of
-----------
business on the last Business Day of the month preceding the month in which
the applicable Distribution Date occurs.
Reference Bank Rate: With respect to any Accrual Period, the
-------------------
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple
of 0.03125%) of the offered rates for United States dollar deposits for one
month that are quoted by the Reference Banks as of 11:00 a.m., New York City
time, on the related Interest Determination Date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the outstanding balance of the Group II Certificates on such Interest
Determination Date, 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 (rounded upwards, if necessary, to the nearest
whole multiple of 0.03125%) of the rates quoted by one or more major banks in
New York City, selected by 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 balance of the
Group II Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Bankers Trust and NatWest,
---------------
N.A., provided that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks selected by the Trustee which are
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor or any affiliate thereof and (iii) which have been
designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
-------------------------
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Group I Certificates and the
-------------------
Group II Certificates.
REO Property: A Mortgaged Property acquired by the Master Servicer
------------
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the
-------------------------
Seller for a Deleted Mortgage Loan, which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the
form of Exhibit N, (i) have a Stated Principal Balance, after deduction of
the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not less than 90% of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) with respect to any Group I
Mortgage Loan, have a Mortgage Rate not less than or no more than 1% per
annum higher than the Mortgage Rate of the Deleted Mortgage Loan and, with
respect to any Group II Mortgage Loan: (a) have a Maximum Mortgage Rate no
more than 1% per annum higher or lower than the Maximum Mortgage Rate of the
Deleted Mortgage Loan; (b) have a Minimum Mortgage Rate no more than 1% per
annum higher or lower than the Minimum Mortgage Rate of the Deleted Mortgage
Loan; (c) have the same Index and Periodic Rate Cap as that of the Deleted
Mortgage Loan and a Gross Margin not more than 1% per annum higher or lower
than that of the Deleted Mortgage Loan; and (d) not permit conversion of the
related Mortgage Rate to a fixed Mortgage Rate; (iii) have the same or higher
credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) be accruing interest at a rate not more than 1% per annum higher or
lower than that of the Deleted Mortgage Loan; (v) have a Loan-to-Value Ratio
or Combined Loan-to-Value Ratio, as applicable, no higher than that of the
Deleted Mortgage Loan; (vi) have a remaining term to maturity no greater than
(and not more than one year less than) that of the Deleted Mortgage Loan;
(vii) not permit conversion of the Mortgage Rate from a fixed rate to a
variable rate or visa versa; (viii) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the
Deleted Mortgage Loan; (ix) have the same lien priority as the Deleted
Mortgage Loan; (x) constitute the same occupancy type as the Deleted Mortgage
Loan; and (xi) comply with each representation and warranty set forth in
Section 2.03 hereof.
Request for Release: The Request for Release submitted by the
-------------------
Master Servicer to the Trustee, substantially in the form of Exhibits M and
N, as appropriate.
Required Carryover Reserve Fund Deposit: With respect to any
---------------------------------------
Distribution Date, an amount equal to the lesser of (i) the Adjustable Rate
Certificate Carryover for such Distribution Date and (ii) (A) for the first
Distribution Date, $10,000 and (B) for each Distribution Date thereafter, an
amount that when added to other amounts already on deposit in the Carryover
Reserve Fund, the aggregate amount on deposit therein is equal to $10,000.
Required Percentage: With respect to: (i) the Group I Trigger Event
-------------------
and any Distribution Date after the Group I Stepdown Date, is equal to the
quotient of (x) the excess of (I) the Stated Principal Balance of the Group I
Mortgage Loans as of the preceding Due Date over (II) the Certificate
Principal Balance of the most senior Class of the Group I Certificates
outstanding as of the preceding Master Servicer Advance Date (provided that
the Certificate Principal Balance of the most senior Class of Group I
Certificates shall mean the Group I Class A Certificate Principal Balance
until such principal balance is reduced to zero) and (y) the Certificate
Principal Balance of the most senior Class of the Group I Certificates
outstanding (provided that the Certificate Principal Balance of the most
senior Class of Group I Certificates shall mean the Group I Class A
Certificate Balance until such principal balance is reduced to zero); and
(ii) the Group II Trigger Event and any Distribution Date after the Group II
Stepdown Date, is equal to the quotient of (x) the excess of (I) the Stated
Principal Balance of the Group II Mortgage Loans as of as of the preceding
Due Date over (II) the Certificate Principal Balance of the most senior Class
of the Group II Certificates outstanding as of the preceding Master Servicer
Advance Date and (y) the Certificate Principal Balance of the most senior
Class of Group II Certificates outstanding.
Required Insurance Policy: With respect to any Mortgage Loan, any
-------------------------
insurance policy that is required to be maintained from time to time under
this Agreement.
Responsible Officer: When used with respect to the Trustee, any
-------------------
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Scheduled Payment: The scheduled monthly payment on a Mortgage
-----------------
Loan due on any Due Date allocable to principal and/or interest on such
Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
--------------
Seller: Countrywide Home Loans, Inc., a New York corporation, and
------
its successors and assigns, in its capacity as seller of the Mortgage Loans
to the Depositor.
Servicing Advances: All customary, reasonable and necessary "out
------------------
of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations hereunder, including, but not limited
to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
-------------
an amount equal to one month's interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan or, in the event of any
payment of interest that accompanies a Principal Prepayment in full made by
the Mortgagor, interest at the Servicing Fee Rate on the Stated Principal
Balance of such Mortgage Loan for the period covered by such payment of
interest.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
------------------
annum.
Servicing Officer: Any officer of the Master Servicer involved in,
-----------------
or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
Stated Principal Balance: With respect to any Mortgage Loan or
------------------------
related REO Property (i) as of the Cut-off Date and each day thereafter to
and including the first Distribution Date, the Cut-off Date Principal Balance
thereof, and (ii) as of any Distribution Date after the first Distribution
Date, such Cut-off Date Principal Balance minus the sum of (a) the principal
portion of the Scheduled Payments (x) due with respect to such Mortgage Loan
during each Due Period ending prior to the immediately preceding Distribution
Date and (y) that were received by the Master Servicer as of the close of
business on the Determination Date related to such preceding Distribution
Date or with respect to which Advances were made on each Master Servicer
Advance Date prior to such preceding Distribution Date and (b) all Principal
Prepayments with respect to such Mortgage Loan received prior to the
preceding Prepayment Period, and all Liquidation Proceeds to the extent
applied by the Master Servicer as recoveries of principal in accordance with
Section 3.12 with respect to such Mortgage Loan, that were received by the
Master Servicer as of the close of business on the Determination Date related
to such preceding Distribution Date. The Stated Principal Balance of any
Mortgage Loan immediately following a given Distribution Date shall be deemed
to equal the Stated Principal Balance of such Mortgage Loan as of the
immediately following Distribution Date, and, in particular, the Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated Loan will be
zero immediately following the Distribution Date following the Prepayment
Period in which such Mortgage Loan becomes a Liquidated Loan. References
herein to the Stated Principal Balance of a Loan Group at any time shall mean
the aggregate Stated Principal Balance of all Mortgage Loans in such Loan
Group at such time.
Subservicer: As defined in Section 3.02(a).
-----------
Subservicing Agreement: As defined in Section 3.02(c).
----------------------
Substitution Adjustment Amount: The meaning ascribed to such term
------------------------------
pursuant to Section 2.03(c).
Substitution Amount: With respect to any Mortgage Loan substituted
-------------------
pursuant to Section 2.03(c), the excess of (x) the principal balance of the
Mortgage Loan that is substituted for, over (y) the principal balance of the
related substitute Mortgage Loan, each balance being determined as of the
date of substitution.
Tax Matters Person: The person designated as "tax matters person"
------------------
in the manner provided under Treasury regulation Section 1.860F-4(d) and
temporary Treasury regulation Section 301.6231(a)(7)-1T. Initially, this
person shall be the Trustee.
Tax Matters Person Class R Certificate: A Class R Certificate
--------------------------------------
designated as the Tax Matters Person Class R Certificate and evidencing
0.001% Percentage Interest of the Class R Certificates.
Transfer: Any direct or indirect transfer or sale of any Ownership
--------
Interest in a Certificate.
Trust Fund: The corpus of the trust created hereunder consisting
----------
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto on and after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest
not required to be deposited in the Certificate Account pursuant to
Section 3.05(b)(ii); (ii) the Certificate Account, the Distribution Account
and the Carryover Reserve Fund and all amounts deposited therein pursuant to
the applicable provisions of this Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loan; and (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property.
Trustee: The Bank of New York, a New York banking corporation, not
-------
in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from
or surviving any consolidation or merger to which it or its successors may be
a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.
2/28 Mortgage Loan: A Mortgage Loan having a Mortgage Rate that
------------------
is fixed for 24 months after origination thereof before such Mortgage Rate
becomes subject to adjustment.
Voting Rights: The portion of the voting rights of all the
-------------
Certificates that is allocated to any Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Group I Certificates and Group II Certificates
(other than the Class B-IO Certificates), and 5% to the Class B-IO
Certificates and the Class R Certificates, with the allocation among the
Group I Certificates and Group II Certificates to be in proportion to the
Class Certificate Principal Balance of each Class relative to the
Class Certificate Principal Balance of all other such Classes, and with the
allocation among the Class BF-IO, Class BV-IO and Class R Certificates being
two-fifths, two fifths and one fifth, respectively. Voting Rights will be
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
Weighted Maximum Rate Cap: As of any Distribution Date, a rate
-------------------------
equal to (i) the weighted average of the Maximum Mortgage Rates on the
Group II Mortgage Loans on such Distribution Date minus (ii) the Servicing
Fee Rate.
SECTION 1.02. Certain REMIC-Related Defined Terms.
-----------------------------------
In addition to those defined terms defined in Section 1.01,
whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Class R-1 Interest: The uncertificated residual interest in REMIC
------------------
1.
Class R-2 Interest: The uncertificated residual interest in REMIC
------------------
2.
Class R-3 Interest: The uncertificated residual interest in REMIC
------------------
3.
Class R-4 Interest: The uncertificated residual interest in REMIC
------------------
4.
Class T1-F1 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 98% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group I Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-F2 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group I Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-F3 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group I Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-V1 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 98% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-V2 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-V3 Interest: A regular interest in REMIC 1 that is held
--------------------
as an asset of REMIC 2, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T2-F1 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 98% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group I Net Rate,
and has such other terms as are described in Section 4.06.
Class T2-F2 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the lesser of 7.58%
and the Group I Net Rate, and has such other terms as are described in
Section 4.06.
Class T2-F3 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group I Net Rate,
and has such other terms as are described in Section 4.06.
Class T2-F4 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that is entitled to 100% of the interest accruals on
the Class T1-F2 Interest in excess of interest accruals at a rate of 7.58%,
and that has such other terms as are described in Section 4.06. The Class
T2-F4 interest shall not have a principal balance.
Class T2-V1 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 98% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T2-V2 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Class BV Pass-
Through Rate, and that has such other terms as are described in Section 4.06.
Class T2-V3 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that has an initial principal balance equal to 1% of
the Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T2-V4 Interest: A regular interest in REMIC 2 that is held
--------------------
as an asset of REMIC 3, that is entitled to 100% of the interest accruals on
the Class T1-V2 Interest in excess of interest accruals at the Class BV Pass-
Through Rate, and that has such other terms as are described in Section 4.06.
The Class T2-F4 interest shall not have a principal balance.
Class T3-F1 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $31,920,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F2 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $22,000,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F3 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $10,000,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F4 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $10,000,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F5 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $4,200,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F6 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $2,940,000, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F7 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4, that has an initial principal balance of $2,956,603, that
bears interest at a rate equal to the lesser of 7.58% and the Group I Net
Rate, and that has such other terms as are described in Section 4.06.
Class T3-F8 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-F8 Distributable Amount: With respect to any Distribution
--------------------------------
Date, an amount equal to the product of (i) a fraction, the numerator of
which is the number of days in the related Accrual Period and the denominator
of which is 360, (ii) the Class T3-F8 Notional Balance immediately before
such distribution date, and (iii) the Class T3-F8 Pass-Through Rate.
Class T3-F8 Notional Balance: A notional principal balance equal
----------------------------
as of any date to the sum of the principal balances of the Class T2-F1 and
T2-F3 interests for such date.
Class T3-F8 Pass-Through Rate: With respect to any Distribution
-----------------------------
Date, a per annum rate equal to (i) the excess of the Group I Net Rate for
such date over (ii) the product of two and a fraction, the numerator of which
is the product of (x) 7.58% and (y) the principal balance of the Class T2-F2
Interest immediately prior to such Distribution Date, and the denominator of
which is the sum of the principal balances of the Class T2-F2 and T2-F3
Interests immediately before such Distribution Date.
Class T3-F9 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-F9 Distributable Amount: With respect to any Distribution
--------------------------------
Date, an amount equal to the product of (i) a fraction, the numerator of
which is the number of days in the related Accrual Period and the denominator
of which is 360, (ii) the Class T3-F9 Notional Balance immediately before
such Distribution Date, and (iii) the Class T3-F9 Pass-Through Rate.
Class T3-F9 Notional Balance: A notional principal balance equal
----------------------------
as of any date to the principal balance of the Class T2-F2 interest for such
date.
Class T3-F9 Pass-Through Rate: With respect to any Distribution
-----------------------------
Date, a per annum rate equal to (i) the excess of the 7.58% over (ii) the
product of two and a fraction, the numerator of which is the product of (x)
7.58% and (y) the Class T2-F2 Interest immediately prior to such Distribution
Date, and the denominator of which is the sum of the principal balances of
the Class T2-F2 and T2-F3 Interests immediately before such Distribution
Date.
Class T3-F10 Interest: A regular interest in REMIC 3 held as an
---------------------
asset of REMIC 4 that is entitled to receive 100% of the amounts
distributable with respect to the Class T2-F4 Interest, and has such terms as
are described in Section 4.06.
Class T3-V1 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has an initial principal balance of $151,300,000 and
bears interest at a rate equal to the Class BV Pass-Through Rate.
Class T3-V2 Interest: A regular interest in REMIC 3 held as an
---------------------
asset of REMIC 4 that has an initial principal balance of $10,680,000 bears
interest at a rate equal to the Class BV Pass-Through Rate.
Class T3-V3 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has an initial principal balance of $9,790,000 and
bears interest at a rate equal to the Class BV Pass-Through Rate.
Class T3-V4 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has an initial principal balance of $6,267,734 and
bears interest at a rate equal to the Class BV Pass-Through Rate.
Class T3-V5 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-V5 Distributable Amount: With respect to any Distribution
--------------------------------
Date, an amount equal to the product of (i) a fraction, the numerator of
which is the number of days in the related Accrual Period and the denominator
of which is 360, (ii) the Class T3-V5 Notional Balance, and (iii) the Class
T3-V5 Pass-Through Rate.
Class T3-V5 Notional Balance: A notional principal balance equal
----------------------------
as of any date to the sum of the principal balances of the Class T2-V1 and
T2-V3 Interests for such date.
Class T3-V5 Pass-Through Rate: With respect to any Distribution
-----------------------------
Date, a per annum rate equal to the excess of (i) the Group II Net Rate for
such date over (ii) the product of two and a fraction, the numerator of which
is the product of (x) the Class BV Pass-Through Rate and (y) the principal
balance of the Class T2-V2 Interest immediately prior to such Distribution
Date, and the denominator of which is the sum of the principal balances of
the Class T2-V1 and Class T2-V3 Interests immediately prior to such
Distribution Date.
Class T3-V6 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-V6 Distributable Amount: With respect to any Distribution
--------------------------------
Date, an amount equal to the product of (i) a fraction, the numerator of
which is the number of days in the related Accrual Period and the denominator
of which is 360, (ii) the Class T3-V6 Notional Balance, and (iii) the Class
T3-V6 Pass-Through Rate.
Class T3-V6 Notional Balance: A notional principal balance equal
----------------------------
as of any date to the principal balance of the Class T2-V2 Interests for such
date.
Class T3-V6 Pass-Through Rate: With respect to any Distribution
-----------------------------
Date, a per annum rate equal to the excess of (i) the Class BV Pass-Through
Rate for such date over (ii) the product of (x) two and (y) a fraction, the
numerator of which is the product of the Class BV Pass-Through Rate, and the
denominator of which is the sum of the principal balances of the Class T2-V2
and Class T2-V3 Interests immediately prior to such Distribution Date.
Class T3-V7 Interest: A regular interest in REMIC 3 held as an
--------------------
asset of REMIC 4 that is entitled to receive 100% of the amounts
distributable with respect to the Class T2-V4 Interest, and has such terms as
are described in Section 4.06.
Class T4-F1 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $31,920,000 and bears interest at 6.45%.
Ownership of the Class T4-F1 Interest is evidenced by the Class AF-1
Certificates.
Class T4-F2 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $22,000,000 and bears interest at 6.27%.
Ownership of the Class T4-F2 Interest is evidenced by the Class AF-2
Certificates.
Class T4-F3 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $10,000,000 and bears interest at 6.79%.
Ownership of the Class T4-F3 Interest is evidenced by the Class AF-3
Certificates.
Class T4-F4 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $10,000,000 and bears interest at 6.39%.
Ownership of the Class T4-F4 Interest is evidenced by the Class AF-4
Certificates.
Class T4-F5 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $4,200,000 and bears interest at 6.97%.
Ownership of the Class T4-F5 Interest is evidenced by the Class MF-1
Certificates.
Class T4-F6 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $2,940,000 and bears interest at 7.24%.
Ownership of the Class T4-F6 Interest is evidenced by the Class MF-2
Certificates.
Class T4-F7 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $2,956,603 and bears interest at the lesser of
7.58% and the Group I Net Rate, Ownership of the Class T4-F6 Interest is
evidenced by the Class MF-2 Certificates.
Class T4-F8 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the interest accruals on the Class T3-F1 Interest in
excess of the Class AF-1 Certificate Pass-Through Rate. Ownership of the
Class T4-F8 Interest is represented by the Class BF-IO Certificates.
Class T4-F9 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the interest accruals on the Class T3-F2 Interest in
excess of the Class AF-2 Certificate Pass-Through Rate. Ownership of the
Class T4-F9 Interest is evidenced by the Class BF-IO Certificates.
Class T4-F10 Interest: A regular interest in REMIC 4 that is
---------------------
entitled to 100% of the interest accruals on the Class T3-F3 Interest in
excess of the Class AF-3 Certificate Pass-Through Rate. Ownership of the
Class T4-F10 Interest is evidenced by the Class BF-IO Certificates.
Class T4-F11 Interest: A regular interest in REMIC 4 that is
---------------------
entitled to 100% of the interest accruals on the Class T3-F4 Interest in
excess of the Class AF-4 Certificate Pass-Through Rate. Ownership of the
Class T4-F11 Interest is evidenced by the Class BF-IO Certificates.
