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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): August 11, 1998
CWABS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of August 11, 1998, providing for the
issuance of the CWABS, INC., Asset-Backed Certificates,
Series 1998-2).
CWABS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-37539 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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Pooling and Servicing Agreement*
Pooling and Servicing Agreement
-------------------------------
On August 11, 1998, CWABS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of August 11, 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 1998-2 (the "Certificates"). The Pooling and
Servicing Agreement is annexed hereto as Exhibit 99.1.
- ------------------------
* Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus dated August 21, 1998 and the
Prospectus Supplement dated August 25, 1998, of CWABS, Inc., relating to
its Asset- Backed Certificates, Series 1998-2.
<PAGE>
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 August 11, 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
-------------------------------
David Walker
Vice President
Dated: March 17, 1999
<PAGE>
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement,
dated as of August 11, 1998, by
and among, the Company, CHL and
the Trustee
<PAGE>
EXHIBIT 99.1
Execution Copy
==============================================================================
CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of August 11, 1998
--------------------------------------
ASSET-BACKED CERTIFICATES, SERIES 1998-2
==============================================================================
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
ARTICLE I.
DEFINITIONS
<S> <C> <C>
Section 1.01. Defined Terms..............................................................I-1
Section 1.02. Certain REMIC-Related Defined Terms........................................I-39
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-18
Section 2.05. Delivery of Opinion of Counsel in Connection with Substitutions and
Repurchases...............................................................II-19
Section 2.06. Authentication and Delivery of Certificates...............................II-20
Section 2.07. Covenants of the Master Servicer..........................................II-20
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-6
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-15
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-16
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-9
Section 4.07. Extra Master Servicing Fee................................................IV-14
Section 4.08. Carryover Reserve Fund....................................................IV-16
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-7
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
</TABLE>
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of August 11, 1998, among
CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation (in its capacity as
seller hereunder, the "Seller", and in its capacity as master servicer
hereunder, the "Master Servicer"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. As provided herein, the Trustee
shall elect that the Trust Fund be treated for Federal income tax purposes as
four separate real estate mortgage investment conduits (each a "REMIC" or, in
the alternative, "REMIC 1","REMIC 2","REMIC 3", and "REMIC 4", respectively,
REMIC 4 also being referred to as the "Upper Tier REMIC." The Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class MF-1, Class MF-2, Class BF, Class
AV-1, Class MV-1, Class MV-2, Class BV, Class BF-IO, and Class BV-IO
Certificates represent ownership of all of the regular interests in REMIC 4.
The Class R4 Interest represents the sole class of "residual interest" in
REMIC 4 for purposes of the REMIC provisions. Each of the Class R-1, Class
R-2, and Class R-3 Interests represent the sole class of residual interest in
REMIC 1, REMIC 2, and REMIC 3, respectively, for purposes of the REMIC
provisions. Under this Agreement, there are also six classes of uncertificated
REMIC 1 regular interests issued (the Class T1-F1, Class T1-F2, Class T1-F3,
Class T1-V1, Class T1-V2, and Class T1-V3 Interests), eight classes of
uncertificated REMIC 2 regular interests issued (the Class T2-F1, Class T2-F2,
Class T2-F3, Class T2-F4, Class T2-V1, Class T2-V2, Class T2-V3, and Class
T2-V4 Interests), seventeen classes of uncertificated REMIC 3 regular
interests issued (the Class T3-F1, Class T3-F2, Class T3-F3, Class T3-F4,
Class T3-F5, Class T3-F6, Class T3-F7, Class T3-F8, Class T3-F9, Class T3-F10,
Class T3-V1, Class T3-V2, Class T3-V3, Class T3-V4, Class T3-V5, Class T3-V6,
and Class T3-V7 Interests), and twenty-two classes of uncertificated REMIC 4
regular interests issued (Class T4-F1, Class T4-F2, Class T4-F3, Class T4-F4,
Class T4-F5, Class T4-F6, Class T4-F7, Class T4-F8, Class T4-F9, Class T4-F10,
Class T4-F11, Class T4-F12, Class T4-F13, Class T4-F14, Class T4-V1, Class
T4-V2, Class T4-V3, Class T4-V4, Class T4-V5, Class T4-V6, Class T4-V7, and
Class T4-V8 Interests). The REMIC 1 Regular Interests will be held as assets
of REMIC 2, the REMIC 2 Regular Interests will be held as assets of REMIC 3,
and the REMIC 3 Regular Interests will be held as assets of REMIC 4. The
"latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Latest Possible Maturity Date.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Seller and the Trustee agree as follows:
<PAGE>
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms.
