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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): November 20, 1998
CWABS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of November 1, 1998, providing for the
issuance of the CWABS, INC., Asset-Backed Certificates, Series
1998-3).
CWABS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-60823 95-4596514
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4500 Park Granada
Calabasas, California 91302
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 225-3240
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<PAGE>
Item 5. Other Events.
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On November 20, 1998, CWABS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of November 1, 1998 (the "Pooling and
Servicing Agreement"), by and among the Company, as depositor, Countrywide
Home Loans, Inc. ("CHL"), as seller and master servicer, and The Bank of New
York, as trustee (the "Trustee"), providing for the issuance of the Company's
Asset-Backed Certificates, Series 1998-3 (the "Certificates"). The Pooling and
Servicing Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. Pooling and Servicing Agreement, dated as of November 1, 1998,
by and among the Company, CHL and the Trustee.
<PAGE>
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
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David Walker
Vice President
Dated: December 11, 1998
<PAGE>
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement, dated as of November
1, 1998, by and among, the Company, CHL and the Trustee 5
EXHIBIT 99.1
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CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1998
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ASSET-BACKED CERTIFICATES, SERIES 1998-3
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TABLE OF CONTENTS
PAGE
----
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms................................................ I-1
Section 1.02. Certain REMIC-Related Defined Terms..........................I-40
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.................................II-1
Section 2.02. Acceptance by Trustee of the Mortgage Loans..................II-4
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller. ..................................II-6
Section 2.04. Representations and Warranties of the Depositor.............II-19
Section 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases. ...........................II-20
Section 2.06. Authentication and Delivery of Certificates.................II-21
Section 2.07. Covenants of the Master Servicer............................II-21
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-2
Section 3.04. Trustee to Act as Master Servicer...........................III-3
Section 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account ............................III-3
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-6
Section 3.08. Permitted Withdrawals from the Certificate Account,
Distribution Account and the Carryover Reserve Fund ......III-7
Section 3.09. [Reserved...................................................III-9
Section 3.10. Maintenance of Hazard Insurance.............................III-9
Section 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements..III-10
Section 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds and Realized Losses; Repurchase of
Certain Mortgage Loans ..................................III-11
Section 3.13. Trustee to Cooperate; Release of Mortgage Files............III-14
Section 3.14. Documents, Records and Funds in Possession of Master
Servicer to be Held for the Trustee .....................III-16
Section 3.15. Servicing Compensation.....................................III-15
Section 3.16. Access to Certain Documentation............................III-16
Section 3.17. Annual Statement as to Compliance..........................III-16
Section 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements .........................III-17
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-1
Section 4.03. REMIC Distributions..........................................IV-2
Section 4.04. Distributions................................................IV-2
Section 4.05. Monthly Statements to Certificateholders.....................IV-7
Section 4.06. REMIC 1, REMIC 2, REMIC 3, and REMIC 4 Allocations..........IV-10
Section 4.07. Extra Master Servicing Fee..................................IV-14
Section 4.08. Carryover Reserve Fund......................................IV-15
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-5
Section 5.04. Persons Deemed Owners.........................................V-6
Section 5.05. Access to List of Certificateholders' Names and Addresses.....V-6
Section 5.06. Book-Entry Certificates.......................................V-6
Section 5.07. Notices to Depository.........................................V-7
Section 5.08. Definitive Certificates.......................................V-8
Section 5.09. Maintenance of Office or Agency...............................V-8
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-2
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-2
Section 7.03. Notification to Certificateholders..........................VII-3
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-3
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses.........VIII-3
Section 8.06. Eligibility Requirements for Trustee.......................VIII-4
Section 8.07. Resignation and Removal of Trustee.........................VIII-4
Section 8.08. Successor Trustee..........................................VIII-5
Section 8.09. Merger or Consolidation of Trustee.........................VIII-6
Section 8.10. Appointment of Co-Trustee or Separate Trustee..............VIII-6
Section 8.11. Tax Matters................................................VIII-7
ARTICLE IX.
TERMINATION
Section 9.01. Termination upon Liquidation or Repurchase of
all Mortgage Loans ........................................IX-1
Section 9.02. Final Distribution on the Certificates.......................IX-1
Section 9.03. Additional Termination Requirements..........................IX-3
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.....................................................X-1
Section 10.02. Recordation of Agreement; Counterparts........................X-2
Section 10.03. Governing Law.................................................X-2
Section 10.04. Intention of Parties..........................................X-3
Section 10.05. Notices.......................................................X-3
Section 10.06. Severability of Provisions....................................X-4
Section 10.07. Assignment....................................................X-4
Section 10.08. Limitation on Rights of Certificateholders....................X-4
Section 10.09. Inspection and Audit Rights...................................X-5
Section 10.10. Certificates Nonassessable and Fully Paid.....................X-5
POOLING AND SERVICING AGREEMENT, dated as of November 1, 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
MF-1, Class MF-2, Class BF, Class AV-1, Class AV-2, 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 seven
classes of uncertificated REMIC 1 regular interests issued (the Class T1-F1,
Class T1-F2, Class T1-F3, T1-F4, Class T1-V1, Class T1-V2, and Class T1-V3
Interests), nine classes of uncertificated REMIC 2 regular interests issued (the
Class T2-F1, Class T2-F2, Class T2-F3, Class T2-F4, T2-F5, Class T2-V1, Class
T2-V2, Class T2-V3, and Class T2-V4 Interests), nineteen 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, Class T3-V7, Class T3-V8 and Class T3-V9 Interests),
and eighteen 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, and Class T4-F8, Class T4-V1, Class T4-V2, Class T4-V3, Class T4-V4,
Class T4-V5, Class T4-V6, Class T4-V7, Class T4-V8, Class T4-V9 and Class T4-V10
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
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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
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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 AV-2
Interest Carryover Amount for such Distribution Date (if any) (iii) the Class
MV-1 Interest Carryover Amount for such Distribution Date (if any), (iv) the
Class MV-2 Interest Carryover Amount for such Distribution Date (if any) and (v)
the Class BV Interest 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), (iv) or (v), as applicable, with the
same Class designation.
Adjustment Date: As to each Group II Mortgage Loan, each date on which
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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
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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 Distribution 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 with respect to 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.
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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
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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 1998-3". 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
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authenticated by the Trustee in substantially the forms attached hereto as
exhibits.
Certificate Account: The separate Eligible Account created and
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initially maintained by the Master Servicer pursuant to Section 3.05(b) with a
depository institution in the name of the Master Servicer for the benefit of the
Trustee on behalf of the Certificateholders and designated "Countrywide Home
Loans, Inc. in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 1998-3". Funds in the Certificate Account shall be held in
trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Group: Either of the Group I Certificates or the Group II
-----------------
Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (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(l) for
the Group I Certificates and (ii) Section 4.04(m) 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.
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: 6.815% per annum.
----------------------------
Class AV-1 Certificate: Any Certificate designated as a "Class AV-1
----------------------
Certificate" on the face thereof, in the form of Exhibit A-6 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 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.
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 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 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(i), 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 Margin: As of any Distribution Date on or prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.55% per annum and, as
of any Distribution Date after such Optional Termination Date, 1.10% per annum.
Class AV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.61094% 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 AV-2 Certificate: Any Certificate designated as a "Class AV-2
----------------------
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class AV-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the Certificate Principal Balance of the Class AV-2 Certificates.
Class AV-2 Current Interest: As of any Distribution Date, the interest
---------------------------
accrued on the Class AV-2 Certificate Principal Balance during the related
Accrual Period at the Class AV-2 Pass-Through Rate.
Class AV-2 Interest Carryforward Amount: As of any Distribution Date,
---------------------------------------
the sum of (i) the excess of (a) the Class AV-2 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
AV-2 Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class AV-2 Pass-Through Rate for the
related Accrual Period.
Class AV-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 AV-2
Certificates is based upon the Available Funds Cap, the excess of (i) the amount
of interest the Class AV-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 AV-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (ii) the amount of interest payable on the Class
AV-2 Certificates at the Available Funds Cap for such Distribution Date and (B)
the Class AV-2 Interest Carryover Amount for all previous Distribution Dates not
previously paid pursuant to Section 4.04(i), together with interest thereon at a
rate equal to the sum of One-Month LIBOR and the applicable Class AV-2 Margin
for such Distribution Date.
Class AV-2 Margin: As of any Distribution Date on or prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.55% per annum and, as
of any Distribution Date after such Optional Termination Date, 1.10% per annum.
Class AV-2 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.61094% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class AV-2 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-4 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.
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: On any Distribution Date, the lesser of
--------------------------
(i) 8.775% 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-5 hereto,
representing ownership of the Class T4-F5, Class T4-F6, Class T4-F7 and Class
T4-F8.