Class T4-F12 Interest: A regular interest in REMIC 4 that is
---------------------
entitled to 100% of the interest accruals on the Class T3-F5 Interest in
excess of the Class MF-1 Certificate Pass-Through Rate. Ownership of the
Class T4-F11 Interest is evidenced by the Class BF-IO Certificates.
Class T4-F13 Interest: A regular interest in REMIC 4 that is
---------------------
entitled to 100% of the interest accruals on the Class T3-F6 Interest in
excess of the Class MF-2 Certificate Rate. Ownership of the Class T4-F11
Interest is evidenced by the Class BF-IO Certificates.
Class T4-F14 Interest: A regular interest in REMIC 4 that is
---------------------
entitled to 100% of the amounts distributable on the Class T3-F8, Class T3-
F9, and Class T3-F10 Interests.
Class T4-V1 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $151,300,000 and that bears interest at the
Class AV-1 Pass-Through Rate. Ownership of the Class T4-V1 Interest is
evidenced by the Class AV-1 Certificates.
Class T4-V2 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $10,680,000 and that bears interest at the Class
MV-1 Pass-Through Rate. Ownership of the Class T4-V2 Interest is evidenced
by the Class MV-1 Certificates.
Class T4-V3 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $9,790,000 and that bears interest at the Class
MV-2 Pass-Through Rate. Ownership of the Class T4-V3 Interest is evidenced
by the Class MV-2 Certificates.
Class T4-V4 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $6,267,734 and that bears interest at the Class
BV Pass-Through Rate. Ownership of the Class T4-V4 Interest is evidenced by
the Class BV Certificates.
Class T4-V5 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the interest accruals on the Class T3-V1 Interest in
excess of the Class AV-1 Pass-Through Rate. Ownership of the Class T4-V5
Interest is evidenced by the Class BV-IO Certificates.
Class T4-V6 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the interest accruals on the Class T3-V2 Interest in
excess of the Class MV-1 Pass-Through Rate. Ownership of the Class T4-V6
Interest is evidenced by the Class BV-IO Certificates.
Class T4-V7 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the interest accruals on the Class T3-V3 Interest in
excess of the Class MV-2 Pass-Through Rate. Ownership of the Class T4-V6
Interest is evidenced by the Class BV-IO Certificates.
Class T4-V8 Interest: A regular interest in REMIC 4 that is
--------------------
entitled to 100% of the amounts distributable with respect to the Class T3-
V5, Class T3-V6, and Class T3-V7 Interests.
Group I Adjusted Overcollateralization Amount: For any
---------------------------------------------
Distribution Date, the excess of (a) the Stated Principal Balance of the
Group I Mortgage Loans as of the preceding Due Date over (b) the aggregate
principal balance of the Class T3-F1, Class T3-F2, Class T3-F-3, Class T3-F4,
Class T3-F5, Class T3-F6, and the Class T3-F7 Interests.
Group I Adjusted Overcollateralization Release Amount: For any
-----------------------------------------------------
Distribution Date, the lesser of (a) the Group I Principal Distribution
Amount, and (b) the amount, if any, by which the Group I Adjusted
Overcollateralization Amount exceeds the Group I Specified
Overcollateralization Amount.
Group II Adjusted Overcollateralization Amount: For any
----------------------------------------------
Distribution Date, the excess of (c) the Stated Principal Balance of the
Group II Mortgage Loans as of the preceding Due Date over (d) the aggregate
principal balance of the Class T3-V1, Class T3-V2, Class T3-V3, and the Class
T3-V4 Interests.
Group II Adjusted Overcollateralization Release Amount: For any
------------------------------------------------------
Distribution Date, the lesser of the (a) the Group II Principal Distribution
Amount, and (b) the amount, if any, by which the Group II Adjusted
Overcollateralization Amount exceeds the Group II Specified
Overcollateralization Amount.
REMIC: As described in the Preliminary Statements, which term
-----
shall mean "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC 1: As described in the Preliminary Statement.
-------
REMIC 2: As described in the Preliminary Statement.
-------
REMIC 3: As described in the Preliminary Statement.
-------
REMIC 4: As described in the Preliminary Statement.
-------
REMIC 1 Regular Interests: As described in the Preliminary
-------------------------
Statement.
REMIC 2 Regular Interests: As described in the Preliminary
-------------------------
Statement.
REMIC 3 Regular Interests: As described in the Preliminary
-------------------------
Statement.
REMIC 4 Regular Interests: As described in the Preliminary
-------------------------
Statement.
REMIC Provisions: Provisions of the federal income tax law
----------------
relating to real estate mortgage investment conduits, which appear at
sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and
related provisions, and proposed, temporary and final regulations and
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time as well as provisions of
applicable state laws.
Upper Tier REMIC: As described in the Preliminary Statement.
----------------
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
----------------------------
The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title
and interest of the Seller in and to the Mortgage Loans, including all
interest and principal received and receivable by the Seller on or with
respect to the Mortgage Loans on and after the Cut-off Date (to the extent
not applied in computing the Cut-off Date Principal Balance thereof) or
deposited into the Certificate Account by the Seller as an Initial
Certificate Account Deposit as provided in this Agreement, other than
principal due on the Mortgage Loans prior to the Cut-off Date and interest
accruing prior to February 1, 1998. The Seller confirms that, concurrently
with such transfer and assignment, it has deposited into the Certificate
Account the Initial Certificate Account Deposit.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse,
all the right, title and interest of the Depositor in and to the Trust Fund.
In connection with any such transfer and assignment, the Depositor
has delivered to, and deposited with, the Trustee (or, in the case of the
Delay Delivery Mortgage Loans, will deliver to, and deposit with, the Trustee
within seven (7) Business Days following the Closing Date) (except as
provided in clause (vi) below) for the benefit of the Certificateholders, the
following documents or instruments with respect to each Mortgage Loan so
assigned:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse, in the following
form: "Pay to the order of ____________________ without recourse", with
all intervening endorsements that show a complete chain of endorsement
from the originator to the Seller;
(ii) original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage to "The Bank of New
York, a New York banking corporation, as trustee under the Pooling and
Servicing Agreement dated as of February 20, 1998, CWABS, Inc., Asset-
Backed Certificates, Series 1998-1, without recourse" (each such
assignment, when duly and validly completed, to be in recordable form
and sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such
Mortgage;
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy and
all riders thereto or, in the event such original title policy has not
been received from the insurer, such original or duplicate original
lender's title policy and all riders thereto shall be delivered within
one year of the Closing Date.
In the event that in connection with any Mortgage Loan the Seller
cannot deliver the original recorded Mortgage or all interim recorded
assignments of the Mortgage satisfying the requirements of clause (ii), (iii)
or (iv) concurrently with the execution and delivery hereof, the Seller shall
deliver or cause to be delivered to the Trustee a true copy of such Mortgage
and of each such undelivered interim assignment of the Mortgage each
certified by the Seller, the applicable title company, escrow agent or
attorney, or the originator of such Mortgage, as the case may be, to be a
true and complete copy of the original Mortgage or assignment of Mortgage
submitted for recording. The Seller shall promptly deliver or cause to be
delivered to the Trustee such original Mortgage and such assignment or
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery be made later than 270 days following the Closing Date; provided
that in the event that by such date the Seller is unable to deliver or cause
to be delivered each Mortgage and each interim assignment by reason of the
fact that any such documents have not been returned by the appropriate
recording office, or, in the case of each interim assignment, because the
related Mortgage has not been returned by the appropriate recording office,
the Seller shall deliver or cause to be delivered such documents to the
Trustee as promptly as possible upon receipt thereof. If the public
recording office in which a Mortgage or interim assignment thereof is
recorded retains the original of such Mortgage or assignment, a copy of the
original Mortgage or assignment so retained, with evidence of recording
thereon, certified to be true and complete by such recording office, shall
satisfy the Seller's obligations in this Section 2.01. If any document
submitted for recording pursuant to this Agreement is (a) lost prior to
recording or rejected by the applicable recording office, the Seller shall
immediately prepare or cause to be prepared a substitute and submit it for
recording, and shall deliver copies and originals thereof in accordance with
the foregoing or (b) lost after recording, the Seller shall deliver to the
Trustee a copy of such document certified by the applicable public recording
office to be a true and complete copy of the original recorded document. The
Seller shall promptly forward or cause to be forwarded to the Trustee
(a) from time to time additional original documents evidencing an assumption
or modification of a Mortgage Loan and (b) any other documents required to be
delivered by the Depositor or the Master Servicer to the Trustee within the
time periods specified in this Section 2.01.
With respect to each Mortgage Loan as to which the related
Mortgaged Property and Mortgage File are located in (a) the State of
California or (b) any other jurisdiction under the laws of which the
recordation of the assignment specified in clause (iii) above is not
necessary to protect the Trustee's and the Certificateholders, interest in
the related Mortgage Loan, as evidenced by an Opinion of Counsel, delivered
by the Seller to the Trustee and a copy to the Rating Agencies, in lieu of
recording the assignment specified in clause (iii) above, the Seller may
deliver an unrecorded assignment in blank, in form otherwise suitable for
recording to the Trustee; provided that if the related Mortgage has not been
returned from the applicable public recording office, such assignment, or any
copy thereof, of the Mortgage may exclude the information to be provided by
the recording office. As to any Mortgage Loan, the procedures of the
preceding sentence shall be applicable only so long as the related Mortgage
File is maintained in the possession of the Trustee in the State or
jurisdiction described in such sentence. In the event that (i) the Seller,
the Depositor or the Master Servicer gives written notice to the Trustee that
recording is required to protect the right, title and interest of the Trustee
on behalf of the Certificateholders in and to any Mortgage Loan, (ii) a court
recharacterizes the sale of the Mortgage Loans as a financing, or (iii) as a
result of any change in or amendment to the laws of the State or jurisdiction
described in the first sentence of this paragraph or any applicable political
subdivision thereof, or any change in official position regarding application
or interpretation of such laws, including a holding by a court of competent
jurisdiction, such recording is so required, the Trustee shall complete the
assignment in the manner specified in clause (iii) of the second paragraph of
this Section 2.01 and the Seller shall submit or cause to be submitted for
recording as specified above or, should the Seller fail to perform such
obligations, the Trustee shall cause the Master Servicer, at the Master
Servicer's expense, to cause each such previously unrecorded assignment to be
submitted for recording as specified above. In the event a Mortgage File is
released to the Master Servicer as a result of the Master Servicer's having
completed a Request for Release in the form of Exhibit M, the Trustee shall
complete the assignment of the related Mortgage in the manner specified in
clause (iii) of the second paragraph of this Section 2.01.
So long as the Trustee maintains an office in the State of
California, the Trustee shall maintain possession of and not remove or
attempt to remove from the State of California any of the Mortgage Files as
to which the related Mortgaged Property is located in such State. In the
event that the Seller fails to record an assignment of a Mortgage Loan as
herein provided within 90 days of notice of an event set forth in clause (i),
(ii) or (iii) of the above paragraph, the Master Servicer shall prepare and,
if required hereunder, file such assignments for recordation in the
appropriate real property or other records office. The Seller hereby
appoints the Master Servicer (and any successor servicer hereunder) as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date and the Cut-off Date, the
Seller shall deposit or cause to be deposited in the Certificate Account the
amount required to be deposited therein with respect to such payment pursuant
to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement, within
seven Business Days after the Closing Date, the Seller shall either
(i) deliver to the Trustee the Mortgage File as required pursuant to this
Section 2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase the
Delay Delivery Mortgage Loan or (B) substitute the Delay Delivery Mortgage
Loan for a Replacement Mortgage Loan, which repurchase or substitution shall
be accomplished in the manner and subject to the conditions set forth in
Section 2.03, provided that if the Seller fails to deliver a Mortgage File
for any Delay Delivery Mortgage Loan within the period provided in the prior
sentence, the cure period provided for in Section 2.02 or in Section 2.03
shall not apply to the initial delivery of the Mortgage File for such Delay
Delivery Mortgage Loan, but rather the Seller shall have 5 Business Days to
cure such failure to deliver. Upon delivery of the Mortgage File for each
Delay Delivery Mortgage Loan, the Trustee shall send an Initial Certification
for such Delay Delivery Mortgage Loan in accordance with the provisions of
Section 2.02.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
-------------------------------------------
The Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the
form annexed hereto as Exhibit G-1 and in the list of exceptions attached
thereto, of the documents referred to in clauses (i) and (iii) of
Section 2.01 above and all other assets included in the Trust Fund and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will
hold such other assets included in the Trust Fund, in trust for the exclusive
use and benefit of all present and future Certificateholders.
The Trustee agrees to execute and deliver on the Closing Date to
the Depositor, the Master Servicer and the Seller an Initial Certification in
the form annexed hereto as Exhibit G-1 to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), the documents described
in Section 2.01(i) and (iii) with respect to such Mortgage Loan are in its
possession, and based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and relate
to such Mortgage Loan. The Trustee agrees to execute and deliver within 30
days after the Closing Date to the Depositor, the Master Servicer and the
Seller an Interim Certification in the form annexed hereto as Exhibit G-2 to
the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), all documents required to be delivered to it pursuant to this
Agreement with respect to such Mortgage Loan are in its possession (except
those described in Section 2.01(v)) and based on its review and examination
and only as to the foregoing documents, (i) such documents appear regular on
their face and relate to such Mortgage Loan, and (ii) the information set
forth in items (i), (iv), (v), (vi), (viii) and (xiii) of the definition of
the "Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File. The Trustee shall be under no duty or obligation to inspect,
review or examine such documents, instruments, certificates or other papers
to determine that the same are genuine, enforceable or appropriate for the
represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and the Seller (and to any
Certificateholder that so requests) a Final Certification in the form annexed
hereto as Exhibit H, with any applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Trustee shall review each Mortgage File to determine
that it contains the following documents:
(i) the original Mortgage Note, endorsed by the Seller or
the originator of such Mortgage Loan, without recourse, in the
following form: "Pay to the order of _______________ without
recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form
permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such
Mortgage;
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
and
(vi) the original or duplicate original lender's title
policy and all riders thereto if delivered pursuant to Section 2.06
(vi) (otherwise such original or duplicate original lender's title
policy and all riders thereto shall be held in the Mortgage File
upon delivery as provided in such Section).
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include
such exceptions in such Final Certification (and Trustee shall state in such
Final Certification whether any Mortgage File does not then include the
original or duplicate original lender's title policy and all riders thereto).
If the public recording office in which a Mortgage or assignment thereof is
recorded retains the original of such Mortgage or assignment, a copy of the
original Mortgage or assignment so retained, with evidence of recording
thereon, certified to be true and complete by such recording office, shall be
deemed to satisfy the requirements of clause (ii), (iii) or (iv) above, as
applicable. The Seller shall promptly correct or cure such defect referred
to above within 90 days from the date it was so notified of such defect and,
if the Seller does not correct or cure such defect within such period, the
Seller shall either (a) if the time to cure such defect expires prior to the
end of the second anniversary of the Closing Date, substitute for the related
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in
Section 2.03, or (b) purchase such Mortgage Loan from the Trustee within 90
days from the date the Seller was notified of such defect in writing at the
Purchase Price of such Mortgage Loan; provided that any such substitution
pursuant to (a) above or repurchase pursuant to (b) above shall not be
effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05 hereof and any substitution pursuant to (a) above
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit N. No substitution
will be made in any calendar month after the Determination Date for such
month. The Purchase Price for any such Mortgage Loan shall be deposited by
the Seller in the Certificate Account and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit N hereto, the
Trustee shall release the related Mortgage File to the Seller and shall
execute and deliver at the Seller's request such instruments of transfer or
assignment as the Seller has prepared, in each case without recourse, as
shall be necessary to vest in the Seller, or a designee, the Trustee's
interest in any Mortgage Loan released pursuant hereto.
The Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. The Seller shall promptly deliver to the Trustee, upon the execution
or receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of the Seller
from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.01(i)-(vi) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor, and any
Certificateholder against the Seller.
SECTION 2.03. Representations, Warranties and Covenants of the
------------------------------------------------
Master Servicer and the Seller.
- ------------------------------
(a) The Master Servicer hereby represents and warrants to the
Depositor and the Trustee as follows, as of the date hereof:
(i) The Master Servicer is duly organized as a New York
corporation and is validly existing and in good standing under the laws
of the State of New York and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the
doing business laws of any such state, to the extent necessary to ensure
its ability to enforce each Mortgage Loan, to service the Mortgage Loans
in accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Master Servicer has the full corporate power and authority
to sell and service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate
action on the part of the Master Servicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against the Master Servicer in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer
under this Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Master Servicer and will not (A) result in a material breach of any term
or provision of the charter or by-laws of the Master Servicer or
(B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Master Servicer is a
party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the Master
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and the
Master Servicer is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair the Master Servicer's
ability to perform or meet any of its obligations under this Agreement.
(iv) The Master Servicer is an approved servicer of conventional
mortgage loans for FNMA or FHLMC and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master Servicer
to service the Mortgage Loans or to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Master Servicer has obtained the same.
(b) The Seller hereby represents and warrants to the Depositor and
the Trustee as follows, as of the date hereof (unless otherwise indicated or
the context otherwise requires, percentages with respect to the Mortgage
Loans in a Loan Group are measured by the Cut-off Date Principal Balance of
the Mortgage Loans in the related Loan Group):
(i) The Seller is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State of New
York and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller in
any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to sell
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on the part of the
Seller the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except that (a) the enforceability hereof may
be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Seller,
the sale of the Mortgage Loans by the Seller under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Seller and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Seller or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which the Seller is a party or by which it may be bound, or
(C) constitute a material violation of any statute, order or regulation
applicable to the Seller of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller; and the
Seller is not in breach or violation of any material indenture or other
material agreement or instrument, or in violation of any statute, order
or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Seller's ability to perform or meet any of its
obligations under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for FNMA or FHLMC and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby,
or if any such consent, approval, authorization or order is required,
the Seller has obtained the same.
(vii) The information set forth on Exhibit F-1 hereto with respect
to each Mortgage Loan is true and correct in all material respects as of
the Closing Date.
(viii) The Seller will treat the transfer of the Mortgage Loans to
the Depositor as a sale of the Mortgage Loans for all tax, accounting
and regulatory purposes.
(ix) No Mortgage Loan is more than 59 days delinquent in payment of
principal and interest, and no more than 1% of the Group I Mortgage
Loans and no more than 1% of the Group II Mortgage Loans are 30-59 days
delinquent in the payment of principal and interest.
(x) No Group I Mortgage Loan that was secured by a first lien on
the related Mortgaged Property had a Loan-to-Value Ratio at origination
in excess of 90%; no Group I Mortgage Loan that was secured by a second
lien on the related Mortgaged Property had a Combined Loan-to-Value
Ratio at origination in excess of 100%; and no Group II Mortgage Loan
had a Loan-to-Value Ratio at origination in excess of 95%.