In addition to those defined terms defined in Section 1.02, whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accrual Period: With respect to the Group I Certificates and any
Distribution Date, the calendar month immediately preceding such Distribution
Date. With respect to the Group II Certificates and any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the Closing Date) and ending on the day
immediately preceding such Distribution Date. All calculations of interest on
the Group I Certificates will be made on the basis of a 360-day year
consisting of twelve 30-day months, and all calculations of interest on the
Group II Certificates will be made on the basis of the actual number of days
elapsed in the related Accrual Period and in a 360 day year.
Adjustable Rate Certificate Carryover: With respect to any
Distribution Date, an amount equal to the sum of (i) the Class AV-1 Interest
Carryover Amount for such Distribution Date (if any), (ii) the Class MV-1
Carryover Amount for such Distribution Date (if any), (iii) the Class MV-2
Interest Carryover Amount for such Distribution Date (if any) and (iv) the
Class BV Carryover Amount for such Distribution Date (if any); provided that
when the term Adjustable Rate Certificate Carryover is used with respect to
one Class of Group II Certificates, it shall mean such carryover amount listed
in clauses (i), (ii), (iii) or (iv), as applicable, with the same Class
designation.
Adjustment Date: As to each Group II Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the sum of (A) the
aggregate of payments of principal and interest (net of the Servicing Fees) on
the Mortgage Loans that were due on the related Due Date and not received as
of the close of business on the related Determination Date and (B) with
respect to each REO Property that has not been liquidated, an amount equal to
the excess, if any, of (x) one month's interest (adjusted to the Net Mortgage
Rate) on the Stated Principal Balance of the related Mortgage Loan over (y)
the net monthly rental income (if any) from such REO Property deposited in the
Certificate Account for such Distribution Date pursuant to Section 3.12, less
the aggregate amount of any such delinquent payments that the Master Servicer
has determined would constitute a Nonrecoverable Advance were an advance to be
made with respect thereto.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Certificate Account at the close of business on
the immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due
after the related Due Date and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution Date,
the sum of the Realized Losses with respect to the Mortgage Loans which are to
be applied in reduction of the Certificate Principal Balance of the
Certificates pursuant to this Agreement, which shall on any such 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 (a) the Group I Certificates,
a per annum rate equal to the weighted average Mortgage Rate on the Mortgage
Loans in the related Loan Group less the related Servicing Fee for such
Distribution Date and (b) the Group II Certificates, a per annum rate equal to
twelve times the quotient of (x) the total scheduled interest collected or
Advanced on the Mortgage Loans in the related Loan Group based on the Mortgage
Rates in effect on the related Due Date less the related Servicing Fee for
such Distribution Date divided by (y) the Certificate Principal Balance of the
Group II Certificates. Bankruptcy Code: Title 11 of the United States Code.
Book-Entry Certificates: Any of the Certificates that shall be registered in
the name of the Depository or its nominee, the ownership of which is reflected
on the books of the Depository or on the books of a person maintaining an
account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each
Class of Regular Certificates (other than the Class B-IO Certificates)
constitutes a Class of Book-Entry Certificates. Business Day: Any day other
than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions
in the City of New York, New York or the city in which the Corporate Trust
Office of the Trustee is located are authorized or obligated by law or
executive order to be closed. Carryover Reserve Fund: The separate Eligible
Account created and initially maintained by the Trustee pursuant to Section
4.08 in the name of the Trustee for the benefit of the Group II
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWABS, Inc., Asset-Backed Certificates, Series 1998-2".
Funds in the Carryover Reserve Fund shall be held in trust for the Group II
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
exhibits. Certificate Account: The separate Eligible Account created and
initially maintained by the 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 1998-2". Funds in the Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
this Agreement.
Certificate Group: Either of the Group I Certificates or the Group II
Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than any
Class B-IO Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (i) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant
to Section 4.04, and (ii) any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to (i) Section 4.04(k) for
the Group I Certificates and (ii) Section 4.04(l) for the Group II
Certificates. References herein to the Certificate Principal Balance of a
Class of Certificates or a Certificate Group shall mean the Certificate
Principal Balances of all Certificates in such Class or all Certificates in
such Certificate Group, as the case may be.