Class BF-IO Distributable Amount: With respect to any Distribution
--------------------------------
Date, the sum of the amounts distributable on the Class T4-F5, Class T4-F6,
Class T4-F7, and Class T4-F8 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-10 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.
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(i), 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, 2.750% per annum and, as of any
Distribution Date after such Optional Termination Date, 4.125% per annum.
Class BV Pass-Through Rate: For the first Distribution Date, 7.81094%
--------------------------
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-11 hereto,
representing ownership of the Class T4-V6, Class T4-V7, Class T4-V8, Class T4-V9
and Class T4-V10 Interests.
Class BV-IO Distributable Amount: With respect to any Distribution
--------------------------------
Date, the aggregate of the amounts distributable on the Class T4-V6, Class
T4-V7, Class T4-V8, Class T4-V9 and Class T4-V10 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-2 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.
Class MF-1 Interest Carryforward Amount: As of any Distribution Date,
---------------------------------------
the sum of (i) the excess of (a) the Class MF Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
MF Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MF-1 Pass-Through Rate for the
related Accrual Period.
Class MF-1 Pass-Through Rate: 7.050% per annum.
----------------------------
Class MF-1 Unpaid Realized Loss Amount: As of any Distribution Date,
--------------------------------------
the excess of (i) the Class MF-1 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-3 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.
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: On any Distribution Date, the lesser of
----------------------------
(i) 7.590% per annum and (ii) the weighted average Net Mortgage Rate for Group I
Mortgage Loans for the related Due Period.
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-8 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.
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(i), 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, 0.875% per annum and,
as of any Distribution Date after such Optional Termination Date, 1.3125% per
annum.
Class MV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.93594% 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-9 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.
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(i), 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, 1.250% per annum and,
as of any Distribution Date after such Optional Termination Date, 1.875% per
annum.
Class MV-2 Pass-Through Rate: For the first Distribution Date,
----------------------------
6.31094% 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: November 20, 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: November 1, 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 Loans identified on the
-----------------------------
schedule of Mortgage Loans hereto 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
O.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th
------------------
day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and designated "The Bank of New York,
in trust for registered holders of CWABS, Inc., Asset-Backed Certificates,
Series 1998-3". Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 1:00
---------------------------------
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
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 December 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 (or, if Fitch does not provide such a rating, by S&P in lieu of
Fitch) 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.
Fitch: Fitch IBCA, Inc.
-----
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
------
Act of 1989.
Fixed Rate Certificate Carryover: With respect to any Distribution
--------------------------------
Date, an amount equal to the sum of (i) the Class AF-1 Interest Carryover Amount
for such Distribution Date (if any), (ii) the Class MF-1 Interest Carryover
Amount for such Distribution Date (if any), (iii) the Class MF-2 Interest
Carryover Amount for such Distribution Date (if any) and (iv) the Class BF
Interest 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 I Certificates, it shall mean such carryover amount listed in
clauses (i), (ii), (iii), or (iv), as applicable, with the same Class
designation.
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 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 MF-1, Class MF-2,
--------------------
Class BF and/or Class BF-IO Certificates.
Group I Class A Certificate Principal Balance: The Class AF-1
---------------------------------------------
Certificate Principal Balance.
Group I Class A Certificates: The Class AF-1 Certificates.
----------------------------
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) 79.00% 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 $531,731.
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) 97.00% 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 $531,731; 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 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) 85.00% 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 $531,731.
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 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 $531,731.
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 Amount: 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 collected during the related Due Period (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 group of Mortgage Loans identified in the
----------------------
Prospectus Supplement as Group I Mortgage Loans and listed on the schedules of
Mortgage Loans hereto (i.e., Exhibits F-1 and F-2 hereof), 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 Net Rate Carryover Reserve Fund: The separate Eligible Account
---------------------------------------
created and initially maintained by the Trustee pursuant to Section 4.09 in the
name of the Trustee for the benefit of the Group I Certificateholders and
designated "The Bank of New York in trust for registered holders of CWABS, Inc.,
Asset-Backed Certificates, Series 1998-3". Funds in the Group I Net Rate
Carryover Reserve Fund shall be held in trust for the Group I Certificateholders
for the uses and purposes set forth in this Agreement.
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 aggregate Stated Principal Balances of each Group I Mortgage Loan that was
repurchased by the Seller or the Master Servicer, (iv) the aggregate of all
Substitution Adjustment Amounts for the related Determination Date in connection
with the substitution of Group I Mortgage Loans pursuant to Section 2.03(c) and
(v) all Liquidation Proceeds collected during the related Due Period (to the
extent such Liquidation Proceeds relate 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, 1.5% 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, 3.0%
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 Standard Rate: The lesser of 8.75% and the Group I Net Rate.
---------------------
Group I Stepdown Date: With respect to Group I Mortgage Loans, the
---------------------
later to occur of (i) the Distribution Date in December 2001 or (ii) the first
Distribution Date on which the Group I Class A Certificate Principal Balance is
less than or equal to 79.00% 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 Certificates: Any of the Class AV-1, Class AV-2, 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 AV-2, Class MV-1, Class MV-2 and Class BV Certificate Principal Balances.
Group II Class A Certificate Principal Balance: The sum of the Class
----------------------------------------------
AV-1 and Class AV-2 Certificate Principal Balances.
Group II Class A Current Interest: Any one or more of the following
---------------------------------
(as the context requires): Class AV-1 Current Interest and/or Class AV-2 Current
Interest.
Group II Class A Interest Carryforward Amount: Any one or more of the
---------------------------------------------
following (as the context requires): Class AV-1 Interest Carryforward Amount
and/or Class AV-2 Interest Carryforward Amount.
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) 65.50% 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
$1,299,400.
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 $1,299,400 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 or Class AV-2
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 $1,299,400.
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, Class AV-2 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) 89.00%
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 $1,299,400.
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(d)(v).
Group II Extra Principal Distribution Amount: 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 Class A Interest Carryforward Amount: Any one or more of the
---------------------------------------------
following (as the context requires): Class AV-1 Interest Carryforward Amount
and/or Class AV-2 Interest Carryforward Amount.
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 collected during the
related Due Period (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 group of Mortgage Loans identified in the
-----------------------
Prospectus Supplement as Group II Mortgage Loans and listed on the schedules of
Mortgage Loans hereto (i.e., Exhibits F-1 and F-2 hereof), including any
Mortgage Loans delivered in replacement thereof.
Group II Net Rate: The weighted average Net Mortgage Rate for Group II
-----------------
Mortgage Loans. For purposes of the definition of Group II Net Rate, all
calculations of interest in respect of a Mortgage Loan at the Mortgage Rate less
the Servicing Fee Rate will be made on the basis of the actual number of days in
the related Due Period and a 360 day year. The Net Mortgage Rate for the Group
II Mortgage Loans in respect of the first Distribution Date shall be 8.486%.
Group II Overcollateralization Amount: With respect to any
-------------------------------------
Distribution Date, the excess, if any, of 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 during the related Prepayment Period,
(iii) the aggregated Stated Principal Balances of each Group II Mortgage Loan
that was repurchased by the Seller or the Master Servicer, (iv) aggregate of all
Substitution Adjustment Amounts for the related Determination Date in connection
with the substitution of Group II Mortgage Loans pursuant to Section 2.03(c) and
(v) all Liquidation Proceeds collected during the related Due Period (to the
extent such Liquidation Proceeds relate 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 Standard Rate: The lesser of (i) the sum of (A) One Month
----------------------
LIBOR plus (B) the Class BV Margin, and (ii) the Group II Net Rate.
Group II Stepdown Date: With respect to Group II Mortgage Loans, the
----------------------
later to occur of (i) the Distribution Date in December 2001 or (ii) the first
Distribution Date on which the Group II Class A Certificate Principal Balance is
less than or equal to 65.50% 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, November 18, 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 Subgroup: Any of the Subgroup A Mortgage Loans, Subgroup B
-------------
Adjustable Rate Mortgage Loans or the Subgroup B Fixed Rate 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, 1:00 p.m.
----------------------------
Pacific time on 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.
Moody's: Moody's Investors Service, Inc.
-------
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 Excess Spread: With respect to any Distribution Date and
-----------------
Certificate Group, a fraction, expressed as a percentage, the numerator of which
is equal to the excess of (x) the aggregate Stated Principal Balance of the then
outstanding Mortgage Loans (after giving effect to distributions of principal of
the Certificates on such Distribution Date) in the related Loan Group times the
related Net Rate with respect to such Loan Group over (y) the sum of the
Interest Distribution Amount for such Distribution Date and Certificate Group,
and the denominator of which is an amount equal to (1) the aggregate Stated
Principal Balance (after giving effect to distributions of principal of the
Certificates on such Distribution Date) of the then outstanding Mortgage Loans
in the related Loan Group multiplied by (2) the actual number of days elapsed in
the related Interest Accrual Period divided by 360.