(xi) Each Group I Mortgage Loan is secured by a valid and
enforceable first or second lien on the related Mortgaged Property and
each Group I Mortgage Loan is secured by a valid and enforceable first
lien on the related Mortgaged Property, in each case subject only to
(1) the lien of non-delinquent current real property taxes and
assessments, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable
to mortgage lending institutions generally or specifically reflected in
the appraisal made in connection with the origination of the related
Mortgage Loan, (3) other matters to which like properties are commonly
subject that do not materially interfere with the benefits of the
security intended to be provided by such Mortgage and (4) only in the
case of each such Group I Mortgage Loan which is secured by a valid and
enforceable second lien on the Mortgaged Property, any senior mortgage
loan secured by such Mortgaged Property and identified in the Mortgage
File related to such Mortgage Loan. Approximately 89.54% of the Group I
Mortgage Loans and 100% of the Group II Mortgage Loans were secured by
first liens on the related Mortgaged Properties. Approximately 10.46% of
the Group I Mortgage Loans were secured by second liens on the related
Mortgaged Properties.
(xii) Immediately prior to the assignment of the Mortgage Loans to
the Depositor, the Seller had good title to, and was the sole owner of,
each Mortgage Loan free and clear of any pledge, lien, encumbrance or
security interest and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement.
(xiii) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(xiv) There is no valid offset, claim, defense or counterclaim to
any Mortgage Note or Mortgage, including the obligation of the Mortgagor
to pay the unpaid principal of or interest on such Mortgage Note.
(xv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property that are or may be a lien
prior to, or equal with, the lien of such Mortgage, except those that
are insured against by the title insurance policy referred to in item
(xix) below.
(xvi) As of the Closing Date, to the best of the Seller's knowledge,
each Mortgaged Property is free of material damage and is in good
repair.
(xvii) Each Mortgage Loan at origination complied in all material
respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of
the transactions contemplated hereby will not involve the violation of
any such laws.
(xviii) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written
instrument that has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been delivered to the Trustee);
satisfied, cancelled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the
lien of such Mortgage; or executed any instrument of release,
cancellation, modification (except as expressly permitted above) or
satisfaction with respect thereto.
(xix) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date Stated
Principal Balance of each such Mortgage Loan or a commitment (binder) to
issue the same was effective on the date of the origination of each
Mortgage Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the Mortgaged Property is located
and acceptable to FNMA or FHLMC and is in a form acceptable to FNMA or
FHLMC, which policy insures the Seller and successor owners of
indebtedness secured by the insured Mortgage, as to the first priority
lien, of the Mortgage subject to the exceptions set forth in paragraph
(iv) above; to the best of the Seller's knowledge, no claims have been
made under such mortgage title insurance policy and no prior holder of
the related Mortgage, including the Seller, has done, by act or
omission, anything that would impair the coverage of such mortgage title
insurance policy.
(xx) No Mortgage Loan was the subject of a Principal Prepayment in
full between the Closing Date and the Cut-off Date.
(xxi) To the best of the Seller's knowledge, all of the improvements
that were included for the purpose of determining the Appraised Value of
the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property.
(xxii) To the best of the Seller's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of the Seller's
knowledge, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and the
Mortgaged Property is lawfully occupied under applicable law.
(xxiii) The Mortgage Note and the related Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law,
except that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. To the best of the Seller's
knowledge, all parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties.
(xxiv) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making, or closing or
recording the Mortgage Loans were paid.
(xxv) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure.
(xxvi) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(xxvii) Each Mortgage Note and each Mortgage is in substantially one
of the forms attached hereto as Exhibit P acceptable in form to FNMA or
FHLMC.
(xxviii) There exist no deficiencies with respect to escrow deposits
and payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under
the Mortgage or the related Mortgage Note.
(xxix) The origination, underwriting and collection practices used by
the Seller with respect to each Mortgage Loan have been in all respects
legal, prudent and customary in the mortgage lending and servicing
business.
(xxx) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations.
(xxxi) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature.
(xxxii) Each Mortgage Loan contains a customary "due on sale" clause.
(xxxiii) Approximately 4.27% of the Group I Mortgage Loans and
approximately 4.98% of the Group II Mortgage Loans are secured by two-
to four-family dwellings. Approximately 1.85% of the Group I Mortgage
Loans and approximately 4.17% of the Group II Mortgage Loans are secured
by condominium units. Approximately 87.78% of the Group I Mortgage
Loans and approximately 84.43% of the Group II Mortgage Loans are
secured by detached one-family dwellings.
(xxxiv) No Group I Mortgage Loan had a principal balance in excess of
$488,000 at origination and no Group II Mortgage Loan had a principal
balance in excess of $695,000 at origination.
(xxxv) Each Group I Mortgage Loan was originated in or after March
1997.
(xxxvi) Each Group II Mortgage Loan was originated in or after August
1997; each Group II Mortgage Loan other than a 2/28 Mortgage Loan had an
initial Adjustment Date no later than February 1, 2002; each 2/28
Mortgage Loan had an initial Adjustment Date no later than March 1,
2000.
(xxxvii) Approximately 80.58% of the Group I Mortgage Loans and
approximately 64.38% of the Group II Mortgage Loans provide for a
prepayment penalty.
(xxxviii) No Mortgage Loan provides for primary mortgage insurance.
(xxxix) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 7.81% of the Group I
Mortgage Loans are secured by investor properties, and at least
approximately 91.76% of the owner-occupied Group I Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group I Mortgage Loans).
(xl) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 6.97% of the
Group II Mortgage Loans are secured by investor properties, and at least
approximately 92.52% of the owner-occupied Group II Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group II Mortgage Loans).
(xli) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire and extended
coverage and coverage for such other hazards as are customary in the
area where the Mortgaged Property is located in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the
Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the condominium unit. All
such individual insurance policies and all flood policies referred to in
item (xl) above contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee,
and the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance, including flood insurance, at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor.
(xlii) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage not
less than the least of (A) the original outstanding principal balance of
the Mortgage Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis, or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973, as amended.
(xliii) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation
of the Mortgaged Property.
(xliv) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of the Seller's
knowledge, there is no material event that, with the passage of time or
with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration under
the Mortgage or the related Mortgage Note; and the Seller has not waived
any default, breach, violation or event of acceleration.
(xlv) Each Mortgaged Property is improved by a one- to four-family
residential dwelling, including condominium units and dwelling units in
PUDs, that, to the best of the Seller's knowledge, does not include
cooperatives or mobile homes and does not constitute other than real
property under state law.
(xlvi) Each Mortgage Loan is being serviced by the Master Servicer.
(xlvii) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the Mortgage
Loan Schedule. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan. The Mortgage Note does
not permit or obligate the Master Servicer to make future advances to
the Mortgagor at the option of the Mortgagor.
(xlviii) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
that previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such
item that remains unpaid and that has been assessed, but is not yet due
and payable. Except for (A) payments in the nature of escrow payments,
and (B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day
that precedes by one month the Due Date of the first installment of
principal and interest, including without limitation, taxes and
insurance payments, the Master Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a party
other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage.
(xlix) Each Mortgage Loan was underwritten in all material respects
in accordance with the Seller's underwriting guidelines for B and C
quality mortgage loans or, with respect to Mortgage Loans originated in
accordance with other underwriting guidelines, in substantial compliance
of the Seller's guidelines.
(l) Prior to the approval of the Mortgage Loan application, an
appraisal of the related Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no
interest, direct or indirect, in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by
the approval or disapproval of the Mortgage Loan; such appraisal is in a
form acceptable to FNMA and FHLMC.
(li) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan, and no Mortgage Loan is subject
to a buydown or similar arrangement.
(lii) The Mortgage Rates borne by the Group I Mortgage Loans as of
the Cut-off Date ranged from 7.00% per annum to 15.75% per annum and the
weighted average Mortgage Rate as of the Cut-off Date was 9.917% per
annum.
(liii) The Mortgage Rates borne by the Group II Mortgage Loans as of
the Cut-off Date ranged from 4.625% per annum to 14.200% per annum and
the weighted average Mortgage Rate as of the Cut-off Date was 8.967% per
annum.
(liv) The Mortgage Loans were selected from among the outstanding
one- to four-family mortgage loans in the Master Servicer's portfolio at
the Closing Date as to which the representations and warranties made as
to the Mortgage Loans set forth in this Section 2.03(b) can be made.
Such selection was not made in a manner that would adversely affect the
interests of Certificateholders.
(lv) The Gross Margins on the Group II Mortgage Loans range from
approximately 2.75% to 9.70% and the weighted average Gross Margin was
approximately 6.224%.
(lvi) Except for 40 Group I Mortgage Loans representing
approximately 3.58% of the Group I Mortgage Loans and except for 183
Group II Mortgage Loans representing approximately 10.01% of the
Group II Mortgage Loans each Mortgage Loan has a payment date on or
before the Due Date in the month of the first Distribution Date.
(lvii) The Mortgage Loans, individually and in the aggregate, conform
in all material respects to the descriptions thereof in the Prospectus
Supplement.
(lviii) (Reserved)
(lix) There is no obligation on the part of the Seller under the
terms of the Mortgage or related Mortgage Note to make payments in
addition to those made by the Mortgagor.
(lx) Any leasehold estate securing a Mortgage Loan has a term of
not less than five years in excess of the term of the related Mortgage
Loan.
(lxi) (Reserved)
(lxii) Each Mortgage Loan represents a "qualified mortgage" within
the meaning of Section 860(a)(3) of the Code (but without regard to the
rule in Treasury Regulation Section 1.860G-2(f)(2) that treats a
defective obligation as a qualified mortgage, or any substantially
similar successor provision) and applicable Treasury regulations
promulgated thereunder.
(lxiii) Each Mortgage Loan was originated (within the meaning of
Section 3(a) (41) of the Securities Exchange Act of 1934, as amended) by
an entity that satisfied at the time of origination the requirements of
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
(lxiv) No Mortgage Loan was either a "consumer credit contract" or a
"purchase money loan" as such terms are defined in 16 C.F.R. Section 433
nor is any Mortgage Loan a "mortgage" as defined in 15 U.S.C.
Section 1602(aa).
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) or (b) that
materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan, the party discovering such breach shall give prompt notice
thereof to the other parties. Each of the Master Servicer and the Seller
(each, a "Representing Party") hereby covenants with respect to the
representations and warranties set forth in Sections 2.03(a) and (b),
respectively, that within 90 days of the earlier of the discovery by such
Representing Party or receipt of written notice by such Representing Party
from any party of a breach of any representation or warranty set forth herein
made that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, shall, (i) if such
90-day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
substitute in its place a Replacement Mortgage Loan, in the manner and
subject to the conditions set forth in this Section; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase
Price in the manner set forth below; provided that any such substitution
pursuant to (i) above or repurchase pursuant to (ii) above shall not be
effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05 hereof and any such substitution pursuant to
(i) above shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit N. Any
Representing Party liable for a breach under this Section 2.03 shall promptly
reimburse the Master Servicer and the Trustee for any expenses reasonably
incurred by the Master Servicer or the Trustee in respect of enforcing the
remedies for such breach. To enable the Master Servicer to amend the
Mortgage Loan Schedule, Any Representing Party liable for a breach under this
Section 2.03 shall, unless it cures such breach in a timely fashion pursuant
to this Section 2.03, promptly notify the Master Servicer whether such
Representing Party intends either to repurchase, or to substitute for, the
Mortgage Loan affected by such breach. With respect to the representations
and warranties described in this Section that are made to the best of the
Representing Party's knowledge, if it is discovered by any of the Depositor,
the Master Servicer, the Seller or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, notwithstanding the
Representing Party's lack of knowledge with respect to the substance of such
representation or warranty, such inaccuracy shall be deemed a breach of the
applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the Seller
delivering such Replacement Mortgage Loan shall deliver to the Trustee for
the benefit of the Certificateholders the related Mortgage Note, Mortgage and
assignment of the Mortgage, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed and the Mortgage
assigned as required by Section 2.01. No substitution will be made in any
calendar month after the Determination Date for such month. Scheduled
Payments due with respect to Replacement Mortgage Loans in the Due Period
related to the Distribution Date on which such proceeds are to be distributed
shall not be part of the Trust Fund and will be retained by the Seller
delivering such Replacement Loan on such Distribution Date. For the month of
substitution, distributions to Certificateholders will include the Scheduled
Payment due on any Deleted Mortgage Loan for the related Due Period and
thereafter the Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. The Master Servicer shall amend the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect
the removal of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Replacement Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller delivering such Replacement
Mortgage Loan shall be deemed to have made with respect to such Replacement
Mortgage Loan or Loans, as of the date of substitution, the representations
and warranties set forth in Section 2.03(b) with respect to such Mortgage
Loan. Upon any such substitution and the deposit to the Certificate Account
of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph, the Trustee shall
release to the Representing Party the Mortgage File relating to such Deleted
Mortgage Loan and held for the benefit of the Certificateholders and shall
execute and deliver at the Master Servicer's direction such instruments of
transfer or assignment as have been prepared by the Master Servicer, in each
case without recourse, as shall be necessary to vest in the Seller, or its
respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution
is less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all
such Deleted Mortgage Loans. An amount equal to the aggregate of the
deficiencies described in the preceding sentence (such amount, the
"Substitution Adjustment Amount") shall be deposited into the Certificate
Account by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment
Period during which the related Mortgage Loan became required to be purchased
or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.08 on the Determination Date for the Distribution Date
in the month following the month during which such Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the
Purchase Price, the delivery of the Opinion of Counsel required by
Section 2.05, if any, and the receipt of a Request for Release in the form of
Exhibit N hereto, the Trustee shall release the related Mortgage File held
for the benefit of the Certificateholders to such Seller, and the Trustee
shall execute and deliver at such Person's direction the related instruments
of transfer or assignment prepared by such Seller, in each case without
recourse, as shall be necessary to transfer title from the Trustee for the
benefit of the Certificateholders and transfer the Trustee's interest to such
Seller to any Mortgage Loan purchased pursuant to this Section 2.03. It is
understood and agreed that the obligation under this Agreement of the Seller
to cure, repurchase or replace any Mortgage Loan as to which a breach has
occurred and is continuing shall constitute the sole remedy against the
Seller respecting such breach available to Certificateholders, the Depositor
or the Trustee.
(d) The representations and warranties set forth in Section 2.03
hereof shall survive delivery of the respective Mortgage Files to the Trustee
for the benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Depositor.
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The Depositor hereby represents and warrants to the Master Servicer
and the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations under
this Agreement.
(ii) The Depositor has the full corporate power and
authority to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement and has duly
authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, subject, as to enforceability, to
(i) bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and (ii) general principles
of equity, regardless of whether enforcement is sought in a proceeding
in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which the Depositor is a party or by which it may be bound or
(C) constitute a material violation of any statute, order or regulation
applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the Closing Date, and following the
transfer of the Mortgage Loans to it by the Seller, the Depositor had good
title to the Mortgage Loans and the Mortgage Notes were subject to no
offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties
set forth in the two immediately preceding paragraphs shall survive delivery
of the Mortgage Files to the Trustee. Upon discovery by the Depositor or the
Trustee of a breach of any of the foregoing representations and warranties
set forth in the immediately preceding paragraph (referred to herein as a
"breach"), which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency. The Depositor hereby
covenants with respect to the representations and warranties made by it in
this Section 2.04 that within 90 days of the earlier of the discovery it or
receipt of written notice by it from any party of a breach of any
representation or warranty set forth herein made that materially and
adversely affects the interests of the Certificateholders in any Mortgage
Loan, it shall cure such breach in all material respects and, if such breach
is not so cured, shall repurchase or replace the affected Mortgage Loan or
Loans in accordance with the procedure set forth in Section 2.03(c).
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
-------------------------------------------------
Substitutions and Repurchases.
- -----------------------------
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03
or 2.04 shall be made unless the Representing Party making such repurchase or
substitution delivers to the Trustee an Opinion of Counsel, addressed to the
Trustee, to the effect that such repurchase or substitution would not
(i) result in the imposition of the tax on "prohibited transactions" of the
Trust Fund or contributions after the Closing Date, as defined in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the Trust Fund
to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02, 2.03 or 2.04)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such loan and (b) receipt by the Trustee of an Opinion of Counsel
to the effect that such repurchase or substitution, as applicable, will not
result in the events described in clause (i) or clause (ii) of the preceding
sentence.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of section 86OG(a)(3) of the Code,
the party discovering such fact shall promptly (and in any event within 5
Business Days of discovery) give written notice thereof to the other parties.
In connection therewith, the Trustee shall require the Seller, at the
Seller's option, to either (i) substitute, if the conditions in
Section 2.03(b) with respect to substitutions are satisfied, a Replacement
Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within 90 days of such discovery in the same manner as it would
a Mortgage Loan for a breach of representation or warranty contained in
Section 2.03. The Trustee shall reconvey to the Seller the Mortgage Loan to
be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
-------------------------------------------
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement to the
best of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
SECTION 2.07. Covenants of the Master Servicer.
--------------------------------
The Master Servicer hereby covenants to the Depositor, the Trustee
as follows:
(a) the Master Servicer shall comply in the performance of
its obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor or the Trustee and prepared by
the Master Servicer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the information, certificate, statement or report not
misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.
-----------------------------------------
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with customary
and usual standards of practice of prudent mortgage loan lenders in the
respective states in which the Mortgaged Properties are located. In
connection with such servicing and administration, the Master Servicer shall
have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority,
subject to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but
only in the manner provided in this Agreement), (iii) to collect any
Insurance Proceeds and other Liquidation Proceeds, and (iv) subject to
Section 3.12(a), to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan; provided that
the Master Servicer shall take no action that is inconsistent with or
prejudices the interests of the Trust Fund or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor and the Trustee
under this Agreement. The Master Servicer shall represent and protect the
interest of the Trust Fund in the same manner as it currently protects its
own interest in mortgage loans in its own portfolio in any claim, proceeding
or litigation regarding a Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which
would cause the Trust Fund to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860(a) or 860(d) of the Code, but in any
case not in any manner that is a lesser standard than that provided in the
first sentence of this Section 3.01. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the
Depositor and the Trustee, when the Master Servicer believes it appropriate
in its reasonable judgment, to execute and deliver, on behalf of the Trustee,
the Depositor, the Certificateholders or any of them, any and all instruments
of satisfaction or cancellation, or of partial or full release or discharge
and all other comparable instruments, with respect to the Mortgage Loans, and
with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery
by any or all of them as are necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Master Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to
Section 3.06, and further as provided in Section 3.08. All costs incurred by
the Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans
so permit.
The Master Servicer shall deliver a list of Servicing Officers to
the Trustee by the Closing Date.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
-----------------------------------------------
Master Servicer.
- ---------------
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer
or a subservicer or reference to actions taken through a Master Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of
this Agreement without diminution of such obligation or liability by virtue
of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the
same terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. Every subservicing agreement entered into
by the Master Servicer shall contain a provision giving the successor Master
Servicer the option to terminate such agreement in the event a successor
Master Servicer is appointed. All actions of each subservicer performed
pursuant to the related subservicing agreement shall be performed as an agent
of the Master Servicer with the same force and effect as if performed
directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
SECTION 3.03. Rights of the Depositor, the Trustee in Respect of
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the Master Servicer.