Certificate Register: The register maintained pursuant to Section
5.02 hereof.
Certificateholder or Holder: The person in whose name a Certificate
is registered in the Certificate Register (initially, Cede & Co., as nominee
for the Depository, in the case of any Class of Regular Certificates (other
than the Class B-IO Certificates), except that solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in
the name of the Depositor or any affiliate of the Depositor shall be deemed
not to be Outstanding and the Voting Interest evidenced thereby shall not be
taken into account in determining whether the requisite amount of Voting
Interests necessary to effect such consent has been obtained; provided that if
any such Person (including the Depositor) owns 100% of the Voting Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in
determining which Certificates are registered in the name of an affiliate of
the Depositor.
Class: All Certificates bearing the same Class designation as set
forth in Section 5.01 hereof.
Class AF-1 Certificate: Any Certificate designated as a
"Class AF-1 Certificate" on the face thereof, in the form of Exhibit A-1
hereto, representing the right to distributions as set forth herein.
Class AF-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-1
Certificates.
Class AF-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-1 Certificate Principal Balance during the
related Accrual Period at the Class AF-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class AF-1 Current Interest with respect
to prior Distribution Dates over (b) the amount actually distributed to the
Class AF-1 Certificates with respect to interest and (ii) interest thereon (to
the extent permitted by applicable law) at the Class AF-1 Pass-Through Rate
for the related Accrual Period.
Class AF-1 Pass-Through Rate: On any Distribution Date, the lesser of
(i) 6.220% per annum and (ii) the weighted average Net Mortgage Rate for Group
I Mortgage Loans.
Class AF-2 Certificate: Any Certificate designated as a "Class AF-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class AF-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-2
Certificates.
Class AF-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-2 Certificate Principal Balance during the
related Accrual Period at the Class AF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class AF-2 Current Interest with respect
to prior Distribution Dates over (b) the amount actually distributed to the
Class AF-2 Certificates with respect to interest and (ii) interest thereon (to
the extent permitted under applicable law) at the Class AF-2 Pass-Through Rate
for the related Accrual Period.
Class AF-2 Pass-Through Rate: On any Distribution Date, the lesser of
(i) 6.070% per annum and (ii) the weighted average Net Mortgage Rate for Group
I Mortgage Loans.
Class AF-3 Certificate: Any Certificate designated as a "Class AF-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class AF-3 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-3
Certificates.
Class AF-3 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-3 Certificate Principal Balance during the
related Accrual Period at the Class AF-3 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-3 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class AF-3 Current Interest with respect
to prior Distribution Dates over (b) the amount actually distributed to the
Class AF-3 Certificates with respect to interest and (ii) interest thereon (to
the extent permitted by applicable law) at the Class AF-3 Pass-Through Rate
for the related Accrual Period.
Class AF-3 Pass-Through Rate: On any Distribution Date, the lesser of
(i)(a) as of any Distribution Date on or prior to the Optional Termination
Date for the Group I Certificates, 6.600% per annum and (b) as of any
Distribution Date after such Optional Termination Date, 7.100% per annum and
(ii) the weighted average Net Mortgage Rate for Group I Mortgage Loans.
Class AF-4 Certificate: Any Certificate designated as a
"Class AF-4 Certificate" on the face thereof, in the form of Exhibit A-4
hereto, representing the right to distributions as set forth herein.
Class AF-4 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-4
Certificates.
Class AF-4 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-4 Certificate Principal Balance during the
related Accrual Period at the Class AF-4 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-4 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class AF-4 Current Interest with respect
to prior Distribution Dates over (b) the amount actually distributed to the
Class AF-4 Certificates with respect to interest and (ii) interest thereon (to
the extent permitted by applicable law) at the Class AF-4 Pass-Through Rate
for the related Accrual Period.
Class AF-4 Pass-Through Rate: On any Distribution Date, the lesser of
(i) 6.190% per annum and (ii) the weighted average Net Mortgage Rate for Group
I Mortgage Loans.