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 5.06094% 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, except that the Initial Adjustment Dates for certain
of the 2/28 and 3/27 Mortgage Loans are subject to a provision that limits
permissible increases and decreases in the Mortgage Rates as provided in the
related Mortgage Notes.
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 (or, if Fitch does
not provide such a rating, by S&P in lieu of Fitch), or such lower rating
as will not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each Rating
Agency (or, if Fitch does not provide such a rating, by S&P in lieu of
Fitch), or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by each 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
Rating Agency for such securities (or, if Fitch does not provide such a
rating, by S&P in lieu of Fitch), or such lower ratings as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency;
(vi) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency;
(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 (x) if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such securities and (y) if Fitch does not provide such a
rating, of S&P in lieu of Fitch), or such lower rating as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency;
(x) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable long term rating
by each Rating Agency (or, if Fitch does not provide such a rating, by S&P
in lieu of Fitch) or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the Certificates
by each 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 Rating Agency (or, if Fitch does not provide such a rating, by S&P
in lieu of Fitch) 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 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 Rating Agency, as evidenced by a signed
writing delivered by each 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, (v) an "electing large partnership" as
defined in Section 775 of the Code and (vi) 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, any state
thereof or the District of Columbia, or an estate whose income from sources
without the United States is includible 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 persons 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 November 17,
---------------------
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 (i) 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, (i) 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: (i) 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 on which the Net Excess Spread is less than 0.25%, the excess
of (i) the product of 0.50% and the aggregate Stated Principal Balance of the
Group II Mortgage Loans over (ii) the amount of funds on deposit in the
Carryover Reserve Fund prior to deposits thereto on such Distribution Date. With
respect to any Distribution Date on which the Net Excess Spread is equal to or
greater than 0.25%, the excess of (i) $5,000 over (ii) the amount of funds on
deposit in the Carryover Reserve Fund prior to deposits thereto on such
Distribution Date.
Required Group I Net Rate Carryover Reserve Fund Deposit: With respect
--------------------------------------------------------
to any Distribution Date on which the Net Excess Spread is less than 0.25%, the
excess of (i) the product of 0.50% and the aggregate Stated Principal Balance of
the Group I Mortgage Loans over (ii) the amount of funds on deposit in the Group
I Net Rate Carryover Reserve Fund prior to deposits thereto on such Distribution
Date. With respect to any Distribution Date on which the Net Excess Spread is
equal to or greater than 0.25%, the excess of (i) $5,000 over (ii) the amount of
funds on deposit in the Group I Net Rate Carryover Reserve Fund prior to
deposits thereto on such Distribution Date.
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.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies.
---
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 (i) 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.
Subgroup A Mortgage Loans: The subgroup of Group II Mortgage Loans
-------------------------
identified in the Prospectus Supplement as Subgroup A Mortgage Loans and listed
on the schedules of Mortgage Loans hereto (i.e., Exhibits F-1 and F-2 hereof),
including any Mortgage Loans delivered in replacement thereof.
Subgroup A Principal Funds: With respect to the Subgroup A 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 during the related Prepayment
Period (iii) the aggregate Stated Principal Balances of each Subgroup A Mortgage
Loan that was repurchased by the Seller or the Master Servicer, (iv) the
aggregate of all Substitution Adjustment Amounts for the related Determination
Date in connection with the substitution of Subgroup A Mortgage Loans pursuant
to Section 2.03(c) and (v) all Liquidation Proceeds collected during the related
Due Period (to the extent such Liquidation Proceeds relate to principal) less
all Nonrecoverable Advances relating to principal reimbursed during the related
Due Period.
Subgroup B Adjustable Rate Mortgage Loans: The subgroup of Group II
-----------------------------------------
Mortgage Loans identified in the Prospectus Supplement as Subgroup B Adjustable
Rate Mortgage Loans and listed on the schedules of Mortgage Loans hereto (i.e.,
Exhibits F-1 and F-2 hereof), including any Mortgage Loans delivered in
replacement thereof.
Subgroup B Fixed Rate Mortgage Loans: The subgroup of Group II
------------------------------------
Mortgage Loans identified in the Prospectus Supplement as Subgroup B Fixed Rate
Mortgage Loans and listed on the schedules of Mortgage Loans hereto (i.e.,
Exhibits F-1 and F-2 hereof), including any Mortgage Loans delivered in
replacement thereof.
Subgroup B Mortgage Loans: The Subgroup B Fixed Rate Mortgage Loans
-------------------------
and the Subgroup B Adjustable Rate Mortgage Loans, collectively.
Subgroup B Principal Funds: With respect to the Subgroup B Mortgage
--------------------------
Loans, the sum, without duplication of (i) the scheduled principal collected
during the related Due Period or Advanced or before the related Master Servicer
Advance Date, (ii) prepayments collected during the related Prepayment Period,
(iii) the aggregate Stated Principal Balances of each Subgroup B Mortgage Loan
that was repurchased by the Seller or the Master Servicer, (iv) the aggregate of
all Substitution Adjustment Amounts for the related Determination Date in
connection with the substitution of Subgroup B Mortgage Loans pursuant to
Section 2.03(c) and (v) all Liquidation Proceeds collected during the related
Due Period (to the extent such Liquidation Proceeds relate to principal) less
all Nonrecoverable Advances relating to principal reimbursed during the related
Due Period.
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 ss. 1.860F-4(d) and temporary
Treasury regulation ss. 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.
3/27 Mortgage Loan: A Mortgage Loan having a Mortgage Rate that is
------------------
fixed for 36 months after origination thereof before such Mortgage Rate becomes
subject to adjustment.
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, the
Carryover Reserve Fund and the Group I Net Rate 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 Certificate Principal
Balance of each Class relative to the 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 the product (i)
.98 and (ii) the excess of (A) the Group I Class A Certificate Balance as of the
Cut-off Date over (B) the Group I Specified Overcollateralization Amount, prior
to the Group I Stepdown 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 (i) 98% of the
Stated Principal Balance of the Group I Loans as of the Cut-off Date over (ii)
the principal balance of the Class T1-F1 Interest, 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-F4 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 the product (i)
.98 and (ii) the excess (A) the Group I Class A Certificate Balance as of the
Cut-off Date over (B) the Group I Specified Overcollateralization Amount, prior
to the Group I Stepdown 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 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 (i) 98% of the
Stated Principal Balance of the Group I Loans as of the Cut-off Date over (ii)
the principal balance of the Class T1-F1 Interest, 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 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 Standard 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 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-F5 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-F3 Interest in excess of the product of (i) the principal balance of the
Class T1-F3 Interest, and (ii) the Group I Standard Rate, and that has such
other terms as are described in Section 4.06. The Class T2-F5 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 Group II Standard 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 on the principal balance of the
Class T1-V2 Interests at the Group II Standard 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 that is held as an
--------------------
asset of REMIC 4, that has an initial principal balance equal to the product (i)
.98 and (ii) the excess (A) the Group I Class A Certificate Balance as of the
Cut-off Date over (B) the Group I Specified Overcollateralization Amount, prior
to the Group I Stepdown Date, that bears interest at a per annum rate equal to
6.81 percent, and that has such other terms as are described in Section 4.06.
Class T3-F2 Interest: A regular interest in REMIC 3 that is held as an
--------------------
asset of REMIC 4, that has a notional principal balance equal to the principal
balance of Class T3-F1 Interest, that bears interest at a per annum rate equal
to excess of (i) the Group I Standard Rate over (ii) the Class T3-F1 Interest
Rate, and has such other terms as are described in Section 4.06.
Class T3-F3 Interest: A regular interest in REMIC 3 that is held as an
--------------------
asset of REMIC 4, that has an initial principal balance equal to excess of the
Group I Class A Certificates Principal Balance over the principal balance of the
T3-F1 Interest, that bears interest at a per annum rate equal to the Group I
Standard 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 $3,190,000, that bears
interest at a rate equal to the Group I Standard 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 $3,190,000, that bears
interest at a rate equal to the Group I Standard 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 $3,190,000, that bears
interest at a rate equal to the Group I Standard 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 such terms as are described in Section 4.06.
Class T3-F7 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 T7-F7 Notional Balance immediately before such
distribution date, and (iii) the Class T3-F7 Pass-Through Rate.
Class T3-F7 Notional Balance: A notional principal balance equal as of
----------------------------
any date to the sum of the principal balances of the Class T2-F1, T2-F2 and
T2-F4 interests for such date.
Class T3-F7 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) Group I Standard Rate and (y) the principal balance of the Class
T2-F3 Interest immediately prior to such Distribution Date, and the denominator
of which is the sum of the principal balances of the Class T2-F3 and T2-F4
Interests immediately before such Distribution Date.