- -------------------
Neither the Trustee nor the Depositor shall have any responsibility
or liability for any action or failure to act by the Master Servicer, and
none of them is obligated to supervise the performance of the Master Servicer
hereunder or otherwise.
SECTION 3.04. Trustee to Act as Master Servicer.
---------------------------------
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its designee shall thereupon assume all of the
rights and obligations of the Master Servicer hereunder arising thereafter
(except that the Trustee shall not be (i) liable for losses of the Master
Servicer pursuant to Section 3.10 hereof or any acts or omissions of the
predecessor Master Servicer hereunder, (ii) obligated to make Advances if it
is prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant
to Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties hereunder, including pursuant to Section 2.03
or the first paragraph of Section 6.02 hereof). If the Master Servicer shall
for any reason no longer be the Master Servicer (including by reason of any
Event of Default), the Trustee (or any other successor servicer) may, at its
option, succeed to any rights and obligations of the Master Servicer under
any subservicing agreement in accordance with the terms thereof; provided
that the Trustee (or any other successor servicer) shall not incur any
liability or have any obligations in its capacity as servicer under a
subservicing agreement arising prior to the date of such succession unless it
expressly elects to succeed to the rights and obligations of the Master
Servicer thereunder; and the Master Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior
to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each subservicing agreement and the Mortgage Loans
then being serviced thereunder and an accounting of amounts collected held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
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Account; Distribution Account.
- -----------------------------
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are
located to collect all payments called for under the terms and provisions of
the Mortgage Loans to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Required Insurance
Policy. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan and
(ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 270 days. In the event of any such arrangement, the Master
Servicer shall make Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements.
The Master Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such
payment is required is prohibited by applicable law.
(b) The Trustee shall establish and initially maintain, on behalf
of the Certificateholders, the Certificate Account. The Master Servicer
shall deposit into the Certificate Account daily, within two Business Days of
receipt thereof, in immediately available funds, the following payments and
collections received or made by it on and after the Cut-off Date (to the
extent not applied in computing the Cut-off Date Principal Balance thereof):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) (a) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, other
than interest accrued on the Mortgage Loans prior to February 1, 1998,
and (b) the Initial Certificate Account Deposit;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Master Servicer's normal servicing
procedures;
(iv) all Compensating Interest;
(v) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(vi) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment Amount;
(viii) all Advances made by the Master Servicer pursuant to
Section 4.01; and
(ix) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer
into the Certificate Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in
the nature of prepayment penalties, late payment charges or assumption fees,
if collected, need not be remitted by the Master Servicer. In the event that
the Master Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may
at any time withdraw or direct the Trustee, or such other institution
maintaining the Certificate Account, to withdraw such amount from the
Certificate Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice
thereof to the Trustee, or such other institution maintaining the Certificate
Account, that describes the amounts deposited in error in the Certificate
Account. The Master Servicer shall maintain adequate records with respect to
all withdrawals made pursuant to this Section. All funds deposited in the
Certificate Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 3.08. In no event shall the Trustee
incur liability for withdrawals from the Certificate Account at the direction
of the Master Servicer.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount withdrawn by the Trustee pursuant to the
second paragraph of Section 3.08(a); and
(ii) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments.
The foregoing requirements for remittance by the Master Servicer
and deposit by the Trustee into the Distribution Account shall be exclusive.
In the event that the Master Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time direct the Trustee to withdraw such amount from
the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall
be held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08.
In no event shall the Trustee incur liability for withdrawals from the
Distribution Account at the direction of the Master Servicer.
(d) (Reserved.)
(e) Each institution that maintains the Certificate Account, the
Distribution Account or the Carryover Reserve Fund shall invest the funds in
each such account, as directed by the Master Servicer, in Permitted
Investments, which shall mature not later than (i) in the case of the
Certificate Account, the Business Day preceding the related Distribution Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such Certificate Account, then such Permitted Investment shall
mature not later than such Distribution Date) and (ii) in the case of the
Distribution Account and the Carryover Reserve Fund, the Business Day
immediately preceding the first Distribution Date that follows the date of
such investment (except that if such Permitted Investment is an obligation of
the institution that maintains such Distribution Account or Carryover Reserve
Fund, then such Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or disposed of prior
to its maturity. All such Permitted Investments shall be made in the name of
the Trustee, for the benefit of the Certificateholders, except in connection
with Permitted Investments made with respect to funds in the Carryover
Reserve Fund which shall be made in the name of the Trustee, for the benefit
of the Class BV-IO Certificateholders. In the case of (x) the Certificate
Account and the Distribution Account, all income and gain net of any losses
realized from any such investment shall be for the benefit of the Master
Servicer as servicing compensation and shall be remitted to it monthly as
provided herein and (y) the Carryover Reserve Fund all income and gain net of
any losses realized from any such investment shall be for the benefit of the
Class BV-IO Certificateholders and shall be remitted to the Class BV-IO
Certificateholders monthly as provided herein. The amount of any losses
incurred in the Certificate Account or the Distribution Account in respect of
any such investments shall be deposited by the Master Servicer, or the
Trustee upon receipt from the Master Servicer, in the Certificate Account or
the Distribution Account, as applicable, out of the Master Servicer's own
funds immediately as realized. Any losses incurred in the Carryover Reserve
Fund in respect of any such investments shall be charged against amounts on
deposit in the Carryover Fund (or such investments) immediately as realized.
The Trustee shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the
Certificate Account, the Distribution Account or the Carryover Reserve Fund
and made in accordance with this Section 3.05.
(f) The Trustee shall give at least 30 days advance notice to the
Master Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Certificate Account, the Distribution
Account or the Carryover Reserve Fund prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
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Escrow Accounts.
- ---------------
To the extent required by the related Mortgage Note, the Master
Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors
(or advances by the Master Servicer) for the payment of taxes, assessments,
hazard insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master Servicer to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer out of related collections for any payments
made pursuant to Sections 3.01 hereof (with respect to taxes and assessments
and insurance premiums) and 3.10 hereof (with respect to hazard insurance),
to refund to any Mortgagors any sums as may be determined to be overages, to
pay interest, if required by law or the terms of the related Mortgage or
Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear
and terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01 hereof. The Escrow Accounts shall not be a part
of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information
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Regarding the Mortgage Loans.
- ----------------------------
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage
Loans and all accounts, insurance policies and other matters relating to this
Agreement, such access being afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Master Servicer designated by it.
Upon reasonable advance notice in writing if required by federal
regulation, the Master Servicer will provide to each Certificateholder that
is a savings and loan association, bank or insurance company certain reports
and reasonable access to information and documentation regarding the Mortgage
Loans sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided that the Master Servicer shall be
entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Master Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account,
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Distribution Account and the Carryover Reserve
- ----------------------------------------------
(a) The Master Servicer (or the Depositor or the Seller, as
applicable, in the case of clauses (vi) and (vii) below) may from time to
time, direct the Trustee to make withdrawals from the Certificate Account,
and such institution shall make such withdrawals therefrom, for the following
purposes:
(i) to pay to the Master Servicer (to the extent not previously
paid to or withheld by the Master Servicer), as servicing compensation
in accordance with Section 3.15, that portion of any payment of interest
that equals the Servicing Fee for the period with respect to which such
interest payment was made, and, as additional servicing compensation,
those other amounts set forth in Section 3.15;
(ii) to reimburse the Master Servicer for Advances made by it with
respect to the Mortgage Loans, such right of reimbursement pursuant to
this subclause (ii) being limited to amounts received on particular
Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds)
that represent late recoveries of payments of principal and/or interest
on such particular Mortgage Loan(s) in respect of which any such Advance
was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(iv) to reimburse the Master Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Master Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, the Master
Servicer's right to reimbursement of Servicing Advances pursuant to this
subclause (v) with respect to any Mortgage Loan being limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such advances were
made pursuant to Section 3.01 or Section 3.06;
(vi) to pay to the Seller, the Depositor or the Master Servicer, as
applicable, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Section 2.02, 2.03
or 3.12, all amounts received thereon and not taken into account in
determining the related Stated Principal Balance of such repurchased
Mortgage Loan;
(vii) to reimburse the Seller, the Master Servicer or the Depositor
for expenses incurred by any of them in connection with the Mortgage
Loans or Certificates and reimbursable pursuant to Section 6.03 hereof
provided that such amount shall only be withdrawn following the
withdrawal from the Certificate Account for deposit into the
Distribution Account pursuant to the following paragraph;
(viii) to withdraw pursuant to Section 3.05 any amount deposited in
the Certificate Account and not required to be deposited therein; and
(ix) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date, the Trustee shall withdraw from the Certificate
Account the amount of Group I Interest Funds, Group I Principal Funds, Group
II Interest Funds and Group II Principal Funds, to the extent on deposit, and
the Trustee shall deposit such amount in the Distribution Account.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to subclauses (i), (ii),
(iv), (v) and (vi) above.
(b) The Trustee shall withdraw funds from the Distribution Account
for distribution to the Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to the last paragraph of
Section 8.11). In addition, the Trustee may from time to time make
withdrawals from the Distribution Account for the following purposes:
(i) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds in
or credited to the Distribution Account;
(ii) to withdraw pursuant to Section 3.05 any amount deposited in
the Distribution Account and not required to be deposited therein; and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
(c) The Trustee shall withdraw funds from the Carryover Reserve
Fund for distribution to the Group II Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn,
the amount of any taxes that it is authorized to retain pursuant to the last
paragraph of Section 8.11). In addition, the Trustee may from time to time
make withdrawals from the Carryover Reserve Fund for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in
the Carryover Reserve Fund and not required to be deposited therein; and
(ii) to clear and terminate the Carryover Reserve Fund upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. (Reserved.)
SECTION 3.10. Maintenance of Hazard Insurance.
-------------------------------
The Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the
proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. The Master Servicer shall also cause
flood insurance to be maintained on property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan, to the extent described
below. Pursuant to Section 3.05 hereof, any amounts collected by the Master
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to
the Certificateholders or remittances to the Trustee for their benefit, be
added to the principal balance of the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It is
understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor or maintained on property acquired in respect of
a Mortgage other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
If the Mortgaged Property is located at the time of origination of the
Mortgage Loan in a federally designated special flood hazard area and such
area is participating in the national flood insurance program, the Master
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the original principal balance of the related Mortgage Loan,
(ii) the replacement value of the improvements that are part of such
Mortgaged Property, or (iii) the maximum amount of such insurance available
for the related Mortgaged Property under the Flood Disaster Protection Act of
1973, as amended.
In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.10, it being understood and
agreed that such policy may contain a deductible clause on terms
substantially equivalent to those commercially available and maintained by
comparable servicers. If such policy contains a deductible clause, the
Master Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with the first sentence
of this Section 3.10, and there shall have been a loss that would have been
covered by such policy, deposit in the Certificate Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Depositor and the Trustee for the benefit of the Certificateholders,
claims under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
----------------------------------------------
Agreements.
- ----------
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall to the extent that it has knowledge of
such conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required Insurance
Policy. Notwithstanding the foregoing, the Master Servicer is not required
to exercise such rights with respect to a Mortgage Loan if the Person to whom
the related Mortgaged Property has been conveyed or is proposed to be
conveyed satisfies the terms and conditions contained in the Mortgage Note
and Mortgage related thereto and the consent of the mortgagee under such
Mortgage Note or Mortgage is not otherwise so required under such Mortgage
Note or Mortgage as a condition to such transfer. In the event that the
Master Servicer is prohibited by law from enforcing any such due-on-sale
clause, or if coverage under any Required Insurance Policy would be adversely
affected, or if nonenforcement is otherwise permitted hereunder, the Master
Servicer is authorized, subject to Section 3.11(b), to take or enter into an
assumption and modification agreement from or with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable
state law, the Mortgagor remains liable thereon, provided that the Mortgage
Loan shall continue to be covered (if so covered before the Master Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Master Servicer, subject to Section 3.11(b), is also authorized with the
prior approval of the insurers under any Required Insurance Policies to enter
into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Master Servicer shall not be deemed to be
in default under this Section 3.11(a) by reason of any transfer or assumption
that the Master Servicer reasonably believes it is restricted by law from
preventing.
(b) Subject to the Master Servicer's duty to enforce any due-on-
sale clause to the extent set forth in Section 3.11(a) hereof, in any case in
which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the
Trustee is required releasing the Mortgagor from liability on the Mortgage
Loan, the Master Servicer shall prepare and deliver or cause to be prepared
and delivered to the Trustee for signature and shall direct, in writing, the
Trustee to execute the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding
assumptions or the transfer of the Mortgaged Property to such Person. In
connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the
Scheduled Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the
Periodic Rate Cap, the Adjustment Date and any other term affecting the
amount or timing of payment on the Mortgage Loan) may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be
acceptable to the Master Servicer in accordance with its underwriting
standards as then in effect. The Master Servicer shall notify the Trustee
that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original of such substitution or assumption
agreement, which in the case of the original shall be added to the related
Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Master Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional servicing compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
------------------------------------------
Determination of Excess Proceeds and Realized
- ---------------------------------------------
Losses; Repurchase of Certain Mortgage Loans.
- --------------------------------------------
(a) The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing
such of the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments. In connection with such foreclosure or other conversion, the
Master Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and the requirements of the insurer under any
Required Insurance Policy; provided that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or
towards the restoration of any property unless it shall determine (i) that
such restoration and/or foreclosure will increase the proceeds of liquidation
of the Mortgage Loan after reimbursement to itself of such expenses and
(ii) that such expenses will be recoverable to it through Liquidation
Proceeds (respecting which it shall have priority for purposes of withdrawals
from the Certificate Account pursuant to Section 3.08 hereof). The Master
Servicer shall be responsible for all other costs and expenses incurred by it
in any such proceedings; provided that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property,
as contemplated in Section 3.08 hereof. If the Master Servicer has knowledge
that a Mortgaged Property that the Master Servicer is contemplating acquiring
in foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Master Servicer, the Master Servicer will, prior to acquiring the Mortgaged
Property, consider such risks and only take action in accordance with its
established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO
Property references this Agreement and the Trustee's capacity thereunder.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property.
The Master Servicer shall prepare for and deliver to the Trustee a statement
with respect to each REO Property that has been rented showing the aggregate
rental income received and all expenses incurred in connection with the
management and maintenance of such REO Property at such times as is necessary
to enable the Trustee to comply with the reporting requirements of the REMIC
Provisions. The net monthly rental income, if any, from such REO Property
shall be deposited in the Certificate Account no later than the close of
business on each Determination Date. The Master Servicer shall perform the
tax reporting and withholding related to foreclosures, abandonments and
cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns,
as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Trust Fund or, at the expense
of the Trust Fund, request more than 60 days prior to the day on which such
two-year period would otherwise expire, an extension of the two-year grace
period unless the Trustee shall have been supplied with an Opinion of Counsel
(such opinion not to be an expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such two-
year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used for the production of income by
or on behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject the Trust Fund to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged Property under section
860G(c) of the Code or otherwise, unless the Master Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of
any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any
Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management
and net of unreimbursed Servicing Fees, Advances, Servicing Advances and any
management fee paid or to be paid with respect to the management of such
Mortgaged Property, shall be applied to the payment of principal of, and
interest on, the related defaulted Mortgage Loans (with interest accruing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited
into the Certificate Account. To the extent the income received during a
Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan,
net of any payment to the Master Servicer as provided above, shall be
deposited in the Certificate Account on the next succeeding Determination
Date following receipt thereof for distribution on the related Distribution
Date, except that any Excess Proceeds shall be retained by the Master
Servicer as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income
from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed
Servicing Advances and Servicing Fees, pursuant to Section 3.08(a)(v) or this
Section 3.12; second, to reimburse the Master Servicer for any unreimbursed
Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage
Rate to the Due Date occurring in the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan.
(b) On each Determination Date, the Master Servicer shall
determine the respective aggregate amounts of Excess Proceeds and Realized
Losses, if any, for the related Prepayment Period.
(c) The Master Servicer, in its sole discretion, shall have the
right to elect (by written notice sent to the Trustee) to purchase for its
own account from the Trust Fund any Mortgage Loan that is 91 days or more
delinquent at a price equal to the Purchase Price. The Purchase Price for
any Mortgage Loan purchased hereunder shall be delivered to the Trustee for
deposit in the Certificate Account and the Trustee, upon receipt of such
deposit and a Request for Release from the Master Servicer in the form of
Exhibit N hereto, shall release or cause to be released to the purchaser of
such Mortgage Loan the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest
in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant
hereto and the purchaser of such Mortgage Loan shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan and all
security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage
Loan shall thereupon own such Mortgage Loan, and all security and documents,
free of any further obligation to the Trustee or the Certificateholders with
respect thereto.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will promptly
notify the Trustee by delivering a Request for Release substantially in the
form of Exhibit N. Upon receipt of such request, the Trustee shall promptly
release the related Mortgage File to the Master Servicer, and the Trustee
shall at the Master Servicer's direction execute and deliver to the Master
Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Master Servicer, together with the
Mortgage Note with written evidence of cancellation thereon. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Certificate Account, the Distribution
Account, the Carryover Reserve Fund or the related subservicing account.
From time to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose, collection
under any policy of flood insurance any fidelity bond or errors or omissions
policy, or for the purposes of effecting a partial release of any Mortgaged
Property from the lien of the Mortgage or the making of any corrections to
the Mortgage Note or the Mortgage or any of the other documents included in
the Mortgage File, the Trustee shall, upon delivery to the Trustee of a
Request for Release in the form of Exhibit M signed by a Servicing Officer,
release the Mortgage File to the Master Servicer. Subject to the further
limitations set forth below, the Master Servicer shall cause the Mortgage
File or documents so released to be returned to the Trustee when the need
therefor by the Master Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Certificate Account,
in which case the Trustee shall deliver the Request for Release to the Master
Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity. Notwithstanding the
foregoing, the Master Servicer shall cause possession of any Mortgage File or
of the documents therein that shall have been released by the Trustee to be
returned to the Trustee within 21 calendar days after possession thereof
shall have been released by the Trustee unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Certificate Account, and the Master Servicer shall have
delivered to the Trustee a Request for Release in the form of Exhibit N or
(ii) the Mortgage File or document shall have been delivered to an attorney
or to a public trustee or other public official as required by law for
purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property and the Master Servicer shall have
delivered to the Trustee an Officer's Certificate of a Servicing Officer
certifying as to the name and address of the Person to which the Mortgage
File or the documents therein were delivered and the purpose or purposes of
such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of
---------------------------------------------
Master Servicer to be Held for the Trustee.