Class AF-4 Principal Distribution Amount: As of any Distribution
Date, an amount equal to the product of (i) a fraction, the numerator of which
is the Certificate Principal Balance of the Class AF-4 Certificates on such
Distribution Date and the denominator of which is the Group I Class A
Certificate Principal Balance, (ii) the Group I Class A Principal Distribution
Amount for such Distribution Date and (iii) the Class AF-4 PDA Factor for such
Distribution Date.
Class AF-4 PDA Factor: As of any Distribution Date set forth below,
the percentage set forth across from such Distribution Date:
Distribution Date Percentage
-------------------------------------------- -----------
September 1998-August 2001.......................... 0%
September 2001- August 2003......................... 45%
September 2003- August 2004......................... 80%
September 2004- August 2005......................... 100%
September 2005 and thereafter....................... 300%
Class AV-1 Certificate: Any Certificate designated as a "Class AV-1
Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to distributions as set forth herein.
Class AV-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AV-1
Certificates.
Class AV-1 Interest Carryover Amount: As of any Distribution Date,
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class AV-1 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class AV-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class AV-1 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class AV-1 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class AV-1 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to Section
4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class AV-1 Margin for such Distribution
Date.
Class AV-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class AV-1 Certificate Principal Balance during the
related Accrual Period at the Class AV-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class AV-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class AV-1 Current Interest with respect
to prior Distribution Dates (excluding any AV-1 Interest Carryover Amount)
over (b) the amount actually distributed to the Class AV-1 Certificates with
respect to interest and (ii) interest thereon (to the extent permitted by
applicable law) at the Class AV-1 Pass-Through Rate for the related Accrual
Period.
Class AV-1 Margin: As of any Distribution Date on or prior to the
Optional Termination Date for the Group II Certificates, 0.17% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.34% per
annum.
Class AV-1 Pass-Through Rate: For the first Distribution Date,
5.82234% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class AV-1 Margin, (ii) the Weighted Maximum Rate Cap
and (iii) the Available Funds Cap for such Distribution Date.
Class B-IO Certificates: Either or both of the Class BF-IO
Certificates and the Class BV-IO Certificates, as the context may require.
Class BF Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group I
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class BF Certificates.
Class BF Certificate: Any Certificate designated as a "Class BF
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
Class BF Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class BF Certificates.
Class BF Current Interest: As of any Distribution Date, the interest
accrued on the Class BF Certificate Principal Balance during the related
Accrual Period at the Class BF Pass-Through Rate plus any amount previously
distributed with respect to interest for such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class BF Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class BF Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
BF Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class BF Pass-Through Rate for the
related Accrual Period.
Class BF Pass-Through Rate: The lesser of (i) 7.560% per annum and
(ii) the weighted average Net Mortgage Rate for Group I Mortgage Loans for the
related Due Period.
Class BF Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class BF Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BF Applied Realized Loss Amount
on all previous Distribution Dates.
Class BF-IO Certificates: Any Certificate designated as a "Class
BF-IO Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing ownership of the Class T4-F8, Class T4-F9, Class T4-F10, Class
T4-F11, Class T4-F12, Class T4-F13, and Class T4-F14 Interests.
Class BF-IO Distributable Amount: With respect to any Distribution
Date, the sum of the amounts distributable on the Class T4-F8, Class T4-F9,
Class T4-F10, Class T4-F11, Class T4-F12, Class T4-F13, and Class T4-F14
Interests.
Class BV Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group II
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class BV Certificates.
Class BV Certificate: Any Certificate designated as a "Class BV
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class BV Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class BV Certificates.
Class BV Current Interest: As of any Distribution Date, the interest
accrued on the Class BV Certificate Principal Balance during the related
Accrual Period at the Class BV Pass-Through Rate plus any amount previously
distributed with respect to interest for such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class BV Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class BV Current Interest with respect to
prior Distribution Dates (excluding any Class BV Interest Carryover Amount)
over (b) the amount actually distributed to the Class BV Certificates with
respect to interest and (ii) interest thereon (to the extent permitted by
applicable law) at the Class BV Pass-Through Rate for the related Accrual
Period.