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 principal balance of the Class T2-F3 interest 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 Standard Rate over (ii)
the product of two and a fraction, the numerator of which is the product of (x)
Group I Standard Rate and (y) the Class T2-F3 Interest immediately prior to such
Distribution Date, and the denominator of which is the sum of the principal
balances of the Class T2-F3 and T2-F4 Interests immediately before such
Distribution Date.
Class T3-F9 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-F5 Interest, and has such terms as are described in
Section 4.06.
Class T3-F10 Interest: A regular interest in REMIC 3 that is held as
---------------------
an asset of REMIC 4 that will exist and have a principal balance to the extent
of the excess of (i) the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of the Cutoff Date over (ii) the aggregate Certificate
Principal Balance of the Class AF-1, Class MF-1, Class MF-2 and Class BF
Certificates on the Closing Date. The Class T3-F10 Interest will bear interest
at the Group I Standard Rate.
Class T3-V1 Interest: A regular interest in REMIC 3 held as an asset
--------------------
of REMIC 4 that has an initial principal balance of $100,000,000 and bears
interest at a rate equal to the Group II Standard 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 $100,000,000 and bears
interest at a rate equal to the Group II Standard 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 $9,026,000 bears interest at
a rate equal to the Group II Standard 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 $7,221,000 and bears
interest at a rate equal to the Group II Standard Rate.
Class T3-V5 Interest: A regular interest in REMIC 3 held as an asset
--------------------
of REMIC 4 that has an initial principal balance of $7,221,000 and bears
interest at a rate equal to the Group II Standard Rate.
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 sum of the principal balances of the Class T2-V1 and T2-V3
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 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 Group II Standard 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-V2 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-V7 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-V7 Notional Balance, and (iii) the Class T3-V7
Pass-Through Rate.
Class T3-V7 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-V7 Pass-Through Rate: With respect to any Distribution Date,
-----------------------------
a per annum rate equal to the excess of (i) the Group II Standard Rate for such
date over (ii) the product of (x) two and (y) a fraction, the numerator of which
is the product of the Group II Standard Rate Class T2-V2, 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-V8 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 T3-V9 Interest: A regular interest in REMIC 3 that is held as an
--------------------
asset of REMIC 4 that will exist and have a principal balance to the extent of
the excess of (i) the aggregate Stated Principal Balance of the Group II
Mortgage Loans as of the Cutoff Date over (ii) the aggregate Certificate
Principal Balance of the Class AV-1, Class AV-2, Class MV-1, Class MV-2 and
Class BV Certificates on the Closing Date. The Class T3-V9 Interest will bear
interest at the Group II Standard Rate.
Class T4-F1 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $96,775,000 and bears interest at 6.815%. 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 $3,190,000 and bears interest at 7.050%. Ownership
of the Class T4-F2 Interest is evidenced by the Class MF-1 Certificates.
Class T4-F3 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $3,190,000 and bears interest at the lesser of
7.590% and the Group I Net Rate. Ownership of the Class T4-F3 Interest is
evidenced by the Class MF-2 Certificates.
Class T4-F4 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $3,191,000 and bears interest at the lesser of
8.775% and the Group I Net Rate, Ownership of the Class T4-F4 Interest is
evidenced by the Class BF Certificates.
Class T4-F5 Interest: A regular interest in REMIC 4 that is entitled
--------------------
to 100% of the interest accruals on the Class T3-F1 and Class T3-F3 Interest in
excess of the Class AF-1 Certificate Pass-Through Rate. Ownership of the Class
T4-F5 Interest is represented by the Class BF-IO Certificates.
Class T4-F6 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 MF-1 Certificate Pass-Through Rate. Ownership of the Class T4-F6 Interest
is evidenced by the Class BF-IO Certificates.
Class T4-F7 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-2 Certificate Rate. Ownership of the Class T4-F7 Interest is evidenced
by the Class BF-IO Certificates.
Class T4-F8 Interest: A regular interest in REMIC 4 that is entitled
--------------------
to 100% of the amounts distributable on the Class T3-F2, Class T3-F7, Class
T3-F8, Class T3-F9and Class T3-F10 Interests. Ownership of the Class T4-F8
interest is represented by the Class BF-IO Certificates.
Class T4-V1 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $100,000,000 and that bears interest at the lesser
of (i) the Class AV-1 Pass-Through Rate and (ii) the Group II Net Mortgage 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 $118,948,000 and that bears interest at the lesser
of (i) the Class AV-2 Pass-Through Rate and (ii) the Group II Net Mortgage Rate.
Ownership of the Class T4-V2 Interest is evidenced by the Class AV-2
Certificates.
Class T4-V3 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $17,542,000 and that bears interest at the lesser
of (i) the Class MV-1 Pass-Through Rate and (ii) the Group II Net Mortgage Rate.
Ownership of the Class T4-V3 Interest is evidenced by the Class MV-1
Certificates.
Class T4-V4 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $12,994,000 and that bears interest at the lesser
of (i) the Class MV-2 Pass-Through Rate and (ii) the Group II Net Mortgage Rate.
Ownership of the Class T4-V4 Interest is evidenced by the Class MV-2
Certificates.
Class T4-V5 Interest: A regular interest in REMIC 4 that has an
--------------------
initial principal balance of $10,396,000 and that bears interest at the lesser
of the Class BV Pass-Through Rate and (ii) the Group II Net Mortgage Rate.
Ownership of the Class T4-V5 Interest is evidenced by the Class BV Certificates.
Class T4-V6 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
interest accruals on the Class T4-V1 Interest. 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-V2 Interest in excess of
interest accruals on the Class T4-V2 Interest. 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 interest accruals on the Class T3-V3 Interest in excess of
interest accruals on the Class T4-V3 Interest. Ownership of the Class T4-V8
Interest is evidenced by the Class BV-IO Certificates.
Class T4-V9 Interest: A regular interest in REMIC 4 that is entitled
--------------------
to 100% of the interest accruals on the Class T3-V4 Interest in excess of
interest accruals on the Class T4-V4 Interest. Ownership of the Class T4-V9
Interest is evidenced by the Class BV-IO Certificates.
Class T4-V10 Interest: A regular interest in REMIC 4 that is entitled
---------------------
to 100% of the amounts distributable with respect to the Class T3-V6, Class
T3-V7, Class T3-V8 and Class T3-V9 Ownership of the Class T4-V10 Interest is
evidenced by the BV-10 Certificates BV-10 Certificates.
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-F3, Class T3-F4, Class T3-F5 and the Class T3-F6
Interests.
Group I Adjusted Overcollateralization Release Amount: For any
-----------------------------------------------------
Distribution Date, the lesser of (a) the Group I Principal Distribution Amount
with respect to the Group I Mortgage Loans, and (b) the amount, if any, by which
the Group I Adjusted Overcollateralization Amount for such date, calculated for
this purpose on the basis of the assumption that 100% of the Group I Principal
Distribution Amount for such date is applied on such date in reduction of the
principal balances of the Class T3-F1, Class T3-F3, Class T3-F4, Class T3-F5 and
Class T3-F6 Interests, 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, T3-V4 and the Class T3-V5 Interests.
Group II Adjusted Overcollateralization Release Amount: For any
------------------------------------------------------
Distribution Date, the lesser of the (a) the Group II Principal Distribution
Amount with respect to the Group II Mortgage Loans, and (b) the amount, if any,
by which the Group II Adjusted Overcollateralization Amount for such date,
calculated for this purpose on the basis of the assumption that 100% of the
Group II Principal Distribution Amount for such date is applied on such date in
reduction of the principal balances of the Class T3-V1, Class T3-V2, Class
T3-V3, Class T3-V4 and Class T3-V5 Interests, 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 the Cut-off Date. The Seller
confirms that, concurrently with such transfer and assignment, it has deposited
into the Certificate Account the Initial Certificate Account Deposit.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the use and benefit of the Certificateholders, 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 November 1, 1998, CWABS, Inc., Asset-Backed
Certificates, Series 1998-3, without recourse" (each such assignment, when
duly and validly completed, to be in recordable form and sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or, in the event such original title policy has not been
received from the insurer, 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 or subgroup thereof are measured by the Cut-off Date Principal
Balance of the Mortgage Loans in such Loan Group or subgroup thereof, as the
case may be):
(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 had a Loan-to-Value Ratio at origination
in excess of 90%; no Group II Mortgage Loan had a Combined Loan-to-Value
Ratio at origination in excess of 100%.
(xi) Each Group I Mortgage Loan, each Subgroup A Mortgage Loan and
each Subgroup B Adjustable Rate Mortgage Loan is secured by a valid and
enforceable first lien on the related Mortgaged Property, and each Subgroup
B Fixed Rate Mortgage Loan is secured by a valid and enforceable first or
second 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.