- ------------------------------------------
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully
to the Trustee for any funds received by the Master Servicer or that
otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Master Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in the Certificate Account, shall be held by the Master
Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
Certificate Account, Distribution Account or Carryover Reserve Fund or in any
Escrow Account (as defined in Section 3.06), or any funds that otherwise are
or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy,
writ of attachment or other encumbrance, or assert by legal action or
otherwise any claim or right of set off against any Mortgage File or any
funds collected on, or in connection with, a Mortgage Loan, except, however,
that the Master Servicer shall be entitled to set off against and deduct from
any such funds any amounts that are properly due and payable to the Master
Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or direct the Trustee to withdraw from the
Certificate Account out of each payment of interest on a Mortgage Loan
included in the Trust Fund an amount equal to interest at the applicable
Servicing Fee Rate on the Stated Principal Balance of the related Mortgage
Loan for the period covered by such interest payment.
Additional servicing compensation in the form of any Excess
Proceeds, prepayment penalties, assumption fees, late payment charges,
Prepayment Interest Excess, and all income and gain net of any losses
realized from Permitted Investments shall be retained by the Master Servicer
to the extent not required to be deposited in the Certificate Account
pursuant to Section 3.05 or 3.12(a) hereof. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance,
as required by Section 3.10 hereof and maintenance of the other forms of
insurance coverage required by Section 3.10 hereof) and shall not be entitled
to reimbursement therefor except as specifically provided in Sections 3.08
and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
-------------------------------
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of the Certificates and
the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access
shall be afforded without charge, but only upon reasonable and prior written
request and during normal business hours at the offices of the Master
Servicer designated by it. Nothing in this Section shall limit the
obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
---------------------------------
The Master Servicer shall deliver to the Depositor and the Trustee
on or before May 31 of each year commencing May 31, 1999, an Officer's
Certificate stating, as to the signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and of
the performance of the Master Servicer under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and (iii) to
the best of such officer's knowledge, each Subservicer has fulfilled all its
obligations under its Subservicing Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation specifying
each such default known to such officer and the nature and status thereof.
The Trustee shall forward a copy of each such statement to each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided
such statement is delivered by the Master Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing
------------------------------------------------
Statement; Financial Statements.
- -------------------------------
On or before the later of (i) May 31 of each year, beginning with
May 31, 1999 or (ii) within 30 days of the issuance of the annual audited
financial statements beginning with the audit for the period ending in 1998,
the Master Servicer at its expense shall cause a nationally recognized firm
of independent public accountants (who may also render other services to the
Master Servicer, the Seller or any affiliate thereof) that is a member of the
American Institute of Certified Public Accountants to furnish a report to the
Trustee, Depositor and the Seller in compliance with the Uniform Single
Attestation Program for Mortgage Bankers. Copies of such report shall be
provided by the Trustee to any Certificateholder upon request at the Master
Servicer's expense, provided such report is delivered by the Master Servicer
to the Trustee. Upon written request, the Master Servicer shall provide to
the Certificateholders its publicly available annual financial statements
(or, for so long as Countrywide Home Loans, Inc. is the Master Servicer
hereunder, the Master Servicer's parent company's publicly available annual
financial statements), if any, promptly after they become available.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances.
--------
Subject to the conditions of this Article IV, the Master Servicer,
as required below, shall make an Advance and deposit such Advance in the
Certificate Account. Each such Advance shall be remitted to the Certificate
Account no later than 1:00 p.m. Pacific time on the Master Servicer Advance
Date in immediately available funds. The Master Servicer shall be obligated
to make any such Advance only to the extent that such advance would not be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it
has made a Nonrecoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Nonrecoverable Advance, the Master
Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance,
if applicable, and (ii) to the Depositor, each Rating Agency and the Trustee
an Officer's Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own
funds, the Master Servicer may (i) cause to be made an appropriate entry in
its records relating to the Certificate Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of
its own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection
-------------------------------------------------
with Prepayment Interest Shortfalls.
- -----------------------------------
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Master Servicer shall, to the extent of one-half of
the Servicing Fee for such Distribution Date, deposit into the Certificate
Account, as a reduction of the Servicing Fee (but not in excess of one-half
thereof) for such Distribution Date, no later than the close of business on
the Business Day immediately preceding such Distribution Date, an amount
equal to the Prepayment Interest Shortfall; and in case of such deposit, the
Master Servicer shall not be entitled to any recovery or reimbursement from
the Depositor, the Trustee, the Trust Fund or the Certificateholders.
SECTION 4.03 REMIC Distributions
-------------------
On each Distribution Date the Trustee shall allocate distributions to
the REMIC 1 Regular Interests, the REMIC 2 Regular Interests, the REMIC 3
Regular Interests, and the REMIC 4 Regular Interests in accordance with
Section 4.06 hereof.
SECTION 4.04 Distributions.
-------------
(a) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group I Interest Funds in the following order of priority (unless otherwise
specified):
(i) to each Class of the Group I Class A Certificates, the Group I
Class A Current Interest and any Group I Class A Interest Carryforward
Amount for each such Class of Group I Class A Certificates; provided
that if the Group I Interest Funds are not sufficient to make a full
distribution of all Group I Class A Current Interest and any Group I
Class A Interest Carryforward Amount for all Classes of Group I Class A
Certificates, the Group I Interest Funds will be distributed pro rata
among each Class of the Group I Class A Certificates based on the ratio
of (x) the Group I Class A Current Interest and any Group I Class A
Interest Carryforward Amount for such Class of the Group I Class A
Certificates to (y) the total amount of Group I Class A Current Interest
and any Group I Class A Interest Carryforward Amount for all Classes of
Group I Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current
Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current
Interest;
(iv) to the Class BF Certificates, the Class BF Current Interest;
and
(v) any remainder shall constitute part of the Group I Excess
Cashflow for such Distribution Date.
(b) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group II Interest Funds in the following order of priority:
(i) to the Group II Class A Certificates, the Class AV-I Current
Interest and any Class AV-I Interest Carryforward Amount for the
Group II Class A Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current
Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current
Interest;
(iv) to the Class BV Certificates, the Class BV Current Interest;
and
(v) any remainder shall constitute part of the Group II Excess
Cashflow for such Distribution Date.
(c) On each Distribution Date, the Trustee shall make the
following allocation from the Distribution Account of an amount equal to the
Group I Principal Distribution Amount in the following order of priority:
(i) to the Group I Class A Certificates, the Group I Class A
Principal Distribution Amount to be distributed in the priority and as
provided in Section 4.04(d);
(ii) to the Class MF-1 Certificates, the Class MF-1 Principal
Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2 Principal
Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount; and
(v) any remainder shall constitute part of the Group I Excess
Cashflow for such Distribution Date.
(d) On each Distribution Date, the Group Class A Principal
Distribution Amount allocated under Section 4.04(c)(i) to the Group I Class A
Certificates is required to be further allocated by the Trustee to the Group
I Class A Certificates in the following priority: first to the Class AF-4
Certificates, the Class AF-4 Principal Distribution Amount, and then the
remainder sequentially to the Class AF-1, Class AF-2, Class AF-3 and Class
AF-4 Certificates, in that order until the respective Certificate Principal
Balances thereof are reduced to zero; provided that on any Distribution Date
on which the Group I Class A Certificate Principal Balance is equal to or
greater than the Stated Principal Balance as of such Distribution Date of the
Group I Mortgage Loans, the Group I Class A Principal Distribution Amount
will be distributed pro rata and not sequentially.
(e) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group II Principal Distribution Amount in the following order of priority:
(i) to the Group II Class A Certificates, the Class A Principal
Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Principal
Distribution Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2 Principal
Distribution Amount;
(iv) to the Class BV Certificates, the Class BV Principal
Distribution Amount; and
(v) any remainder shall constitute part of the Group II Excess
Cashflow for such Distribution Date.
(f) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of, first, the Group I
Excess Cashflow and, second, of the Group II Remainder Excess Cashflow, in
the following order of priority:
(i) for distribution as part of the Group I Principal Distribution
Amount, the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest
Carryforward Amount;
(iii) to the Class MF-1 Certificates, the Class MF-1 Unpaid Realized
Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 Interest
Carryforward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid Realized
Loss Amount;
(vi) to the Class BF Certificates, the Class BF Interest
Carryforward Amount;
(vii) to the Class BF Certificates, the Class BF Unpaid Realized
Loss Amount; and
(viii) the remainder (except for amounts representing Group II
Remainder Excess Cashflow) shall constitute Group I Remainder Excess
Cashflow.
(g) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of, first, the Group II
Excess Cashflow and, second, of the Group I Remainder Excess Cashflow, in the
following order of priority:
(i) for distribution as part of the Group II Principal
Distribution Amount, the Group II Extra Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Interest
Carryforward Amount;
(iii) to the Class MV-1 Certificates, the Class MV-1 Unpaid Realized
Loss Amount;
(iv) to the Class MV-2 Certificates, the Class MV-2 Interest
Carryforward Amount;
(v) to the Class MV-2 Certificates, the Class MV-2 Unpaid Realized
Loss Amount;
(vi) to the Class BV Certificates, the Class BV Interest
Carryforward Amount;
(vii) to the Class BV Certificates, the Class BV Unpaid Realized
Loss Amount; and
(viii) the remainder (except for amounts representing Group I
Remainder Excess Cashflow) shall constitute Group II Remainder Excess
Cashflow.
(h) On each Distribution the Trustee shall make the following
allocations from the Distribution Account of the Group I Remainder Excess
Cashflow in the following order of priority:
(i) for allocation pursuant to Section 4.04(g);
(ii) to the Class BF-IO Certificates, the Class BF-IO
Distributable Amount;
(iii)
to the Master Servicer, in payment of the Extra Master
Servicing Fee pursuant to Section 4.08 hereof for such Distribution
Date; and
(iv) any remainder to the Class R Certificates.
(i) On each Distribution the Trustee shall make the following
allocations from the Distribution Account of the Group II Remainder Excess
Cashflow in the following order of priority:
(i) for allocation pursuant to Section 4.04(f);
(ii) to the Carryover Reserve Fund, in an amount equal to the
Carryover Reserve Fund Deposit for further allocation pursuant to
Section 4.04(j);
(iii) to the Class BV-IO Certificates, the Class BV-IO
Distributable Amount;
(iv)
to the Master Servicer, in payment of the Extra Master
Servicing Fee for such Distribution Date pursuant to Section 4.07
hereof; and
(v) any remainder to the Class R Certificates.
(j) On each Distribution the Trustee shall make the following
allocations from the Carryover Reserve Fund of the Carryover Reserve Fund
Deposit: to each Class of Group II Certificates pro rata, any Adjustable Rate
Certificate Carryover for such Class.
(k) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount for the Group I Certificates to reduce the
Certificate Principal Balances of the Group I Subordinated Certificates in
the following order of priority:
(i) to the Class BF Certificates until the Class BF Certificate
Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class MF-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(l) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount for the Group II Certificates to reduce the
Certificate Principal Balances of the Group II Subordinated Certificates in
the following order of priority:
(i) to the Class BV Certificates until the Class BV Certificate
Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
(m) Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either by
wire transfer in immediately available funds to the account of such holder at
a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least 5 Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
aggregate principal denominations of not less than $1,000,000 or evidencing a
Percentage Interest aggregating 10% or more with respect to such Class or, if
not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.
Notwithstanding the foregoing, but subject to Section 9.02 hereof respecting
the final distribution, distributions with respect to Certificates registered
in the name of a Depository shall be made to such Depository in immediately
available funds.
On or before 5:00 p.m. Pacific time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Master
Servicer and the Trustee may agree from time to time) containing such data
and information as agreed to by the Master Servicer and the Trustee such as
to permit the Trustee to prepare the Monthly Statement to Certificateholders
and make the required distributions for the related Distribution Date (the
"Remittance Report"). The Trustee shall, not later than 9:00 a.m. Pacific
time on the Master Servicer Advance Date, other than any Master Servicer
Advance Date relating to any Distribution Date on which the proceeds of any
Optional Termination are being distributed, (i) furnish by telecopy a
statement to the Master Servicer (the information in such statement to be
made available to Certificateholders by the Trustee on request) setting forth
the Group I Interest Funds, Group I Principal Funds, Group II Interest Funds
and Group II Principal Funds for such Distribution Date and the amount to be
withdrawn from the Certificate Account and (ii) determine (and notify the
Master Servicer by telecopy of the results of such determination) the amount
of Advances to be made by the Master Servicer in respect of the related
Distribution Date; provided that no Advance shall be made if it would be a
Nonrecoverable Advance; provided further that any failure by the Trustee to
notify the Master Servicer will not relieve the Master Servicer from any
obligation to make any such Advances. The Trustee shall not be responsible
to recompute, recalculate or verify information provided to it by the Master
Servicer and shall be permitted to conclusively rely on any information
provided to it by the Master Servicer.
SECTION 4.05 Monthly Statements to Certificateholders.
----------------------------------------
(n) Not later than each Distribution Date, the Trustee shall
prepare and cause to be forwarded by first class mail to each Holder of a
Class of Certificates of the Trust Fund, the Master Servicer and the
Depositor a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein, (B) the aggregate
of all scheduled payments of principal included therein and (C) the
Group I Extra Principal Distribution Amount (if any) and the Group II
Extra Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each
Class allocable to interest;
(iii) the Class Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date and (ii) the allocation of any Applied Realized Loss
Amounts for such Distribution Date;
(iv) the aggregate of the Stated Principal Balance of the Mortgage
Loans for each Loan Group for the following Distribution Date;
(v) the related amount of the Servicing Fees paid to or retained
by the Master Servicer;
(vi) the Pass-Through Rate for each Class of Certificates with
respect to the current Accrual Period;
(vii) any Interest Carryforward Amount for each such Class;
(viii) the Group I Net Rate and the Group II Net Rate;
(ix) the amount of Advances for each Certificate Group included in
the distribution on such Distribution Date;
(x) the cumulative amount of Applied Realized Loss Amounts for
each Certificate Group to date;
(xi) the number and aggregate principal amounts of Mortgage Loans
in each Loan Group (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 days, (2) 31 to 60 days, (3) 61 to 90 days and
(4) 91 or more days, and (B) in foreclosure and delinquent (1) 30 days,
(2) 31 to 60 days, (3) 61 to 90 days and (4) 91 or more days, in each
case as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month in each Loan Group, the loan number
and Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date and
the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties
in each Loan Group as of the close of business on the Determination Date
preceding such Distribution Date;
(xiv) the Stated Principal Balance of all Liquidated Loans in each
Loan Group;
(xv) with respect to any Liquidated Loan in each Loan Group, the
loan number and Stated Principal Balance relating thereto;
(xvi) with respect to each Loan Group, whether a Trigger Event has
occurred; and
(xvii) the Adjustable Rate Certificate Carryover (if any) with
respect to each Class of Group II Certificates.
(o) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.05 to each Rating Agency.
(p) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vi)
of this Section 4.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in effect.
(q) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates the Form 1066 and
each Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with respect
to the following matters:
(i) The original projected principal and interest cash flows on
the Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each Class of regular
and residual interests created hereunder and the Mortgage Loans, based
on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest
cash flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end
of such calendar quarter with respect to each Class of regular or
residual interests created hereunder and to the Mortgage Loans, together
with each constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing
and amount of any cancellation of indebtedness income of the REMIC with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property"
or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.11.
Section 4.06 REMIC 1, REMIC 2, REMIC 3, and REMIC 4 Allocations.
---------------------------------------------------
(a) The initial principal balances of the Class T1-F1, Class T1-F2, and
Class T1-F3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-of Date.
On each Distribution Date, 98% of all Group I Principal Funds for the related
Due Period shall be allocated to the Class T1-F1 Interest. Remaining amounts
of Group I Principal Funds for the related Due Period shall be allocated
first to the Class T1-F3 Interest up to an amount equal to 2% of any amount
that represents a Group I Adjusted Overcollateralization Release Amount with
respect to such Distribution Date and then equally between the Class T1-F2
and Class T1-F3 Interests. Interest accruing on the Class T1-F3 Interest in
respect of each Distribution Date in an amount equal to 1% of the increase in
the Group I Adjusted Overcollateralization Amount from the immediately
preceding Distribution Date shall be deferred and added to the principal
balance of the Class T1-F3 Interest. The amount of interest accrued and
deferred on the Class T1-F3 Interest in accordance with the preceding
sentence in respect of each Distribution Date shall be distributed as
principal on such date to the Class T1-F2 Interest.
(b) On each Distribution Date, the Applied Realized Loss Amount with
respect to the Group I Certificates for such date shall be allocated 98% to
the Class T1-F1 Interest. The remaining 2% of such Applied Realized Loss
Amount shall be allocated to the Class T1-F3 Interest to the extent that the
principal balance of the Class T1-F3 Interest exceeds 1% of the aggregate of
the Stated Principal Balance of the Group I Mortgage Loans as of such date
and then equally between the Class T1-F2 and Class T1-F3 Interests.
(c) The initial principal balances of the Class T1-V1, Class T1-V2, and
Class T1-V3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-of
Date. On each Distribution Date, 98% of all Group II Principal Funds for the
related Due Period shall be allocated to the Class T1-V1 Interest. Remaining
amounts of Group II Principal Funds for the related Due Period shall be
allocated first to the Class T1-V3 Interest up to an amount equal to 2% of
any amount that represents a Group II Adjusted Overcollateralization Release
Amount with respect to such Distribution Date and then equally between the
Class T1-V2 and Class T1-V3 Interests. Interest accruing on the Class T1-V3
Interest in respect of each Distribution Date in an amount equal to 1% of the
increase in the Group II Adjusted Overcollateralization Amount from the
immediately preceding Distribution Date shall be deferred and added to the
principal balance of the Class T1-V3 Interest. The amount of interest
accrued and deferred on the Class T1-V3 Interest in accordance with the
preceding sentence in respect of each Distribution Date shall be distributed
as principal on such date to the Class T1-V2 Interest.
(d) On each Distribution Date, the Applied Realized Loss Amount with
respect to the Group II Certificates for such date shall be allocated 98% to
the Class T1-V1 Interest. The remaining 2% of such Applied Realized Loss
Amount shall be allocated to the Class T1-V3 Interest to the extent that the
principal balance of the Class T1-V3 Interest exceeds 1% of the aggregate of
the Stated Principal Balance of the Group II Mortgage Loans as of such date
and then equally between the Class T1-V2 and Class T1-V3 Interests.
(e) The initial principal balances of the Class T2-F1, Class T2-F2, and
Class T2-F3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-of Date.
The Class T2-F4 Interest shall not have a principal balance. On each
Distribution Date, 98% of all Group I Principal Funds for the related Due
Period shall be allocated to the Class T2-F1 Interest. Remaining amounts of
Group I Principal Funds for the related Due Period shall be allocated first
to the Class T2-F3 Interest up to an amount equal to 2% of any amount that
represents a Group I Adjusted Overcollateralization Release Amount with
respect to such Distribution Date and then equally between the Class T2-F2
and Class T2-F3 Interests. Interest accruing on the Class T2-F3 Interest in
respect of each Distribution Date in an amount equal to 1% of the increase in
the Group I Adjusted Overcollateralization Amount from the immediately
preceding Distribution Date shall be deferred and added to the principal
balance of the Class T2-F3 Interest. The amount of interest accrued and
deferred on the Class T2-F3 Interest in accordance with the preceding
sentence in respect of each Distribution Date shall be distributed as
principal on such date to the Class T2-F2 Interest.