Class BV Interest Carryover Amount: As of any Distribution Date, the
sum of (A) if on such Distribution Date the Pass-Through Rate for the Class BV
Certificates is based upon the Available Funds Cap, the excess of (i) the
amount of interest the Class BV Certificates would otherwise be entitled to
receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class BV Margin for such Distribution Date,
up to the Weighted Maximum Rate Cap, over (ii) the amount of interest payable
on the Class BV Certificates at the Available Funds Cap for such Distribution
Date and (B) the Class BV Interest Carryover Amount for all previous
Distribution Dates not previously paid pursuant to Section 4.04(j), together
with interest thereon at a rate equal to the sum of One-Month LIBOR and the
applicable Class BV Margin for such Distribution Date.
Class BV Margin: For any Distribution Date on or prior to the
Optional Termination Date for the Group II Certificates, 1.20% per annum and,
as of any Distribution Date after such Optional Termination Date, 1.80% per
annum.
Class BV Pass-Through Rate: For the first Distribution Date, 6.85234%
per annum. As of any Distribution Date thereafter, the least of (i) One-Month
LIBOR plus the Class BV Margin, (ii) the Weighted Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
Class BV Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class BV Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BV Applied Realized Loss
Amounts on all previous Distribution Dates.
Class BV-IO Certificates: Any Certificate designated as a "Class
BV-IO Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing ownership of the Class T4-V5, Class T4-V6, Class T4-V7, and Class
T4-V8 Interests.
Class BV-IO Distributable Amount: With respect to any Distribution
Date, the aggregate of the amounts distributable on the Class T4-V5, Class
T4-V6, Class T4-V7, and Class T4-V8 Interests.
Class MF-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group I
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class MF-1 Certificates.
Class MF-1 Certificate: Any Certificate designated as a "Class MF-1
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class MF-1 Certificate Principal Balance: As of any date of
determination, the Certificate
Principal Balance of the Class MF-1 Certificates.
Class MF-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class MF-1 Certificate Principal Balance during the
related Accrual Period at the Class MF-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MF-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class MF Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
MF Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MF-1 Pass-Through Rate for
the related Accrual Period.
Class MF-1 Pass-Through Rate: The lesser of (i) 6.520% per annum and
(ii) the weighted average Net Mortgage Rate for Group I Mortgage Loans for the
related Due Period.
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-6 hereto,
representing the right to distributions as set forth herein.
Class MF-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MF-2
Certificates.
Class MF-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class MF-2 Certificate Principal Balance during the
related Accrual Period at the Class MF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MF-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class MF-2 Current Interest with respect
to prior Distribution Dates over (b) the amount actually distributed to the
Class MF-2 Certificates with respect to interest and (ii) interest thereon (to
the extent permitted by applicable law) at the Class MF-2 Pass-Through Rate
for the related Accrual Period.
Class MF-2 Pass-Through Rate: The lesser of (i) 6.745% 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-10 hereto,
representing the right to distributions as set forth herein.
Class MV-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MV-1
Certificates.
Class MV-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class MV Certificate Principal Balance during the
related Accrual Period at the Class MV Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class MV Current Interest with respect to
prior Distribution Dates (excluding any Class MV-1 Interest Carryover Amount)
over (b) the amount actually distributed to the Class MV-1 Certificates with
respect to interest and (ii) interest thereon (to the extent permitted by
applicable law) at the Class MV-1 Pass-Through Rate for the related Accrual
Period.
Class MV-1 Interest Carryover Amount: As of any Distribution Date,
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-1 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class MV-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class MV-1 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class MV-1 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class MV-1 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to Section
4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class MV-1 Margin for such Distribution
Date.
Class MV-1 Margin: As of any Distribution Date on or prior to the
Optional Termination Date for the Group II Certificates, 0.34% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.51% per
annum.
Class MV-1 Pass-Through Rate: For the first Distribution Date,
5.99234% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class MV-1 Margin, (ii) the Weighted Maximum Rate Cap
and (iii) the Available Funds Cap for such Distribution Date.
Class MV-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class MV-1 Applied Realized Loss Amount over (ii) the
sum of all distributions in reduction of the Class MV-1 Applied Realized Loss
Amounts on all previous Distribution Dates.
Class MV-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Realized Losses with respect to the Group II Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance
of the Class MV-2 Certificates.
Class MV-2 Certificate: Any Certificate designated as a "Class MV-2
Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to distributions as set forth herein.
Class MV-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MV-2
Certificates.