All of the Group I Mortgage Loans, all of the Subgroup A Mortgage Loans,
all of the Subgroup B Adjustable Rate Mortgage Loans and approximately
81.38% of the Subgroup B Fixed Rate Mortgage Loans were secured by first
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 3.17% of the Group I Mortgage Loans,
approximately 3.54% of the Subgroup A Mortgage Loans, approximately 1.49%
of the Subgroup B Fixed Rate Mortgage Loans and approximately 3.02% of the
Subgroup B Adjustable Rate Mortgage Loans are secured by two- to
four-family dwellings. Approximately 3.09% of the Group I Mortgage Loans,
approximately 3.79% of the Subgroup A Mortgage Loans, approximately 1.27%
of the Subgroup B Fixed Rate Mortgage Loans and approximately 4.71% of the
Subgroup B Adjustable Rate Mortgage Loans are secured by condominium units.
Approximately 86.61% of the Group I Mortgage Loans, approximately 85.20% of
the Subgroup A Mortgage Loans, approximately 87.96% of the Subgroup B Fixed
Rate Mortgage Loans and approximately 83.18% of the Subgroup B Adjustable
Rate Mortgage Loans are secured by detached one-family dwellings.
Approximately 5.28% of the Group I Mortgage Loans, approximately 6.75% of
the Subgroup A Mortgage Loans, approximately 9.28% of the Subgroup B Fixed
Rate Mortgage Loans and approximately 7.79% of the Subgroup B Adjustable
Rate Mortgage Loans are secured by PUDs. Approximately 1.85% of the Group I
Mortgage Loans, approximately 0.72% of the Subgroup A Mortgage Loans, none
of the Subgroup B Fixed Rate Mortgage Loans and approximately 1.30% of the
Subgroup B Adjustable Rate Mortgage Loans are secured by manufactured
housing.
(xxxiv) No Group I Mortgage Loan had a principal balance in excess of
$227,000, no Subgroup A Mortgage Loan had a principal balance in excess of
$225,528, no Subgroup B Fixed Rate Mortgage Loan had a principal balance in
excess of $715,000, no Subgroup B Adjustable Rate Mortgage Loan had a
principal balance in excess of $1,261,400, in each case at origination.
(xxxv) Each Group I Mortgage Loan was originated in or after January
1998.
(xxxvi) Each Group II Mortgage Loan was originated in or after April
1997; each Group II Mortgage Loan other than 2/28 and 3/27 Mortgage Loans
had an initial Adjustment Date no later than June 1999; each 2/28 and 3/27
Mortgage Loan had an initial Adjustment Date no later than December 2001.
(xxxvii) Approximately 83.15% of the Group I Mortgage Loans and
approximately 82.01% 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, approximately 91.41% of the Group I Mortgage Loans
are secured by owner-occupied Mortgaged Properties that are primary
residences.
(xl) On the basis of representations made by the Mortgagors in their
loan applications, approximately 96.13% of the Subgroup A Mortgage Loans
are secured by owner-occupied Mortgaged Properties that are primary
residences, approximately 93.65% of the Subgroup B Fixed Rate Mortgage
Loans are secured by owner-occupied Mortgaged Properties that are primary
residences, and approximately 92.24% of the Subgroup B Adjustable Rate
Mortgage Loans are secured by owner-occupied Mortgaged Properties that are
primary residences.
(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 approximately 6.750% per annum to approximately
16.250% per annum and the weighted average Mortgage Rate as of the Cut-off
Date was approximately 9.521% per annum.
(liii) The Mortgage Rates borne by the Subgroup A Mortgage Loans as of
the Cut-off Date ranged from approximately 4.750% per annum to
approximately 13.125% per annum and the weighted average Mortgage Rate as
of the Cut-off Date was approximately 8.863% per annum. The Mortgage Rates
borne by the Subgroup B Fixed Rate Mortgage Loans as of the Cut-off Date
ranged from approximately 7.625% per annum to approximately 15.750% per
annum and the weighted average Mortgage Rate as of the Cut-off Date was
approximately 9.539% per annum. The Mortgage Rates borne by the Subgroup B
Adjustable Rate Mortgage Loans as of the Cut-off Date ranged from
approximately 5.50% per annum to approximately 14.75% per annum and the
weighted average Mortgage Rate as of the Cut-off Date was approximately
9.004% 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 Subgroup A Mortgage Loans range from
approximately 3.500% per annum to approximately 8.875% per annum and the
weighted average Gross Margin was approximately 6.185% per annum. The Gross
Margins on the Subgroup B Adjustable Rate Mortgage Loans range from 4.000%
per annum to approximately 9.500% per annum and the weighted average Gross
Margin approximately 6.383% per annum.
(lvi) Except for 10 Group I Mortgage Loans representing approximately
0.61% of the Group I Mortgage Loans and except for 15 Group II Mortgage
Loans representing approximately 0.62% 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 ss. 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. ss. 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
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Substitutions and Repurchases.
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(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03 or
2.04 shall be made unless the Representing Party making such repurchase or
substitution delivers to the Trustee an Opinion of Counsel, addressed to the
Trustee, to the effect that such repurchase or substitution would not (i) result
in the imposition of the tax on "prohibited transactions" of the Trust Fund or
contributions after the 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.
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(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer or
a subservicer or reference to actions taken through a Master Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
Every subservicing agreement entered into by the Master Servicer shall contain a
provision giving the successor Master Servicer the option to terminate such
agreement in the event a successor Master Servicer is appointed. All actions of
each subservicer performed pursuant to the related subservicing agreement shall
be performed as an agent of the Master Servicer with the same force and effect
as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Master Servicer.
Section 3.03. Rights of the Depositor, the Trustee in Respect of the
------------------------------------------------------
Master Servicer.
---------------
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Master Servicer, and none of
them is obligated to supervise the performance of the Master Servicer hereunder
or otherwise.
Section 3.04. Trustee to Act as Master Servicer.
---------------------------------
In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default),
the Trustee or its designee shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Master Servicer pursuant to
Section 3.10 hereof or any acts or omissions of the predecessor Master Servicer
hereunder, (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof,
(iv) responsible for expenses of the Master Servicer pursuant to Section 2.03 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.03 or the first paragraph of Section 6.02 hereof). If the
Master Servicer shall for any reason no longer be the Master Servicer (including
by reason of any Event of Default), the Trustee (or any other successor
servicer) may, at its option, succeed to any rights and obligations of the
Master Servicer under any subservicing agreement in accordance with the terms
thereof; provided that the Trustee (or any other successor servicer) shall not
incur any liability or have any obligations in its capacity as servicer under a
subservicing agreement arising prior to the date of such succession unless it
expressly elects to succeed to the rights and obligations of the Master Servicer
thereunder; and the Master Servicer shall not thereby be relieved of any
liability or obligations under the subservicing agreement arising prior to the
date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each subservicing agreement and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
Section 3.05. Collection of Mortgage Loan Payments; Certificate
-------------------------------------------------
Account; Distribution Account.
-----------------------------
(a) The Master Servicer shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage lenders in
the respective states in which the Mortgaged Properties are located to collect
all payments called for under the terms and provisions of the Mortgage Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Master Servicer may in its discretion (i) waive any late payment
charge or any prepayment charge or penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) extend the due dates for payments due on
a Mortgage Note for a period not greater than 270 days. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan during the scheduled period in accordance with the amortization schedule of
such Mortgage Loan without modification thereof by reason of such arrangements.
The Master Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited on
a daily basis within one Business Day of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted by
Subservicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans before the Cut-off Date) and the following amounts required to be
deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) 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 November 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 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 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.
(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 remitted by the Master Servicer 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, the Carryover Reserve Fund or the Group I Net Rate
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 second Business Day next
preceding the related Distribution Account Deposit 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
the Business Day next preceding such Distribution Account Deposit Date) and (ii)
in the case of the Distribution Account, the Carryover Reserve Fund and the
Group I Net Rate 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, Carryover Reserve Fund or the Group I Net
Rate 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 (x) the
Carryover Reserve Fund which shall be made in the name of the Trustee, for the
benefit of the Class BV-IO Certificateholders and (y) the Group I Net Rate
Carryover Reserve Fund which shall be made in the name of the Trustee, for the
benefit of the Class BF-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, (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 and (z) the Group I Net Rate
Carryover Reserve Fund, all income and gain net of any losses realized from any
such investment shall be for the benefit of the Class BF-IO Certificateholders
and shall be remitted to the Class BF-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 in the Certificate Account or paid to the Trustee for
deposit into 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 Reserve Fund (or such investments)
immediately as realized. Any losses incurred in the Group I Net Rate Carryover
Reserve Fund in respect of any such investments shall be charged against amounts
on deposit in the the Group I Net Rate Carryover Reserve 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, the
Carryover Reserve Fund or the Group I Net Rate Carryover Reserve Fund and made
in accordance with this Section 3.05.