(f) On each Distribution Date, the Applied Realized Loss Amount with
respect to the Group I Certificates for such date shall be allocated 98% to
the Class T2-F1 Interest. The remaining 2% of such Applied Realized Loss
Amount shall be allocated to the Class T2-F3 Interest to the extent that the
principal balance of the Class T2-F3 Interest exceeds 1% of the aggregate of
the Stated Principal Balance of the Group I Mortgage Loans as of such date
and then equally between the Class T2-F2 and Class T2-F3 Interests.
(g) The initial principal balances of the Class T2-V1, Class T2-V2, and
Class T2-V3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-of
Date. The Class T2-V4 Interest shall not have a principal balance. On each
Distribution Date, 98% of all Group II Principal Funds for the related Due
Period shall be allocated to the Class T2-V1 Interest. Remaining amounts of
Group II Principal Funds for the related Due Period shall be allocated first
to the Class T2-V3 Interest up to an amount equal to 2% of any amount that
represents a Group II Adjusted Overcollateralization Release Amount with
respect to such Distribution Date and then equally between the Class T2-V2
and Class T2-V3 Interests. Interest accruing on the Class T2-V3 Interest in
respect of each Distribution Date in an amount equal to 1% of the increase in
the Group II Adjusted Overcollateralization Amount from the immediately
preceding Distribution Date shall be deferred and added to the principal
balance of the Class T2-V3 Interest. The amount of interest accrued and
deferred on the Class T2-V3 Interest in accordance with the preceding
sentence in respect of each Distribution Date shall be distributed as
principal on such date to the Class T2-V2 Interest.
(h) On each Distribution Date, the Applied Realized Loss Amount with
respect to the Group II Certificates for such date shall be allocated 98% to
the Class T2-V1 Interest. The remaining 2% of such Applied Realized Loss
Amount shall be allocated to the Class T2-V3 Interest to the extent that the
principal balance of the Class T2-V3 Interest exceeds 1% of the aggregate of
the Stated Principal Balance of the Group II Mortgage Loans as of such date
and then equally between the Class T2-V2 and Class T2-V3 Interests.
(i) On each Distribution Date, the Class T3-F1, Class T3-F2, Class T3-
F3, Class T3-F4, Class T3-F5, Class T3-F6, Class T3-F7, Class T3-V1, Class
T3-V2, Class T3-V3 and Class T3-V4 Interests shall be entitled to receive
principal distributions that correspond to the principal distributions on the
corresponding class of Interests in REMIC 4 (the Class T4-F1, Class T4-F2,
Class T4-F3, Class T4-F4, Class T4-F5, Class T4-F6, Class T4-F7, Class T4-V1,
Class T4-V2, Class T4-V3, and Class T4-V4 Interests, respectively).
(j) On each Distribution Date, interest that accrues with respect to
the Class T3-F8, Class T3-F9 and Class T3-F10 Interests shall be distributed
as principal on the Class T3-F1, Class T3-F2, Class T3-F3, Class T3-F4, Class
T3-F5, Class T3-F6 and Class T3-F7 Interests to achieve the Group I Specified
Overcollateralization Amount for such Distribution Date, and to the extent
not needed for this purpose, shall be distributed with respect to the Class
T3-F8, Class T3-F9 and Class T3-F10 Interests in proportion to their
entitlements to current and accrued undistributed interest. On each
Distribution Date, interest that accrues with respect to the Class T3-V5,
Class T3-V6, and Class T3-V7 Interests shall be distributed as principal on
the Class T3-V1, Class T3-V2, Class T3-V3, and Class T3-V4 Interests to
achieve the Group II Specified Overcollateralization Amount for such
Distribution Date, and to the extent not needed for this purpose, shall be
distributed with respect to the Class T3-V5, Class T3-V6, and Class T3-V7
Interests in proportion to their entitlements to current and accrued
undistributed interest. Interest that accrues on the Class T3-F8, Class T3-
F9, Class T3-F10, Class T3-V5, Class T3-V6, and Class T3-V7 Interests shall
not itself bear interest.
(k) On each Distribution Date, the Applied Realized Loss Amount for the
Group I Certificates shall be allocated as follows:
first, to the Class T3-F1 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F1 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
second, to the Class T3-F2 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F2 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
third, to the Class T3-F3 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F3 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
fourth, to the Class T3-F4 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F4 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
fifth, to the Class T3-F5 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F5 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
sixth, to the Class T3-F6 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F6 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
seventh, to the Class T3-F7 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F7 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
eighth, proportionately to the accrued interest balances of the T3-F8,
Class T3-F9, Class T3-F10 Interests; and
ninth, in a manner that will cause any amount due on each REMIC 3
Regular Interest to equal the amount due on the corresponding Class of
REMIC 4 Regular Interests.
(l) On each Distribution Date, the Applied Realized Loss Amount for the
Group II Certificates shall be allocated as follows:
first, to the Class T3-V1 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V1 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
second, to the Class T3-V2 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V2 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
third, to the Class T3-V3 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V3 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
fourth, to the Class T3-V4 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V4 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
fifth, to the Class T3-V5 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V5 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
sixth, to the Class T3-V6 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V6 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
seventh, to the Class T3-V7 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-V7 Interest on
such Distribution Date (after giving effect to any distributions made on
such date);
eighth, proportionately to the accrued interest balances of the T3-V5,
Class T3-V6, Class T3-V7 Interests; and
ninth, in a manner that will cause any amount due on each REMIC 3
Regular Interests to equal the amount due on the corresponding Class of
REMIC 4 Regular Interests.
(m) On each Distribution Date, the Class T4-F1, Class T4-F2, Class T4-
F3, Class T4-F4, Class T4-F5, Class T4-F6, Class T4-F7, Class T4-V1, Class
T4-V2, Class T4-V3, and Class T4-V4 Interests shall be entitled to receive
distributions of principal and interest equal to the principal and interest
distributions required to be paid with respect to the corresponding Class of
Certificates (determined as if the distributions on the Certificates were
computed without regard to the amounts distributed under Section 4.04(i)
hereof from the Carryover Reserve Fund). On each Distribution Date, interest
that accrues with respect to the Class T4-F8, Class T4-F9, Class T4-F10,
Class T4-F11, Class T4-F12, Class T4-F13, Class T4-F14, during the related
Accrual Period shall be distributed as Group I Excess Cashflow and Group I
Remainder Excess Cashflow in accordance with Section 4.04 (f), (g) and (h),
and interest that accrues with respect to the Class T4-V5, Class T4-V6, Class
T4-V7, and Class T4-V8 Interests during the related Accrual Period shall be
distributed as Group II Excess Cashflow and as Group II Remainder Excess
Cashflow in accordance with Section 4.04(f), (g) and (i) hereof. Interest
that accrues on the Class T4-F8, Class T4-F9, Class T4-F10, Class T4-F11,
Class T4-F12, Class T4-F13, Class T4-F14, Class T4-V5, Class T4-V6, Class T4-
V7, and Class T4-V8 Interests shall not itself bear interest.
(n) On each Distribution Date, the Applied Realized Loss Amount for the
Group I Certificates and the Applied Realized Loss Amount for the Group II
Certificates shall be allocated among the REMIC 4 Regular Interests in
accordance with the allocations provided in Section 4.04 (k) and (l) hereof
for the corresponding classes of Certificates.
Section 4.07 Extra Master Servicing Fee
--------------------------
(a) REMIC 4 shall pay to the Master Servicer the Extra Master Servicing
Fee as an additional fee for services rendered as Master Servicer. Such fee
shall be due and payable on any Distribution Date only to the extent their
are amounts remaining after all amounts required to be distributed with
respect to the REMIC 4 Regular Interests have been made for that Distribution
Date. Furthermore, if for any Distribution Date an amount would be required
to be paid from the Carryover Reserve Fund pursuant to Section 4.04(j), the
Master Servicer shall make an advance to REMIC 4 in the amount of any Extra
Master Servicing Fee due for that Distribution Date.)
(b) With respect to each Distribution Date, the Extra Master Servicing
Fee shall equal the sum of the following:
(i) an amount equal to the product of the Class AF-1 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-F1 Interest
principal balance over the Class T4-F1 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date);
(ii) an amount equal to the product of the Class AF-2 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-F2 Interest
principal balance over the Class T4-F2 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date);
(iii) an amount equal to the product of the Class AF-3 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F3
Interest principal balance over the Class T4-F3 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(iv) an amount equal to the product of the Class AF-4 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-F4 Interest
principal balance over the Class T4-F4 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date);
(v) an amount equal to the product of the Class MF-1 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-F5 Interest
principal balance over the Class T4-F5 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date);
(vi) an amount equal to the product of the Class MF-2 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-F6 Interest
principal balance over the Class T4-F6 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date);
(vii) an amount equal to the product of the Class AV-1 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-V1
Interest principal balance over the Class T4-V1 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(viii) an amount equal to the product of the Class MV-1 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-V2
Interest principal balance over the Class T4-V2 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date); and
(ix) an amount equal to the product of the Class MV-2 Pass-Through Rate
for such Distribution Date and the excess of the Class T3-V3 Interest
principal balance over the Class T4-V3 Interest principal balance
(before giving effect to any reductions of such balances on such
Distribution Date).
Section 4.08 Carryover Reserve Fund
----------------------
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AV-1, Class
MV-1, Class MV-2, and Class BV Certificates, the Carryover Reserve Fund. The
Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled
with , any other moneys, including without limitation, other moneys held by
the Trustee pursuant to this Agreement.
(b) On each Distribution Date for which the amount on deposit in the
Carryover Reserve Fund is less than the amount of Required Carryover Reserve
Fund Deposit, the Trustee shall deposit amounts from the Distribution Account
to the Carryover Reserve Fund pursuant to Section 4.04(i). The Trustee shall
make withdrawals from the Carryover Reserve Fund to make distributions
pursuant to Section 4.04(i) hereof.
(c) Funds in the Carryover Reserve Fund may be invested in Permitted
Investments. Any earnings on such amounts shall be payable to the Class BV-
IO Certificates. The Class BV-IO Certificates shall evidence ownership of
the Carryover Reserve Fund for federal tax purposes and shall direct the
Trustee in writing as to the investment of amounts therein.
(d) Upon termination of the Trust Fund, any amounts remaining in the
Carryover Reserve Fund shall be distributed to the Holders of the Class BV-IO
Certificates in the same manner as if distributed pursuant to Section 4.04(i)
hereof.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
----------------
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Certificates shall be issuable in registered form,
in the minimum dollar denominations, integral dollar multiples in excess
thereof (except that one Certificate in of each Class may be issued in a
different amount which must be in excess of the applicable minimum dollar
denomination) and aggregate dollar denominations as set forth in the
following table:
<TABLE>
<CAPTION>
Integral Original
Multiples Certificate
Minimum in Excess of Principal
Class Denomination Minimum Balance
<S> <C> <C> <C>
AF-1 $25,000 $1,000 $31,920,000
AF-2 $25,000 $1,000 $22,000,000
AF-3 $25,000 $1,000 $10,000,000
AF-4 $25,000 $1,000 $10,000,000
MF-1 $25,000 $1,000 $4,200,000
MF-2 $25,000 $1,000 $2,940,000
BF $25,000 $1,000 $2,956,603
BF-IO N/A N/A N/A
AV-1 $25,000 $1,000 $151,300,000
MV-1 $25,000 $1,000 $10,680,000
MV-2 $25,000 $1,000 $9,790,000
BV $25,000 $1,000 $6,267,734
BV-IO N/A N/A N/A
R-1 0.001% N/A N/A
R-2 99.999% N/A N/A
</TABLE>
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication
and delivery. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and
such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and
--------------------------------------------------
Exchange of Certificates.
- ------------------------
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for
registration of Transfer of any Certificate, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the same Class and of like aggregate Percentage
Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate, and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of Transfer or exchange
shall be accompanied by a written instrument of Transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his attorney duly
authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Class B-IO or Class R Certificate shall be
made unless such Transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws
or is exempt from the registration requirements under the Securities Act and
such state securities laws. In the event that a Transfer is to be made in
reliance upon an exemption from the Securities Act and such laws, in order to
assure compliance with the Securities Act and such laws, the
Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the Transfer in substantially the forms set
forth in Exhibit J (the "Transferor Certificate") and (x) deliver a letter in
substantially the form of either Exhibit K (the "Investment Letter") or
Exhibit L (the "Rule 144A Letter") or (y) there shall be delivered to the
Trustee an opinion of counsel that such Transfer may be made pursuant to an
exemption from the Securities Act, which opinion of counsel shall not be an
expense of the Depositor, the Seller, the Master Servicer or the Trustee.
The Depositor shall provide to any Holder of a Class B-IO or Class R
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and
such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee and the Master
Servicer shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of
a Class B-IO or Class R Certificate desiring to effect such Transfer shall,
and does hereby agree to, indemnify the Trustee, the Depositor, the Seller
and the Master Servicer against any liability that may result if the Transfer
is not so exempt or is not made in accordance with such federal and state
laws.
No Transfer of an ERISA Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or
using the assets of any such plan, (ii) if such purchaser is an insurance
company, a representation that the purchaser is an insurance company that is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60, or (iii) in the
case of any such ERISA Restricted Certificate presented for registration in
the name of an employee benefit plan subject to ERISA, or a plan subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on
behalf of any such plan, an opinion of counsel satisfactory to the Trustee
and the Master Servicer to the effect that the purchase or holding of such
ERISA Restricted Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those expressly undertaken
in this Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Master Servicer. For purposes of clause (i) of the preceding
sentence, such representation shall be deemed to have been made to the
Trustee by the transferee's acceptance of an ERISA Restricted Certificate (or
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA Restricted Certificates) unless the Trustee shall have
received from the transferee an alternative representation acceptable in form
and substance to the Master Servicer and the Depositor. Notwithstanding
anything else to the contrary herein, any purported transfer of an ERISA
Restricted Certificate to or on behalf of an employee benefit plan subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code without
the delivery to the Trustee and the Master Servicer of an opinion of counsel
satisfactory to the Trustee and the Master Servicer as described above shall
be void and of no effect; provided that the restriction set forth in this
sentence shall not be applicable if there has been delivered to the Trustee
and the Master Servicer an opinion of counsel satisfactory to the Trustee and
the Master Servicer to the effect that the purchase or holding of an ERISA
Restricted Certificate will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those expressly undertaken
in this Agreement. The Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements. The Trustee shall be entitled, but not obligated, to recover
from any Holder of any ERISA Restricted Certificate that was in fact an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code or a Person acting on behalf of any such plan at the
time it became a Holder or, at such subsequent time as it became such a plan
or Person acting on behalf of such a plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate that is not such a plan or Person
acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in
a Class R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and
(C) not to Transfer its Ownership Interest in a Class R Certificate or
to cause the Transfer of an Ownership Interest in a Class R Certificate
to any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this
Section 5.02(c) shall be absolutely null and void and shall vest no
rights in the purported Transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the provisions
of this Section 5.02(c), then the last preceding Permitted Transferee
shall be restored to all rights as Holder thereof retroactive to the
date of registration of Transfer of such Class R Certificate. The
Trustee shall be under no liability to any Person for any registration
of Transfer of a Class R Certificate that is in fact not permitted by
Section 5.02(b) and this Section 5.02(c) or for making any payments due
on such Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this Agreement so
long as the Transfer was registered after receipt of the related
Transfer Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled but not
obligated to recover from any Holder of a Class R Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, the Seller or the
Master Servicer to the effect that the elimination of such restrictions will
not cause the Trust Fund to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the
Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably necessary (a) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is
not transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 shall not be an expense of the Trust
Fund, the Trustee, the Depositor, the Seller or the Master Servicer.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is
delivered to the Master Servicer and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest.
In connection with the issuance of any new Certificate under this
Section 5.03, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its
standard procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
---------------------
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the
contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses.
- ---------
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trustee shall not be held accountable by reason
of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
-----------------------
The Regular Certificates (other than the Class B-IO Certificates),
upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such
Certificates shall initially be registered on the Certificate Register in the
name of the Depository or its nominee, and no Certificate Owner of such
Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in
Section 5.08. Unless and until definitive, fully registered Certificates
("Definitive Certificates") have been issued to the Certificate Owners of
such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Master Servicer and the Trustee may deal
with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of
the respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of such Certificates and the Depository and/or
the Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Certificates are issued pursuant to Section 5.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may
be given by Certificate Owners (acting through the Depository and the
Depository Participants) owning Book-Entry Certificates evidencing the
requisite percentage of principal amount of such Class of Certificates.
SECTION 5.07. Notices to Depository.
---------------------
Whenever any notice or other communication is required to be given
to Certificateholders of the Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give
all such notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
-----------------------
If, after Book-Entry Certificates have been issued with respect to
any Certificates, (a) the Depositor advises the Trustee that the Depository
is no longer willing or able to discharge properly its responsibilities under
the Depository Agreement with respect to such Certificates and the Trustee or
the Depositor is unable to locate a qualified successor, (b) the Depositor,
at its sole option, advises the Trustee that it elects to terminate the book-
entry system with respect to such Certificates through the Depository or
(c) after the occurrence and continuation of an Event of Default, Certificate
Owners of such Book-Entry Certificates having not less than 51% of the Voting
Rights evidenced by any Class of Book-Entry Certificates advise the Trustee
and the Depository in writing through the Depository Participants that the
continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall
notify all Certificate Owners of such Certificates, through the Depository,
of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon surrender to the Trustee of any such Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
such Definitive Certificates, all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon
and performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices at 101 Barclay Street, Floor
12E, New York, New York 10286, Attention: Corporate Trust MBS
Administration, as offices for such purposes. The Trustee will give prompt
written notice to the Certificateholders of any change in such location of
any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
SECTION 6.01. Respective Liabilities of the Depositor, the Master
---------------------------------------------------
Servicer and the Seller.
- -----------------------
The Depositor, the Master Servicer and the Seller shall each be
liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor, the
---------------------------------------------
Master Servicer or the Seller.
- -----------------------------
The Depositor, the Master Servicer and the Seller will each keep in
full effect its existence, rights and franchises as a corporation under the
laws of the United States or under the laws of one of the States thereof and
will each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
Any Person into which the Depositor, the Master Servicer or the
Seller may be merged or consolidated, or any Person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or the Seller
shall be a party, or any person succeeding to the business of the Depositor,
the Master Servicer or the Seller, shall be the successor of the Depositor,
the Master Servicer or the Seller, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided
that the successor or surviving Person to the Master Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf
of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the
---------------------------------------------
Seller, the Master Servicer and others.