Class MV-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class MV-2 Certificate Principal Balance during the
related Accrual Period at the Class MV-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class MV-2 Current Interest with respect
to prior Distribution Dates (excluding any Class MV-2 Interest Carryover
Amount) over (b) the amount actually distributed to the Class MV-2
Certificates with respect to interest and (ii) interest thereon (to the extent
permitted by applicable law) at the Class MV-2 Pass-Through Rate for the
related Accrual Period.
Class MV-2 Interest Carryover Amount: As of any Distribution Date,
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-2 Certificates is based upon the Available Funds Cap, the excess of
(i) the amount of interest the Class MV-2 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class MV-2 Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap, over (ii) the amount
of interest payable on the Class MV-2 Certificates at the Available Funds Cap
for such Distribution Date and (B) the Class MV-2 Interest Carryover Amount
for all previous Distribution Dates not previously paid pursuant to Section
4.04(j), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class MV-2 Margin for such Distribution
Date.
Class MV-2 Margin: As of any Distribution Date on or prior to the
Optional Termination Date for the Group II Certificates, 0.54% per annum and,
as of any Distribution Date after such Optional Termination Date, 0.81% per
annum.
Class MV-2 Pass-Through Rate: For the first Distribution Date,
6.19234% 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: August 28, 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: August 11, 1998.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-Off Date, but without giving
effect to any installments of principal received in respect of Due Dates on
and after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: The Mortgage Loan identified on the
Schedule of Mortgage Loans set forth on Exhibit F-2 hereof for which a related
Mortgage File is not delivered to Trustee on the Closing Date.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the day such payment is scheduled to be due. A Mortgage Loan is
"30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was
due on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Principal Balance of this Certificate".
Depositor: CWABS, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
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 1998-2". 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 September 1998.
Due Date: With respect to any Distribution Date, the first day of the
month in which the related Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, beginning on the Cut-off Date) and ending on the Due Date
in the month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company, the long-term unsecured debt obligations and short-term unsecured
debt obligations of which (or, in the case of a depository institution or
trust company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, so long as Moody's is not a Rating
Agency) are rated by each Rating Agency in one of its two highest long-term
and its highest short-term rating categories respectively, at the time any
amounts are held on deposit therein, or (ii) an account or accounts in a
depository institution or trust company in which such accounts are insured by
the FDIC (to the limits established by the FDIC) and the uninsured deposits in
which accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution or
trust company in which such account is maintained, or (iii) a trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company having capital and surplus
of not less than $50,000,000, acting in its fiduciary capacity or (iv) any
other account acceptable to the Rating Agencies. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Restricted Certificate: Each of the Class MF-1, Class MF-2,
Class BF, Class MV-1, Class MV-2, Class BV, Class B-IO and Class R
Certificates.
Event of Default: As defined in Section 7.01 hereof.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (i) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (ii) interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced to Certificateholders (and not reimbursed to the Master Servicer) up
to the Due Date in the month in which such Liquidation Proceeds are required
to be distributed on the Stated Principal Balance of such Liquidated Loan
outstanding during each Due Period as to which such interest was not paid or
advanced. Extra Master Servicing Fee: The Extra Master Servicing Fee payable
pursuant to Sections 4.07 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Gross Margin: The percentage set forth in the related Mortgage Note
for the Group II Mortgage Loans to be added to the Index for use in
determining the Mortgage Rate on each Adjustment Date, and which is set forth
in the Mortgage Loan Schedule for the Group II Mortgage Loans.
Group I Certificate Principal Balance: The sum of the Class AF-1
Certificate Principal Balance, the Class AF-2 Certificate Principal Balance,
the Class AF-3 Certificate Principal Balance, the Class AF-4 Certificate
Principal Balance, the Class MF-1 Certificate Principal Balance, the Class
MF-2 Certificate Principal Balance and the Class BF Certificate Principal
Balances.
Group I Certificates: Any of the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class MF-1, Class MF-2, Class BF and/or Class BF-IO Certificates.
Group I Class A Certificate Principal Balance: The sum of the Class
AF-1 Certificate Principal Balance, the Class AF-2 Certificate Principal
Balance, the Class AF-3 Certificate Principal Balance and the Class AF-4
Certificate Principal Balance.
Group I Class A Certificates: Any of the Class AF-1, Class AF-2,
Class AF-3 and/or Class AF-4 Certificates.