(f) The Master Servicer shall give at least 30 days advance notice to
the Trustee, the Seller, each Rating Agency and the Depositor of any proposed
change of location of the Certificate Account prior to any change thereof. 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 Distribution Account, the Carryover Reserve Fund or the Group I
Net Rate Carryover Reserve Fund prior to any change thereof.
Section 3.06. Collection of Taxes, Assessments and Similar Items;
---------------------------------------------------
Escrow Accounts.
---------------
To the extent required by the related Mortgage Note, the Master
Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Master Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Master Servicer to compel a Mortgagor to
establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Master Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
Section 3.07. Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Mortgage Loans.
----------------------------
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance policies and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the offices of the Master Servicer
designated by it.
Upon reasonable advance notice in writing if required by federal
regulation, the Master Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided that the Master Servicer shall be
entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Master Servicer in providing such reports and access.
Section 3.08. Permitted Withdrawals from the Certificate Account,
---------------------------------------------------
Distribution Account, the Carryover Reserve Fund and
----------------------------------------------------
the Group I Net Rate Carryover Reserve Fund.
-------------------------------------------
(a) The Master Servicer may from time to time make withdrawals from
the Certificate Account 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 Distribution
Account Deposit Date, the Master Servicer shall withdraw from the Certificate
Account and remit to the Trustee 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. Prior to making any withdrawal from the Certificate Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loan(s), and their respective
portions of such Nonrecoverable Advance.
(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.
(d) The Trustee shall withdraw funds from The Trustee shall withdraw
funds from the the Group I Net Rate Carryover Reserve Fund for distribution to
the Class MF-2 and Class BF 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
Group I Net Rate Carryover Reserve Fund for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in the
Group I Net Rate Carryover Reserve Fund and not required to be deposited
therein; and
(ii) to clear and terminate the Group I Net Rate 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, the Group I Net
Rate 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, Carryover Reserve Fund or the Group I Net Rate 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 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 1999, 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 the Group I Class A Certificates, the Class AF-1 Current
Interest and any Class AF-1 Interest Carryforward Amount;
(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 each Class of the Group II Class A Certificates, the Group II
Class A Current Interest and any Group II Class A Interest Carryforward
Amount for each such Class of Group II Class A Certificates; provided that
if the Group II Interest Funds are not sufficient to make a full
distribution of the aggregate Group II Class A Current Interest and the
aggregate Group II Class A Interest Carryforward Amount for all Classes of
Group II Class A Certificates, the Group II Interest Funds will be
distributed pro rata between each Class of the Group II Class A
Certificates based on the ratio of (x) the Group II Class A Current
Interest and the Group II Class A Interest Carryforward Amount for such
Class of the Group II Class A Certificates to (y) the total amount of Group
II Class A Current Interest and the Group II Class A Interest Carryforward
Amount for all Classes of 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 Class A Principal
Distribution Amount;
(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 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 Group II Class A
Principal Distribution Amount to be allocated as provided in Section
4.04(e);
(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.
(e) On each Distribution Date, the Group II Class A Principal
Distribution Amount allocated under Section 4.04(d)(i) is required to be further
allocated by the Trustee to the Group II Class A Certificates as follows:
Concurrently (1) the Group II Principal Class A Distribution Amount attributable
to Subgroup A Principal Funds, to the Class AV-1 Certificates and (2) the Group
II Principal Class A Distribution Amount attributable to Subgroup B Principal
Funds, to the Class AV-2 Certificates; and thereafter, any excess of the Group
II Class A Principal Distribution Amount over the amounts distributed in the
preceding clauses (1) and (2) shall be distributed pro rata between the Class
AV-1 Certificates and the Class AV-2 Certificates, based on and the amount of
such Subgroup A Principal Funds and the amount of such Subgroup B Principal
Funds, respectively; relative to the sum of the amount of such Subgroup A
Principal Funds and the amount of such Subgroup B Principal Funds; provided,
however, that if the Certificate Principal Balance of either the Class AV-1
Certificates or the Class AV-2 Certificates is reduced to zero, then the Group
II Class A Principal Distribution Amount will be distributed to the remaining
Class of Group II Class A Certificates.
(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 and shall be allocated as provided in Section 4.04(h).
(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 and shall be allocated as provided in Section 4.04(i).
(h) On each Distribution Date 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(f);
(ii) to the Group I Net Rate Carryover Reserve Fund and then pro rata
to the holders of the Group I Certificates in an amount equal to any Fixed
Rate Certificate Carryover for such Class;
(iii) to the Group I Net Rate Carryover Reserve Fund, an amount equal
to the Required Group I Net Rate Carryover Reserve Fund Deposit;
(iv) to the Class BF-IO Certificates, the Class BF-IO Distributable
Amount; together with any amounts withdrawn from the Group I Net Rate
Carryover Reserve Fund for distribution to the Class BF-IO Certificates
pursuant to Section 4.09(c) on such date;
(v) to the Class BF-IO Certificates, the Class BF-IO Distributable
Amount;
(vi) to the Master Servicer, in payment of the Extra Master Servicing
Fee pursuant to Section 4.08 hereof for such Distribution Date; and
(vii) any remainder to the Class R Certificates.
(i) On each Distribution Date 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(g);
(ii) to the Carryover Reserve Fund and then pro rata to the holders of
the Group II Certificates in an amount equal to any Adjustable Rate
Certificate Carryover for such Class;
(iii) to the Carryover Reserve Fund, an amount equal to the Required
Carryover Reserve Fund Deposit;
(iv) to the Class BV-IO Certificates, the Class BV-IO Distributable
Amount; together with any amounts withdrawn from the Carryover Reserve Fund
for distribution to the Class AV-1 Certificates pursuant to Section 4.08(d)
on such date; and
(v) to the Master Servicer, in payment of the Extra Master Servicing
Fee for such Distribution Date pursuant to Section 4.07 hereof; and
(vi) any remainder to the Class R Certificates.
(j) To the extent that a Class of Group I Certificates receives
interest in excess of the Weighted Maximum Rate Cap of the Group II Mortgage
Loans, such interest shall be treated as having been paid to the Carryover
Reserve Fund and then paid by the Carryover Reserve Fund to such
Certificateholders. Amounts deposited to the Carryover Reserve Fund pursuant to
this clause and the preceding clauses (i) (ii) and (iii) shall be deemed to have
been distributed first to the Class BV-IO Certificateholders for applicable tax
purposes.
(k) To the extent that a Class receives interest in excess of the
Weighted Maximum Rate Cap of the Group I Mortgage Loans, such interest shall be
treated as having been paid to the Group I Net Rate Carryover Reserve Fund and
then paid by the Group I Net Rate Carryover Reserve Fund to such
Certificateholders. Amounts deposited to the Group I Net Rate Carryover Reserve
Fund pursuant to this clause and the preceding clauses (h) (ii) and (iii) shall
be deemed to have been distributed first to the Class BF-IO Certificateholders
for applicable tax purposes.
(l) 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.
(m) 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.
(n) 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, Group II Principal Funds Subgroup A Principal
Funds and Subgroup B 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.
----------------------------------------
(a) Not later than each Distribution Date, the Trustee shall prepare
and cause to be forwarded by first class mail to each Holder of a Class of
Certificates of the Trust Fund, the Master Servicer and the Depositor a
statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each Class
allocable to principal, separately identifying (A) the aggregate amount of
any Principal Prepayments included therein, (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 and each Loan Subgroup 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 and each Loan Subgroup (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 in each Loan Group and each
Loan Subgroup that became an REO Property during the preceding calendar
month, the loan number and Stated Principal Balance of such Mortgage Loan
as of the close of business on the Determination Date preceding such
Distribution Date and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties in
each Loan Group and each Loan Subgroup 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 and each Loan Subgroup;
(xv) with respect to any Liquidated Loan, the loan number, theStated
Principal Balance relating thereto and the applicable Loan Group and Loan
Subgroup (if any);
(xvi) with respect to each Loan Group, whether a Trigger Event has
occurred;
(xvii) the Adjustable Rate Certificate Carryover paid and all
remaining Adjustable Rate Certificate Carryover remaining on each Class of
the Group II Certificates on such Distribution Date; and
(xviii) any Fixed Rate Certificate Carryover paid and all remaining
Fixed Rate Certificate Carryover remaining on the Class MF-2 and Class BF
Certificates on such Distribution Date.