- --------------------------------------
None of the Depositor, the Seller, the Master Servicer or any of
the directors, officers, employees or agents of the Depositor, the Seller or
the Master Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in
judgment; provided that this provision shall not protect the Depositor, the
Seller, the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Seller, the Master Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Seller, the Master Servicer
and any director, officer, employee or agent of the Depositor, the Seller or
the Master Servicer shall be indemnified by the Trust Fund and held harmless
against any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage
Loan or Mortgage Loans (except as any such loss, liability or expense shall
be otherwise reimbursable pursuant to this Agreement) and any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the
Seller or the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder and that in its opinion may involve it in any expense or
liability; provided that any of the Depositor, the Seller or the Master
Servicer may, in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties
of the parties hereto and interests of the Trustee and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom shall be, expenses, costs and liabilities
of the Trust Fund, and the Depositor, the Seller and the Master Servicer
shall be entitled to be reimbursed therefor out of the Certificate Account as
provided by Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Master Servicer.
--------------------------------------------
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties
hereunder are no longer permissible under applicable law. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
No such resignation shall become effective until the Trustee or a successor
servicer to such appointment shall have assumed the Master Servicer's
responsibilities, duties, liabilities and obligations hereunder.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Master Servicer shall, for so long as it acts as servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations
as servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the
event that any such policy or bond ceases to be in effect, the Master
Servicer shall use its reasonable best efforts to obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.
ARTICLE VII
DEFAULT; TERMINATION OF MASTER SERVICER
SECTION 7.01. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the Trustee
any payment (excluding a payment required to be made under Section 4.01
hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for five calendar days and, with
respect to a payment required to be made under Section 4.01 hereof, for
one calendar day, after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee or the
Depositor, or to the Trustee and the Master Servicer by the Holders of
Certificates evidencing not less than 25% of the Voting Rights evidenced
by the Certificates; or
(ii) any failure by the Master Servicer or, so long as the Master
Servicer is also the Seller, the Seller to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement or any representation or
warranty shall prove to be untrue, which failure or breach shall
continue unremedied for a period of 60 days after the date on which
written notice of such failure shall have been given to the Master
Servicer by the Trustee or the Depositor, or to the Trustee by the
Holders of Certificates evidencing not less than 25% of the voting
Rights evidenced by the Certificates; provided that the sixty-day cure
period shall not apply to the initial delivery of the Mortgage File for
Delay Delivery Mortgage Loans nor the failure to repurchase or
substitute in lieu thereof; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained
in force undischarged or unstayed for a period of 60 consecutive days;
or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations.
If an Event of Default shall occur, then, and in each and every
such case, so long as such Event of Default shall not have been remedied, the
Trustee shall, but only at the direction of the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the
Certificates, by notice in writing to the Master Servicer (with a copy to
each Rating Agency), terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer hereunder, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee.
The Trustee shall thereupon make any Advance described in Section 4.01 hereof
subject to Section 3.04 hereof. The Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise. Unless expressly provided in such written notice,
no such termination shall affect any obligation of the Master Servicer to pay
amounts owed pursuant to Article VIII. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at
the time be credited to the Certificate Account, or thereafter be received
with respect to the Mortgage Loans. The Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default.
Notwithstanding any termination of the activities of a Master
Servicer hereunder, such Master Servicer shall be entitled
to receive, out of any late collection of a Scheduled Payment on a Mortgage
Loan that was due prior to the notice terminating such Master Servicer's
rights and obligations as Master Servicer hereunder and received after such
notice, that portion thereof to which such Master Servicer would have been
entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to such Master Servicer hereunder the entitlement to which
arose prior to the termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms
and provisions hereof and applicable law including the obligation to make
advances pursuant to Section 4.01. As compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage
Loans that the Master Servicer would have been entitled to if the Master
Servicer had continued to act hereunder. Notwithstanding the foregoing, if
the Trustee has become the successor to the Master Servicer in accordance
with Section 7.01 hereof, the Trustee may, if it shall be unwilling to so
act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution the appointment of which does
not adversely affect the then current rating of the Certificates by each
Rating Agency as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer hereunder. Any successor Master Servicer shall be an
institution that is a FNMA and FHLMC approved seller/servicer in good
standing, that has a net worth of at least $15,000,000, and that is willing
to service the Mortgage Loans and executes and delivers to the Depositor and
the Trustee an agreement accepting such delegation and assignment, that
contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer (other
than liabilities of the Master Servicer under Section 6.03 hereof incurred
prior to termination of the Master Servicer under Section 7.01), with like
effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation
will not be qualified or reduced as a result of such assignment and
delegation. No appointment of a successor to the Master Servicer hereunder
shall be effective until the Trustee shall have consented thereto, and
written notice of such proposed appointment shall have been provided by the
Trustee to each Certificateholder. The Trustee shall not resign as servicer
until a successor servicer has been appointed and has accepted such
appointment. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so
acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption,
the Trustee may make such arrangements for the compensation of such successor
out of payments on Mortgage Loans as it and such successor shall agree;
provided that no such compensation shall be in excess of that permitted the
Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. Neither the Trustee nor any other successor servicer
shall be deemed to be in default hereunder by reason of any failure to make,
or any delay in making, any distribution hereunder or any portion thereof or
any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the
Master Servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.
Any successor to the Master Servicer as servicer shall give notice
to the Mortgagors of such change of servicer and shall, during the term of
its service as servicer maintain in force the policy or policies that the
Master Servicer is required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Certificateholders notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and
remains uncured, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement shall examine them to determine
whether they conform to the requirements of this Agreement. If any such
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall take action as it deems appropriate to
have the instrument corrected.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly negligent failure
to perform its obligations in compliance with this Agreement, or any
liability that would be imposed by reason of its willful misfeasance or bad
faith; provided that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable,
individually or as Trustee, except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement that it reasonably
believed in good faith to be genuine and to have been duly executed by
the proper authorities respecting any matters arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee,
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was grossly
negligent or acted in bad faith or with willful misfeasance; and
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of Holders of each
Class of Certificates evidencing not less than 25% of the Voting Rights
of such Class relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee,
for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by Holders
of each Class of Certificates evidencing not less than 25% of the Voting
Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is
not assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee,
for any loss on any investment of funds pursuant to this Agreement
(other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have
received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee
without the possession of any of the Certificates, or the production thereof
at the trial or other proceeding relating thereto, and any such suit, action
or proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
-------------------------------------
The recitals contained herein shall be taken as the statements of
the Depositor or the Master Servicer, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document other than with respect to the Trustee's
execution and authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor or the Master
Servicer of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Certificate
Account by the Depositor or the Master Servicer.
SECTION 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 8.05. Master Servicer to Pay Trustee's Fees and Expenses.
--------------------------------------------------
The Master Servicer covenants and agrees (i) to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed in writing by the Master Servicer and the Trustee (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) for all services rendered by it in the
execution of the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee and (ii) to pay or
reimburse the Trustee, upon its request, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee on behalf of the
Trust Fund in accordance with any of the provisions of this Agreement
(including, without limitation: (A) the reasonable compensation and the
expenses and disbursements of its counsel, but only for representation of the
Trustee acting in its capacity as Trustee hereunder and (B) to the extent
that the Trustee must engage persons not regularly in its employ to perform
acts or services on behalf of the Trust Fund, which acts or services are not
in the ordinary course of the duties of a trustee, paying agent or
certificate registrar, in the absence of a breach or default by any party
hereto, the reasonable compensation, expenses and disbursements of such
persons, except any such expense, disbursement or advance as may arise from
its negligence, bad faith or willful misconduct). The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by
the Master Servicer and held harmless against any loss, liability or expense
(i) incurred in connection with any legal action relating to this Agreement
or the Certificates, or in connection with the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Trustee's duties hereunder or by reason of reckless
disregard of the Trustee's obligations and duties hereunder and
(ii) resulting from any error in any tax or information return prepared by
the Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder.
SECTION 8.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with
a credit rating that would not cause any of the Rating Agencies to reduce
their respective ratings of any Class of Certificates below the ratings
issued on the Closing Date (or having provided such security from time to
time as is sufficient to avoid such reduction). If such corporation or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06 the combined capital and surplus
of such corporation or association shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.06, the Trustee shall resign immediately in
the manner and with the effect specified in Section 8.07 hereof. The
corporation or national banking association serving as Trustee may have
normal banking and trust relationships with the Depositor, the Seller and the
Master Servicer and their respective affiliates; provided that such
corporation cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
----------------------------------
The Trustee may at any time resign and be discharged from the
trusts hereby created by (1) giving written notice of resignation to the
Depositor and the Master Servicer and by mailing notice of resignation by
first class mail, postage prepaid, to the Certificateholders at their
addresses appearing on the Certificate Register and each Rating Agency, not
less than 60 days before the date specified in such notice when, subject to
Section 8.08, such resignation is to take effect, and (2) acceptance of
appointment by a successor trustee in accordance with Section 8.08 and
meeting the qualifications set forth in Section 8.06. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to
resign after written request thereto by the Depositor, (ii) the Trustee shall
become incapable of acting, or shall be adjudged as bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located, (B) the imposition of such
tax would be avoided by the appointment of a different trustee and (C) the
Trustee fails to indemnify the Trust Fund against such tax, then the
Depositor or the Master Servicer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee, one copy of which shall be
delivered to the Master Servicer and one copy of which shall be delivered to
the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each
Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered by the successor Trustee to the
Master Servicer one complete set to the Trustee so removed and one complete
set to the successor so appointed. Notice of any removal of the Trustee
shall be given to each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
-----------------
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its
predecessor trustee and the Master Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.08, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates. If the Depositor
fails to mail such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
mailed at the expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of
Section 8.06 hereof without the execution or filing of any paper or further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Fund or property securing any Mortgage Note
may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Fund, and to vest in such Person or
Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust Fund or any part thereof, whichever is applicable, and,
subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. The Trustee shall be ultimately liable for
the actions of any co-trustee. If the Master Servicer shall not have joined
in such appointment within 15 days after the receipt by it of a request to do
so, or in the case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-
trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee under
this Agreement to advance funds on behalf of the Master Servicer, shall
be conferred or imposed upon and exercised or performed by the Trustee
and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder or as
successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or co-
trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-
trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject
to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Master
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Tax Matters.
-----------
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that REMIC 1, REMIC 2, REMIC
3, and REMIC 4 qualify as, a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent
(and the Trustee is hereby appointed to act as agent) on behalf of the Trust
Fund and that in such capacity it shall: (a) prepare and file, or cause to
be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Returns (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file or cause to be
prepared and filed with the Internal Revenue Service and applicable state or
local tax authorities income tax or information returns for each taxable year
with respect to each of REMIC 1, REMIC 2, REMIC 3, and REMIC 4, containing
such information and at the times and in the manner as may be required by the
Code or state or local tax laws, regulations, or rules, and furnish or cause
to be furnished to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby;
(b) within thirty days of the Closing Date, furnish or cause to be furnished
to the Internal Revenue Service, on Forms 8811 or as otherwise may be
required by the Code, the name, title, address, and telephone number of the
person that the holders of the Certificates may contact for tax information
relating thereto, together with such additional information as may be
required by such Form, and update such information at the time or times in
the manner required by the Code for the Trust Fund; (c) make or cause to be
made elections, on behalf of REMIC 1, REMIC 2, REMIC 3, and REMIC 4 to be
treated as a REMIC on the federal tax return of the REMIC 1, REMIC 2, REMIC
3, and REMIC 4 for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class R
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct the affairs
of the Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of REMIC 1, REMIC 2, REMIC 3, or REMIC 4 as a REMIC under
the REMIC Provisions; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status
of REMIC 1, REMIC 2, REMIC 3, or REMIC 4; (h) pay, from the sources specified
in the last paragraph of this Section 8.11, the amount of any federal, state
and local taxes, including prohibited transaction taxes as described below,
imposed on REMIC 1, REMIC 2, REMIC 3, or REMIC 4 prior to the termination of
the Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Trustee or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (i) sign or cause to be signed federal,
state or local income tax or information returns; (j) maintain records
relating to the REMIC 1, REMIC 2, REMIC 3, or REMIC 4, including but not
limited to the income, expenses, assets and liabilities of REMIC 1, REMIC 2,
REMIC 3, or REMIC 4, and the fair market value and adjusted basis of the
Trust Fund property determined at such intervals as may be required by the
Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (k) as and when necessary and appropriate,
represent the Trust Fund in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of a REMIC 1,
REMIC 2, REMIC 3, or REMIC 4 , enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of the REMIC 1, REMIC
2, REMIC 3, or REMIC 4 in relation to any tax matter involving the REMIC 1,
REMIC 2, REMIC 3, or REMIC 4.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall
provide to the Trustee promptly upon written request therefor, any such
additional information or data that the Trustee may, from time to time,
request in order to enable the Trustee to perform its duties as set forth
herein. The Depositor hereby indemnifies the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any
errors or miscalculations of the Trustee that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or
data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions"
of the Trust Fund as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of the Trust Fund as defined in Section
860G(c) of the Code, on any contribution to the Trust Fund after the startup
day pursuant to Section 860G(d) of the Code, or any other tax is imposed,
including, without limitation, any federal, state or local tax or minimum tax
imposed upon the Trust Fund pursuant to Sections 23153 and 24872 of the
California Revenue and Taxation Code if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its
obligations under this Agreement, (ii) (x) the Master Servicer, in the case
of any such minimum tax, and (y) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or (iii) in all
other cases, or in the event that any liable party here fails to honor its
obligations under the preceding clauses (i) or (ii), any such tax will be
paid first with amounts otherwise to be distributed to (the Class R
Certificateholders) (the Class B-IO Certificateholders) (pro rata), and
second with amounts otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the
Class BF and Class BV Certificates (pro rata), second, to the Class MF-2 and
MV-2 Certificates (pro rata), third, to the Class MF-1 and MV-1 Certificates
(pro rata), and fourth, to the Group I Class A Certificates and the Group II
Class A Certificates (pro rata). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificates, the Trustee is hereby authorized to retain on any Distribution
Date, from the Holders of the Class R Certificates (and, if necessary,
second, from the Holders of the all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. The Trustee agrees to
promptly notify in writing the party liable for any such tax of the amount
thereof and the due date for the payment thereof.
The Trustee shall treat the Carryover Reserve Fund as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) that is owned by
the Class BV-IO Certificateholders and that is not an asset of the REMIC.
The Trustee shall treat the rights of the Class AV-1, Class MV-1, Class MV-2,
and Class BV Certificateholders to receive payments from the Carryover
Reserve Fund rights in an interest rate cap contract written by the Class BV-
IO Certificateholder in favor of the Class AV-1, Class MV-1, Class MV-2, and
Class BV Certificateholders. Thus each Class AV-1, Class MV-1, Class MV-2,
and Class BV Certificate shall be treated as representing ownership of not
only REMIC 4 Regular Interests, but also ownership of an interest in an
interest rate cap contract. For purposes of determining the issue price of
the REMIC 4 Regular interests, the Trustee shall assume that the interest
rate cap contract has a value of $10,000.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all
-------------------------------------------------
Mortgage Loans.
- --------------
Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Master Servicer, the Seller and the Trustee created hereby
with respect to the Trust Fund shall terminate upon the earlier of (a) the
repurchase by the Master Servicer of all of the Mortgage Loans (and REO
Properties) remaining in the each Loan Group at the price equal to the sum of
(i) 100% of the Stated Principal Balance of each Mortgage Loan in such Loan
Group (other than in respect of REO Property), (ii) accrued interest thereon
at the applicable Mortgage Rate (or, if such repurchase is effected by the
Master Servicer, at the applicable Net Mortgage Rate), (iii) the appraised
value of any REO Property in such Loan Group (up to the Stated Principal
Balance of the related Mortgage Loan), such appraisal to be conducted by an
appraiser mutually agreed upon by the Master Servicer and the Trustee and
(iv) any unreimbursed Servicing Advances, and the principal portion of any
unreimbursed Advances, made on the Mortgage Loans in such Loan Group prior to
the exercise of such repurchase and (b) the later of (i) the maturity or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late Ambassador of the United States to the Court
of St. James, living on the date hereof and (ii) the Latest Possible Maturity
Date.
The right to repurchase all Mortgage Loans and REO Properties in a
Loan Group pursuant to clause (a) above shall be conditioned upon the Stated
Principal Balance of the Mortgage Loans in such Loan Group, at the time of
any such repurchase, aggregating ten percent or less of the aggregate Cut-off
Date Principal Balance of the Mortgage Loans in such Loan Group.
SECTION 9.02. Final Distribution on the Certificates.
--------------------------------------
If on any Determination Date, (i) the Master Servicer determines
that there are no Outstanding Mortgage Loans and no other funds or assets in
the Trust Fund other than the funds in the Certificate Account, the Master
Servicer shall direct the Trustee to send a final distribution notice
promptly to each Certificateholder or (ii) the Trustee determines that a
Class of Certificates shall be retired after a final distribution on such
Class, the Trustee shall notify the Certificateholders within five (5)
Business Days after such Determination Date that the final distribution in
retirement of such Class of Certificates is scheduled to be made on the
immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the related Certificates at the Corporate Trust
Office of the Trustee. If the Master Servicer elects to terminate the Trust
Fund pursuant to clause (a) of Section 9.01, at least 20 days prior to the
date notice is to be mailed to the affected Certificateholders, such electing
party shall notify the Depositor and the Trustee of the date such electing
party intends to terminate the Trust Fund and of the applicable repurchase
price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation, shall be
given promptly by the Trustee by letter to Certificateholders mailed not
earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at
the office therein designated, (b) the amount of such final distribution,
(c) the location of the office or agency at which such presentation and
surrender must be made, and (d) that the Record Date otherwise applicable to
such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein
specified. The Master Servicer will give such notice to each Rating Agency
at the time such notice is given to Certificateholders.
In the event such notice is given, the Master Servicer shall cause
all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the
Trust Fund and the receipt by the Trustee of a Request for Release therefor,
the Trustee shall promptly release to the Master Servicer the Mortgage Files
for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Distribution Account (and, if
applicable, the Carryover Reserve Fund) in the order and priority set forth
in Section 4.04 hereof on the final Distribution Date and in proportion to
their respective Percentage Interests.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee
may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets that remain a part of the Trust Fund. If within one year after
the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject
hereto.
SECTION 9.03. Additional Termination Requirements.