(b) The Trustee's responsibility for disbursing the above information
to the Certificateholders is limited to the availability, timeliness and
accuracy of the information derived from the Master Servicer. The Trustee will
send a copy of each statement provided pursuant to this Section 4.05 to each
Rating Agency.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i), (a)(ii) and (a)(vi) of this Section
4.05 aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of Class R Certificates with respect to the
following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The 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 Interests shall
equal the product of (A) .98 and (B) the excess of the Group I Class A
Certificate Balance over the Group I Specified Overcollateralization Amount
prior to the Group I Stepdown Date. The initial principal balance of the Class
T1-F2 Interest shall equal 98% of the Stated Principal Balance of the Group I
Loans over the initial principal balance of the Class T1-F1 Interest. The
initial principal balance of the Class T1-F3 Interest shall equal 1% of the
Stated Principal Balance of the Group I Loans. The initial principal balance of
the Class T1-F4 Interest shall equal 1% of the Stated Principal Balance of the
Group I Loans. On each Distribution Date, 98% of all the principal to which the
Class AF-1 Certificates are entitled for the related Due Period shall be
allocated to the Class T1-F1 Interest until reduced to zero. Class T1-F2 shall
be allocated the excess of (i) 98% of the Group I Principal Funds over (ii) the
entitlements to principal in respect of the Class T1-F1 Interests. Remaining
amounts of Group I Principal Funds for the related Due Period shall be allocated
first to the Class T1-F4 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-F3 and Class
T1-F4 Interests. Interest accruing on the Class T1-F4 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-F4 Interest. The amount of interest accrued and deferred on the Class
T1-F4 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-F3 Interest.
(b) On each Distribution Date, Realized Losses with respect to the
Group I Mortgage Loans for such date shall be allocated 98% to the Class T1-F1
and T1-F2 Interest in the aggregate as follows: (i) such Realized Losses shall
be first allocated to reduce the principal balance of the Class T1-F2 Interests
to zero; (ii) any remaining Realized Losses will be allocated to the principal
balance of the Class T1-F1 Interests. The remaining 2% of such Realized Losses
shall be allocated to the Class T1-F4 Interest to the extent that the principal
balance of the Class T1-F4 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-F3 and Class T1-F4 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, Realized Losses with respect to the
Group II Mortgage Loans for such date shall be allocated 98% to the Class T1-V1
Interest. The remaining 2% of such Realized Losses 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 Interests shall
equal the product of (A) .98 and (B) the excess of the Group I Class A
Certificate Balance over the Group I Specified Overcollateralization Amount
prior to the Group I Stepdown Date. The initial principal balance of the Class
T2-F2 Interest shall equal 98% of the Stated Principal Balance of the Group I
Loans over the initial principal balance of the Class T1-F1 Interest. The
initial principal balance of the Class T2-F3 Interest shall equal 1% of the
Stated Principal Balance of the Group I Loans. The initial principal balance of
the Class T2-F4 Interest shall equal 1% of the Stated Principal Balance of the
Group I Loans. On each Distribution Date, 98% of all the Group I Principal Funds
to which the Class AF-1 Certificates are entitled for the related Due Period
shall be allocated to the Class T1-F1 Interest. Class T1-F2 shall be allocated
the excess of (i) 98% of the Group I Principal Funds over (ii) the entitlements
to principal in respect of the Class T1-F1 Interests. Remaining amounts of Group
I Principal Funds for the related Due Period shall be allocated first to the
Class T2-F4 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-F4
Interests. Interest accruing on the Class T2-F4 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-F4 Interest. The amount of interest accrued and deferred on the Class
T2-F4 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-F3 Interest.
(f) On each Distribution Date, Realized Losses with respect to the
Group I Mortgage Loans for such date shall be allocated 98% to the Class T2-F1
Interest and Class T2-F2 in the aggregate as follows: (i) such Realized Losses
shall be first allocated to reduce the principal balance of the Class T2-F2
Interests to zero;(ii) any remaining Realized Losses will be allocated to the
principal balance of the Class T2-F1 Interests. The remaining 2% of such
Realized Losses shall be allocated to the Class T2-F4 Interest to the extent
that the principal balance of the Class T2-F4 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-F3 and Class T2-F4 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, Realized Losses with respect to the
Group II Mortgage Loans for such date shall be allocated 98% to the Class T2-V1
Interest. The remaining 2% of such Realized Losses 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-F3, Class
T3-F4, Class T3-F5, Class T3-F6, Class T3-V1, Class T3-V2, Class T3-V3 and Class
T3-V4 and T3-V5 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 (the Class T4-F1 corresponds to Class
T3-F1 and Class T3-F3), Class T4-F2, Class T4-F3, Class T4-F4, Class T4-V1,
Class T4-V2, Class T4-V3, Class T4-V4 and T3-V5 Interests, respectively).
(j) On each Distribution Date, interest that accrues with respect to
the Class T3-F2, Class T3-F7, Class T3-F8, Class T3-F9 and Class T3-F10
Interests shall be distributed as principal on the Class T3-F1, Class T3-F3,
Class T3-F4, Class T3-F5 and Class T3-F6 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 as principal on the
Class T3-V1, Class T3-V2, Class T3-V3, Class T3-V4 and T3-V5 Interests to
achieve the Group I Specified Overcollateralization Amount for such Distribution
Date, and to the extent not needed for either purpose, shall be distributed with
respect to the Class T3-F2, Class T3-F5, Class T3-F6, Class T3-F7 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-V6, Class T3-V7, Class T3-V8 and Class T3-V9 Interests
shall be distributed as principal on the Class T3-V1, Class T3-V2, Class T3-V3,
Class T3-V4 and T3-V5 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 as principal on the Class T3-F1,
Class T3-F3, Class T3-F4, Class T3-F5, Class T3-F6 Interests to achieve the
Group I Specified Overcollaterization Amount for such Distribution Date, and to
the extent not needed for either purpose, shall be distributed with respect to
the Class T3-V6, Class T3-V7, Class T3-V8 and Class T3-V9 Interests in
proportion to their entitlements to current and accrued undistributed interest.
Interest that accrues on the Class T3-F2, Class T3-F6, Class T3-F7, Class T3-F8,
Class T3-V6, Class T3-V7, Class T3-V8 and Class T3-V9 Interests shall not itself
bear interest. Accrued interest on the Class T3-F10 Interest will be deferred
and added to the principal balance thereof until the principal balances of the
Class T3-F1 Interest, Class T3-F3 Interest, Class T3-F4 Interest, Class T3-F5
Interest, Class T3-F6 Interest have been reduced to zero, and any amounts due on
the Class T3-F2 Interest, Class T3-F7 Interest, Class T3-F8 Interest and Class
T3-F9 Interest have been paid in full. Thereafter, all remaining principal and
interest will be applied to pay any deferred amounts due on the Class T3-F10
Interest. Accrued interest on the Class T3-V9 Interest will be deferred and
added to the principal balance thereof until the principal balances of the Class
T3-V1 Interest, Class T3-V2 Interest, Class T3-V3 Interest, Class T3-V4
Interest, Class T3-V5 Interest have been reduced to zero, and any amounts due on
the Class T3-V6 Interest, Class T3-V7 Interest and Class T3-V8 Interest have
been paid in full. Thereafter, all remaining principal and interest will be
applied to pay any deferred amounts due on the Class T3-V9 Interest.
Notwithstanding any provision herein, on any Distribution Date, (1) in
no event shall the interest that accrues with respect to the Class T3-V6, Class
T3-V7, Class T3-V8, and Class T3-V9 Interests that is distributed as principal
on the Class T3-F1, Class T3-F3, Class T3-F4, Class T3-F5, Class T3-F6 Interests
to achieve the Group I Specified Overcollateralization Amount for such
Distribution Date exceed an amount equal to the difference between (a) the
product of (i) the aggregate of the principal balances of the Group I Mortgage
Loans and (ii) the related Group I Net Rate and (b) the amount of interest
accruing on the Class T3-F7, Class T3-F8, Class T3-F9, and Class T3-F10
Interests for such Distribution Date and (2) in no event shall the interest that
accrues with respect to the Class T3-F7, Class T3- F8, Class T3- F9, and Class
T3- F10 Interests that is distributed as principal on the Class T3-V1, Class
T3-V2, Class T3-V3, Class T3-V4 and Class T3-V5 Interests to achieve the Group
II Specified Overcollateralization Amount for such Distribution Date exceed an
amount equal to the difference between (a) the product of (i) the aggregate of
the principal balances of the Group II Mortgage Loans and (ii) the related Group
II Net Rate and (b) the amount of interest accruing on the Class T3-V6, Class
T3-V7, Class T3-V8 and Class T3-V9 Interests for such Distribution Date.
(k) On each Distribution Date, Realized Losses with respect to the
Group I Mortgage Loans shall be allocated as follows:
first, to the Class T3-F1 and T3-F3 Interest to the extent that their
aggregate principal balances exceed the principal balance of the Class
T4-F1 Interest on such Distribution Date (after giving effect to any
distributions made on such date). Allocating such losses to the Class
T3-F3 Interest until its principal balance is reduced to zero, then to
the Class T3-F1 Interest;
second, to the Class T3-F4 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-F5 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-F6 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, proportionately to the accrued interest balances of the T3-F7,
Class T3-F8, Class T3-F9 and Class 3-F10 Interests; and
sixth, 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, Realized Losses with respect to the
Group II Mortgage Loans 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;
sixth, proportionately to the accrued interest balances of the T3-V6,
Class T3-V7, Class T3-V8 and Class Tc-V9 Interests; and seventh, 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-V1, Class T4-V2, Class T4-V3, Class T4-V4 and Class
T4-V5 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 (the Class T3-F1 and
Class T3-F3 Interest correspond to the Class T4-F1) (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 or the
Group I Net Role Rate Reserve Fund respectively). On each Distribution Date,
interest that accrues with respect to the Class T4-F5, Class T4-F6, Class T4-F7,
Class T4-F8, 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-V6, Class T4-V7, Class T4-V8, Class T4-V9 and Class T4-V10 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-F5, Class T4-F6, Class
T4-F7, Class T4-F8, Class T4-V6, Class T4-V7, Class T4-V8, Class T4-V9 and Class
T4-V10 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 the Carryover Reserve Fund 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 sum of the principal
balances of the Class T3-F1 and Class T3-F3 Interest 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 MF-1
Pass-Through Rate (limited to the Group I Net Rate) for such Distribution
Date and the excess of the Class T3-F4 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 MF-2
Pass-Through Rate (limited to the Group I Net Rate) for such Distribution
Date and the excess of the Class T3-F5 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 BF Pass-Through
Rate (limited to the Group I Net Rate) for such Distribution Date and the
excess of the Class T3-F6 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 AV-1 Pass-Through
Rate (limited to the Group II Net 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);
(vi) an amount equal to the product of the Class AV-2
Pass-Through Rate (limited to the Group II Net 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);
(vii) an amount equal to the product of the Class MV-1
Pass-Through Rate (limited to the Group II Net 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); and
(viii) an amount equal to the product of the Class MV-2
Pass-Through Rate (limited to the Group II Net Rate) for such Distribution
Date and the excess of the Class T3-V4 Interest principal balance over the
Class T4-V4 Interest principal balance (before giving effect to any
reductions of such balances on such Distribution Date).
(ix)an amount equal to the product of the Class BV Pass-Through
Rate (limited to the Group II Net Rate) for such Distribution Date and the
excess of the Class T3-V5 Interest principal balance over the Class T4-V5
Interest principal balance (before giving effect to any reductions of such
balances on such Distribution Date).
All amounts received by the Servicer in respect of the Extra Master Servicing
Fee will be deposited into the Carryover Reserve Fund.
Section 4.08. Carryover Reserve Fund.
----------------------
(a) On or before the first Determination 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 on which the Net Excess Spread is less
than 0.25%, the Trustee shall transfer from the Distribution Account to the
Carryover Reserve Fund pursuant to Sections 4.04(i)(ii) the Required Carryover
Reserve Fund Deposit.
(c) The Trustee shall make withdrawals from the Carryover Reserve Fund
to make distributions pursuant to Section 4.04(i) hereof, and shall withdraw
from the Carryover Reserve Fund on any Distribution Date on which the Net Excess
Spread is equal to or greater than 0.25% an amount equal to the amount of funds
on deposit in the Carryover Reserve Fund in excess of $5,000 and distribute such
excess to the Class AV-1 Certificateholders pro rata in accordance with their
respective Percentage Interests. Funds withdrawn from the Carryover Reserve Fund
may not be applied pursuant to any other subsection of Section 4.04 other than
as expressly provided for in this Section 4.08(c).
(d) 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.
(e) 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.
Section 4.09. Group I Net Rate 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 MF-2 and Class BF
Certificates, the Group I Net Rate Carryover Reserve Fund. The Group I Net Rate
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 on which the Net Excess Spread is less
than 0.25%, the Trustee shall transfer from the Distribution Account to the
Group I Net Rate Carryover Reserve Fund pursuant to Sections 4.04(h)(ii) the
Required Group I Net Rate Carryover Reserve Fund Deposit.
(c) The Trustee shall make withdrawals from the Group I Net Rate
Carryover Reserve Fund to make distributions pursuant to Section 4.04(h) hereof,
and shall withdraw from the Carryover Reserve Fund on any Distribution Date on
which the Net Excess Spread is equal to or greater than 0.25% an amount equal to
the amount of funds on deposit in the Group I Net Rate Carryover Reserve Fund in
excess of $5,000 and distribute such excess to the Class MF-2 Certificateholders
pro rata in accordance with their respective Percentage Interests. Funds
withdrawn from the Group I Net Rate Carryover Reserve Fund may not be applied
pursuant to any other subsection of Section 4.04 other than as expressly
provided for in this Section 4.09(c).
(d) Funds in the Group I Net Rate Carryover Reserve Fund may be
invested in Permitted Investments. Any earnings on such amounts shall be payable
to the Class BF-IO Certificates. The Class BF-IO Certificates shall evidence
ownership of the Group I Net Rate Carryover Reserve Fund for federal tax
purposes and shall direct the Trustee in writing as to the investment of amounts
therein.
(e) Upon termination of the Trust Fund, any amounts remaining in the
Group I Net Rate Carryover Reserve Fund shall be distributed to the Holders of
the Class BF-IO Certificates in the same manner as if distributed pursuant to
Section 4.04(h) 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:
Integral Original
Multiples Certificate
Minimum in Excess of Principal
Class Denomination Minimum Balance
- --------------- --------------- --------------- ---------------
AF-1 $25,000 $1,000 $96,775,000
MF-1 $25,000 $1,000 $3,190,000
MF-2 $25,000 $1,000 $3,190,000
BF $25,000 $1,000 $3,191,000
BF-IO N/A N/A N/A
AV-1 $25,000 $1,000 $100,000,000
AV-2 $25,000 $1,000 $118,948,000
MV-1 $25,000 $1,000 $17,542,000
MV-2 $25,000 $1,000 $12,994,000
BV $25,000 $1,000 $10,396,000
BV-IO N/A N/A N/A
R-1 0.001% N/A N/A
R-2 99.999% N/A N/A
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form set forth as attached hereto executed
by the Trustee by manual signature, and such certificate of authentication upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 5.02. Certificate Register; Registration of Transfer and
--------------------------------------------------
Exchange of Certificates.
------------------------
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) No Transfer of a Class 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 and 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 AV-2, 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 AV-2, Class MV-1, Class
MV-2, and Class BV Certificateholders. Thus each Class AV-1, Class AV-2, 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 $5,000.
The Trustee shall treat the Group I Net Rate Carryover Reserve Fund as
an outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h)
that is owned by the Class BF-IO Certificateholders and that is not an asset of
the REMIC. The Trustee shall treat the rights of the Class MF-2 and Class BF,
and Certificateholders to receive payments from the Group I Net Rate Carryover
Reserve Fund rights in an interest rate cap contract written by the Class BF-IO
Certificateholder in favor of the Class MF-2, and Class BF Certificateholders.
Thus, each Class MF-2, and Class BF 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. Any interest paid to the AF-1 and
MF-1 Certificateholders in excess of the Group I Net Rate will be treated as
paid from the Group I Net Rate Carryover Reserve Fund pursuant to an interest
rate cap contract treated as a notional principal 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 $5,000.
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 and the the Group I Net Rate 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) Moody's Investors Service, Attention: Residential
Mortgage Monitoring, 99 Church Street, New York, New York 10004 and (ii) Fitch
IBCA, Inc., Attention: Pat Kearns,One State Street Plaza, New York, NY 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 November, 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 November, 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 __th day of November, 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-11
[Exhibits A-1 through A-11 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 November 1, 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 1998-3
--------------------------------------------------------------
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
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the 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 November 1, 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 1998-3
--------------------------------------------------------------
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
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the 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 November 1, 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 1998-3
------------------------------------------------------------------
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
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the 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 November 1,
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)(3O).
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
includible 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 1998-3
---------------------------
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 November 1, 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 1998-3
---------------------------
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 November 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 1998-3
---------------------------
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 November 1, 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 $__________1 in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other
----------------
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
___ Bank. The Buyer (a) is a national bank or banking
----
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building and loan association, cooperative
bank, homestead association or similar institution,
which is supervised and examined by a State or Federal
authority having supervision over any such institutions
or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is
attached hereto.
- ----------
1 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.
___ 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 1998-3, 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 November 1, 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 1998-3
__________________________________________ 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