-----------------------------------
(a) In the event the Master Servicer exercises its purchase option
on both of the Group I Mortgage Loans and the Group II Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
supplied with an Opinion of Counsel, at the expense of the Master Servicer,
to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition of
taxes on "prohibited transactions" of a REMIC, or (ii) cause a REMIC to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day liquidation
period and notify the Trustee thereof, which shall in turn specify the
first day of such period in a statement attached to the Trust Fund's
final Tax Return pursuant to Treasury Regulation Section 1.860F-1. The
Master Servicer shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel obtained at the
expense of the Master Servicer;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Master
Servicer as agent of the Trustee shall sell all of the assets of the
Trust Fund for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on
hand (other than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to specify the 90-day liquidation period
for the Trust Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the
Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Master Servicer.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
---------
This Agreement may be amended from time to time by the Depositor,
the Master Servicer, the Seller and the Trustee, without the consent of any
of the Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, or to make such other provisions with respect to matters
or questions arising under this Agreement, as shall not be inconsistent with
any other provisions herein if such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder; provided that any such amendment shall be deemed not
to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates, it being
understood and agreed that any such letter in and of itself will not
represent a determination as to the materiality of any such amendment and
will represent a determination only as to the credit issues affecting any
such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee, the Depositor, the Master Servicer and the
Seller may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be
necessary or appropriate to maintain the qualification of the Trust Fund as a
REMIC under the Code or to avoid or minimize the risk of the imposition of
any tax on the Trust Fund pursuant to the Code that would be a claim against
the Trust Fund at any time prior to the final redemption of the Certificates,
provided that the Trustee have been provided an Opinion of Counsel, which
opinion shall be an expense of the party requesting such opinion but in any
case shall not be an expense of the Trustee, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Seller and the Trustee and the Holders of
each Class of Certificates affected thereby evidencing not less than 51% of
the Voting Rights of such Class for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided that no such amendment shall (i) reduce in any manner
the amount of, or delay the timing of, payments required to be distributed on
any Certificate without the consent of the Holder of such Certificate,
(ii) adversely affect in any material respect the interests of the Holders of
any Class of Certificates in a manner other than as described in (i), without
the consent of the Holders of Certificates of such Class evidencing 66% or
more of the Voting Rights of such Class or (iii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to
any such amendment without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall be an expense
of the party requesting such amendment but in any case shall not be an
expense of the Trustee, to the effect that such amendment will not cause the
imposition of any tax on the Trust Fund or the Certificateholders or cause
the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into
an amendment without receiving an Opinion of Counsel, satisfactory to the
Trustee that (i) such amendment is permitted and is not prohibited by this
Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required
to be reached pursuant to this Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
--------------------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at its
expense.
For the purpose of facilitating the recordation of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
SECTION 10.03. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF
LAWS PRINCIPLES THEREOF.
SECTION 10.04. Intention of Parties.
--------------------
It is the express intent of the parties hereto that the conveyance
of the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee.
However, in the event that, notwithstanding the intent of the parties, such
assets are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in such
assets, then (i) this Agreement shall be deemed to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York
and (ii) the conveyance provided for in this Agreement shall be deemed to be
an assignment and a grant by the Depositor to the Trustee, for the benefit of
the Certificateholders, of a security interest in all of the assets that
constitute the Trust Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to
the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the assets of the Trust Fund, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement. The
Depositor shall arrange for filing any Uniform Commercial Code continuation
statements in connection with any security interest granted or assigned to
the Trustee for the benefit of the Certificateholders.
SECTION 10.05. Notices.
-------
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which
it has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer or the
Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 2.04 and 3.12; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(i) Each report to Certificateholders described in Section 4.04;
(ii) Each annual statement as to compliance described in Section
3.17; and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in
the case of the Depositor, CWABS, Inc., 4500 Park Granada, Calabasas,
California 91302, Attention: Dave Walker, with a copy to the same address,
Attention: Legal Department; (b) in the case of the Seller or the Master
Servicer, Countrywide Home Loans, Inc., 4500 Park Granada, Calabasas,
California 91302, Attention: Dave Walker, with a copy to the same address,
Attention: Legal Department, or such other address as may be hereafter
furnished to the Depositor and the Trustee by the Master Servicer in writing;
(c) in the case of the Trustee, The Bank of New York, 101 Barclay Street,
12E, New York, New York Attention: Corporate Trust MBS Administration or
such other address as the Trustee may hereafter furnish to the Depositor or
the Master Servicer; and (d) in the case of the Rating Agencies, (i) Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.,
Attention: Mortgage Surveillance, 25 Broadway, 20th Floor, New York, NY
10007 and (ii) Moody's Investors Service, Attention: Residential Mortgage
Monitoring, 99 Church Street, New York, New York 10004. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
SECTION 10.07. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except
as provided pursuant to Section 6.02, this Agreement may not be assigned by
the Master Servicer without the prior written consent of the Trustee and
Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Certificates
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates shall also have made
written request to the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
---------------------------
The Master Servicer agrees that, on reasonable prior notice, it
will permit any representative of the Depositor or the Trustee during the
Master Servicer's normal business hours, to examine all the books of account,
records, reports and other papers of the Master Servicer relating to the
Mortgage Loans, to make copies and extracts therefrom, to cause such books to
be audited by independent certified public accountants selected by the
Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and independent
public accountants (and by this provision the Master Servicer hereby
authorizes such accountants to discuss with such representative such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any out-of-pocket expense incident to the exercise by
the Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall
be borne by the Master Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and
shall be deemed fully paid.
* * *
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Seller
and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.
CWABS, INC.,
as Depositor
By:
--------------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer and Seller
By:
--------------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee
By:
--------------------------------------------
Name:
Title:
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____th day of February, 1998, before me, a notary public in
and for said State, appeared David Walker, personally known to me on the
basis of satisfactory evidence to be the Executive Vice President of
Countrywide Home Loans, Inc., one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of such corporation and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
(Notarial Seal)
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____th day of February, 1998, before me, a notary public in
and for said State, appeared David Walker, personally known to me on the
basis of satisfactory evidence to be the Vice President of CWABS, Inc., one
of the corporations that executed the within instrument, and also known to me
to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of February, 1998, before me, a notary public in
and for said State, appeared _______________________, personally known to me
on the basis of satisfactory evidence to be a Assistant Treasurer, of The
Bank of New York, a New York banking corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf
of such corporation, and acknowledged to me that such corporation executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
(Notarial Seal)
Exhibit A-1
through A-13
(Exhibits A-1 through A-13 are
photocopies of such Certificates as
delivered.)
(see appropriate documents delivered at closing)
Exhibit B
(Reserved)
Exhibit C
(Reserved)
Exhibit D
(Exhibit D is a photocopy
of the Class R Certificate
as delivered.)
(see appropriate documents delivered at closing)
Exhibit E
(Exhibit E is a photocopy
of the Tax Matters Person Class R Certificate
as delivered.)
(see appropriate documents delivered at closing)
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
Re: Pooling and Servicing Agreement dated as of
February 20, 1998 among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank
of New York, as Trustee, Asset-Backed Certificates, Series
---------------------------------
1998-1
- ---------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed in the attached list of exceptions) it
has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of , without recourse"; and
------------------
(ii) a duly executed assignment of the Mortgage in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement referred to above.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
-----------------------------
Name:
Title:
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
Re: Pooling and Servicing Agreement dated as of
February 20, 1998 among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank
of New York, as Trustee, Asset-Backed Certificates, Series
---------------------------------
1998-1
- -------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as listed in the following paragraph, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attached list of exceptions) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of __________________________ without recourse", with all
intervening endorsements that show a complete chain of endorsement from the
originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or, in the event such original title policy has not been
received from the insurer, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company, with the original policy of title insurance
to be delivered within one year of the Closing Date.
If the Trustee has not received the original recorded Mortgage or an
original recorded assignment of the Mortgage satisfying the requirements of
clause (ii), (iii) or (iv) above, as applicable, the Trustee has received, in
lieu thereof, a true and complete copy of such Mortgage and/or such
assignment or assignments of the Mortgage, as applicable, each certified by
the Seller, the applicable title company, escrow agent or attorney, or the
originator of such Mortgage Loan, as the case may be, to be a true and
complete copy of the original Mortgage or assignment of Mortgage submitted
for recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to
such Mortgage Loan, and (ii) the information set forth in items (i), (iv),
(v), (vi), (viii), (xiii) and (xiv) of the definition of the "Mortgage Loan
Schedule" in Section 1.01 of the Pooling and Servicing Agreement accurately
reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
-----------------------------
Name:
Title:
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Seller)
Re: Pooling and Servicing Agreement dated as of February 20, 1998 among
CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller and
Master Servicer, and The Bank of New York, as Trustee, Asset-Backed
Certificates, Series 1998-1
---------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of _________________ without recourse", with all
intervening endorsements that show a complete chain of endorsement from the
originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted
by Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
If the public recording office in which a Mortgage or assignment thereof
is recorded has retained the original of such Mortgage or assignment, the
Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to
such Mortgage Loan, and (ii) the information set forth in items (i), (iv),
(v), (vi), (viii), (xiii), (xiv), (xv) and (xvi) of the definition of the
"Mortgage Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
----------------------------
Name:
Title:
EXHIBIT I
TRANSFER AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of February 20, 1998 (the "Agreement"), by and among CWABS, Inc., as
depositor (the "Depositor"), Countrywide Home Loans, Inc., as Seller and
Master Servicer and The Bank of New York, as Trustee. Capitalized terms
used, but not defined herein or in Exhibit 1 hereto, shall have the meanings
ascribed to such terms in the Agreement. The Transferee has authorized the
undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate either (i) for its own account or
(ii) as nominee, trustee or agent for another Person and has attached hereto
an affidavit from such Person in substantially the same form as this
affidavit. The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an
affidavit that such subsequent Transferee is a Permitted Transferee and, at
the time of Transfer, such Person does not have actual knowledge that the
affidavit is false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee
understands and agrees that any breach of any of the representations included
herein shall render the Transfer to the Transferee contemplated hereby null
and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will
not Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in
the form set forth as Exhibit M to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Class R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(3D).
10. The Transferee is aware that the Class R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant
purpose of the transfer was to impede the assessment or collection of tax.
In addition, as the holder of a noneconomic residual interest, the Transferee
may incur tax liabilities in excess of any cash flows generated by the
interest and the Transferee hereby represents that it intends to pay taxes
associated with holding the residual interest as they become due.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 19__.
(NAME OF TRANSFEREE)
By:____________________________
Name:
Title:
(Corporate Seal)
ATTEST:
_________________________
(Assistant) Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of _______, 19__.
______________________________
NOTARY PUBLIC
My Commission expires the ___ day of
_______________, 19__.
EXHIBIT 1
Certain Definitions
-------------------
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in Code
Section 521) that is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(c), (v) a Person that is
not a citizen or resident of the United States, a corporation, partnership,
or other entity created or organized in or under the laws of the United
States or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includable in gross income
for United States federal income tax purposes regardless of its connection
with the conduct of a trade or business within the United States and (vi) any
other Person so designated by the Trustee based upon an Opinion of Counsel
that the Transfer of an Ownership Interest in a Class R Certificate to such
Person may cause the Trust Fund to fail to qualify as a REMIC at any time
that certain Certificates are Outstanding. The terms "United States,"
"State" and "International Organization" shall have the meanings set forth in
Code Section 7701 or successor provisions. A corporation will not be treated
as an instrumentality of the United States or of any State or political
subdivision thereof if all of its activities are subject to tax, and, with
the exception of the FHLMC, a majority of its board of directors is not
selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
EXHIBIT 2
Section 5.02(c) of the Agreement
--------------------------------
(c) Each Person who has or who acquires any Ownership Interest in
a Class R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported transferee shall become a
Holder of a Class R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of
a Class R Certificate that is in fact not permitted by Section 5.02(b)
and this Section 5.02(c) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as
the Transfer was registered after receipt of the related Transfer
Affidavit, Transferor Certificate and either the Rule 144A Letter or the
Investment Letter. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, the Seller or the
Master Servicer to the effect that the elimination of such restrictions will
not cause the Trust Fund to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the
Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any Ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably necessary (a) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is
not transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
4500 Park Granada
Calabasas, California 91302
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1998-1
---------------------------
Ladies and Gentlemen:
In connection with our disposition of the Class __ Certificates, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being
disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action that would result in, a
violation of Section 5 of the Act and (c) if we are disposing of a Class R
Certificate, we have no knowledge the Transferee is not a Permitted
Transferee. All capitalized terms used herein but not defined herein shall
have the meanings assigned to them in the Pooling and Servicing Agreement
dated as of February 20, 1998, among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank of New York, as
Trustee.
Very truly yours,
_____________________________
Name of Transferor
By: _________________________
Name:
Title:
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A) FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
4500 Park Granada
Calabasas, California 91302
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1998-1
---------------------------
Ladies and Gentlemen:
In connection with our acquisition of the Class __ Certificates in
the Denomination of (the "Certificates"), we certify that (a)
---------------
we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and
all matters relating thereto or any additional information deemed necessary
to our decision to purchase the Certificates, (d) either (i) we are not an
employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, nor a plan subject to Section 4975 of the
Internal Revenue Code of 1986 (each of the foregoing, a "Plan"), nor are we
acting on behalf of any Plan or (ii) if we are an insurance company, a
representation that we are an insurance company which is purchasing the
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 the
Certificates are covered under PTCE 95-60, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of the Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action that would result in a violation of Section 5 of the Act, and
(g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of the Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with
any conditions for transfer set forth in the Pooling and Servicing Agreement
dated as of February 1, 1998 (the "Agreement"), among CWABS, Inc., as
Depositor, Countrywide Home Loans, Inc., as Seller and Master Servicer, and
The Bank of New York, as Trustee. All capitalized terms used herein but not
defined herein shall have the meanings assigned to them in the Agreement.
Very truly yours,
___________________________
Name of Transferee
By: _______________________
Name:
Title:
EXHIBIT L
FORM OF RULE 144A LETTER FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
4500 Park Granada
Calabasas, California 91101
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1998-1
---------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of the Class R
Certificates (the "Certificates") we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred
to us in a transaction that is exempt from the registration requirements of
the Act and any such laws, (b) we have such knowledge and experience in
financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity
to ask questions of and receive answers from the Depositor concerning the
purchase of the Certificates and all matters relating thereto or any
additional information deemed necessary to our decision to purchase the
Certificates, (d) or either (i) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended,
nor a plan subject to Section 4975 of the Internal Revenue Code of 1986 (each
of the foregoing, a "Plan"), nor are we acting on behalf of any Plan or (ii)
if we are an insurance company, a representation that we are an insurance
company which is purchasing the 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 the Certificates are covered under PTCE 95-60, (e) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy
or accept a transfer, pledge or other disposition of the Certificates, any
interest in the Certificates or any other similar security from, or otherwise
approached or negotiated with respect to the Certificates, any interest in
the Certificates or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would
render the disposition of the Certificates a violation of Section 5 of the
Securities Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with
respect to the Certificates, and (f) we are a "qualified institutional buyer"
as that term is defined in Rule 144A under the Securities Act and have
completed either of the forms of certification to that effect attached hereto
as Annex 1 or Annex 2. We are aware that the sale to us is being made in
reliance on Rule 144A. We are acquiring the Certificates for our own account
or for resale pursuant to Rule 144A and further, understand that the
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under
the Securities Act. All capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Pooling and Servicing
Agreement dated as of February 20, 1998, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller and Master Servicer, and The Bank of
New York, as Trustee.
______________________________
Name of Buyer
By: __________________________
Name:
Title:
ANNEX 1 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(For Transferees Other Than Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $__________/F1/ in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the category
marked below.
- --------------------
[FN]
/F1/ Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities.
</FN>
___ Corporation, etc. The Buyer is a corporation (other than a
----------------
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
----
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
----------------------------------
___ Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a
State or Federal authority having supervision over any such institutions or
is a foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
-------------
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
-----------------
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar official or agency
of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
-------------------
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
----------
meaning of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
------------------
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. The Buyer is a small
---------------------------------
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958.
___ Business Development Company. The Buyer is a business
----------------------------
development company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank
----------
or trust company and whose participants are exclusively State or Local Plans
or ERISA Plans as defined above, and no participant of the Buyer is an
individual retirement account or an H.R. 10 (Keogh) plan.
3. The term "securities" as used herein does not include (i)
---------- ----------------
securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if the
Buyer is a dealer, (iii) bank deposit notes and certificates of deposit, (iv)
loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph, except (i) where the Buyer
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in
accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule
144A.
6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
_____________________________
Name of Buyer
By: _________________________
Name:
Title:
Date: _______________________
ANNEX 2 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(For Transferees That are Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of
a Family of Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be
valued at market.
___ The Buyer owned $____________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
------------------------------
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
----------
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the Buyer's own
account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
______________________________
Name of Buyer or Adviser
By: __________________________
Name:
Title:
IF AN ADVISER:
______________________________
Name of Buyer
Date: ________________________
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
Loan Information
- ----------------
Name of Mortgagor: ______________________________
Master Servicer
Loan No.: ______________________________
Trustee
- -------
Name: ______________________________
Address: ______________________________
______________________________
Trustee
Mortgage File No.: ______________________________
The undersigned Master Servicer hereby acknowledges that it has received
from _______________________________________, as Trustee for the Holders of
Asset-Backed Certificates, Series 1998-1, the documents referred to below
(the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement dated as of February 20, 1998 (the "Pooling and Servicing
Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as
Seller and Master Servicer, and the Trustee.
( ) Mortgage Note dated ___________, 19__, in the original principal sum of
$________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Deed of Trust recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County Recorder's
Office of the County of __________, State of _______________ in
book/reel/docket _______________ of official records at page/image
_____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights
of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been
remitted to the Certificate Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trustee,
and the Master Servicer shall keep the Documents and any proceeds
separate and distinct from all other property in the Master Servicer's
possession, custody or control.
(Master Servicer)
By _______________________
Its _______________________
Date: _________________, 19__
EXHIBIT N
REQUEST FOR RELEASE
(Mortgage Loans Paid in Full, Repurchased or Replaced)
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 1998-1
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE Master Servicer, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
(ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.) (THE (PURCHASE
PRICE) (MORTGAGE LOAN REPURCHASE PRICE) FOR SUCH MORTGAGE LOANS HAS BEEN
PAID.) (THE MORTGAGE LOANS HAVE BEEN LIQUIDATED AND THE RELATED (INSURANCE
PROCEEDS) (LIQUIDATION PROCEEDS) HAVE BEEN DEPOSITED PURSUANT TO SECTION 3.13
OF THE POOLING AND SERVICING AGREEMENT.) (A REPLACEMENT MORTGAGE LOAN HAS
BEEN DELIVERED TO THE TRUSTEE IN THE MANNER AND OTHERWISE IN ACCORDANCE WITH
THE CONDITIONS SET FORTH IN SECTIONS 2.02 AND 2.03 OF THE POOLING AND
SERVICING AGREEMENT.)
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
(For Substitution or Repurchase Only: The Master Servicer certifies that
(an) (no) opinion is required by Section 2.05 (and is attached hereto).)
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________ DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
Exhibit O
(Exhibit O is a photocopy
of the Depository Agreement
as delivered.)
(see appropriate documents delivered at closing)
EXHIBIT P
FORM OF MORTGAGE NOTE AND MORTGAGE
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
March 10, 1998
BY MODEM
- --------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: CWABS, Inc.
Asset-Backed Certificates, Series 1998-1
----------------------------------------
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 and the
Mortgage Loan Statistics in connection with the above-referenced transaction.
Very truly yours,
/s/ Amy Sunshine
Amy Sunshine