Group I Class A Current Interest: Any one or more of the following
(as the context requires): Class AF-1 Current Interest, Class AF-2 Current
Interest, Class AF-3 Current Interest and/or Class AF-4 Current Interest.
Group I Class A Interest Carryforward Amount: Any one or more of the
following (as the context requires): Class AF-1 Interest Carryforward Amount,
Class AF-2 Interest Carryforward Amount, Class AF-3 Interest Carryforward
Amount and/or Class AF-4 Interest Carryforward Amount.
Group I Class A Principal Distribution Amount: With respect to (i)
any Distribution Date prior to the Group I Stepdown Date or Distribution Date
on which a Group I Trigger Event has occurred, 100% of the Group I Principal
Distribution Amount for such Distribution Date and (ii) any Distribution Date
on or after the Group I Stepdown Date where a Group I Trigger Event has not
occurred, the excess of (A) the Group I Class A Certificate Principal Balance
immediately prior to such Distribution Date over (B) the lesser of (I) 80.00%
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 $474,865.
Group I Class B Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date and as long as a Group
I Trigger Event has not occurred and continuing, the excess of (i) the sum of
(A) the Group I Class A Certificate Principal Balance (after taking into
account distribution of the Group I Class A Principal Distribution Amount on
such Distribution Date), (B) the Class MF-1 Certificate Principal Balance
(after taking into account distribution of the Group I Class MF-1 Distribution
Amount on such Distribution Date), (C) the Class MF-2 Certificate Principal
Balance (after taking into account distribution of the Group I Class MF-2
Principal Distribution Amount for such Distribution Date), and (D) the Class
BF Certificate Principal Balance immediately prior to such Distribution Date
over (ii) the lesser of (A) 98.00% of the Stated Principal Balance of the
Group I Mortgage Loans on the preceding Due Date and (B) the Stated Principal
Balance of the Group I Mortgage Loans on the preceding Due Date less $474,865;
provided that after the Group I Class A Certificate Principal Balance, the
Class MF-1 Certificate Principal Balance and the Class MF-2 Certificate
Principal Balance has been reduced to zero, the Group I Class B Principal
Distribution Amount for such Distribution Date will equal 100% of the Group I
Principal Distribution Amount for such Distribution Date.
Group I Class MF-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date, 100% of the Group I
Principal Distribution Amount for such Distribution Date if the Group I Class
A Certificate Principal Balance has been reduced to zero and a Group I Trigger
Event has occurred and is continuing, or, if any of the Class AF-1, Class
AF-2, Class AF-3 or Class AF-4 Certificates are still outstanding and as long
as a Group I Trigger Event has not occurred and is not continuing, the excess
of (i) the sum of (A) the Group I Class A Certificate Principal Balance (after
taking into account distributions of the Group I Class A Principal
Distribution Amount on such Distribution Date) and (B) the Class MF-1
Certificate Principal Balance immediately prior to such Distribution Date over
(ii) the lesser of (A) 89.00% 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
$474,865.
Group I Class MF-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date, 100% of the Group I
Principal Distribution Amount for such Distribution Date if the Group I Class
A Certificate Principal Balance and the Class MF-1 Certificate Principal
Balance have been reduced to zero and a Group I Trigger Event has occurred and
is continuing, or, if any of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4 or Class MF-1 Certificates are still outstanding and as long as a Group I
Trigger Event has not occurred and is not continuing, the excess of (i) the
sum of (A) the Group I Class A Certificate Principal Balance (after taking
into account distributions of the Group I Class A Principal Distribution
Amount on such Distribution Date), (B) the Class MF-1 Certificate Principal
Balance (after taking into account distributions of the Group I Class MF-1
Principal Distribution Amount on such Distribution Date) and (C) the Class
MF-2 Certificate Principal Balance immediately prior to such Distribution Date
over (ii) the lesser of (A) 95.00% 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 $474,865.
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 (to the extent such
Liquidation Proceeds relate to interest) less all Nonrecoverable Advances
relating to interest reimbursed during the related Due Period.
Group I Mortgage Loans: The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having a Mortgage Rate which is fixed
for the life of the related Mortgage, including any Mortgage Loans delivered
in replacement thereof.
Group I Net Rate: The weighted average Net Mortgage Rate for Group I
Mortgage Loans.
Group I Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Stated Principal Balance of the
Group I Mortgage Loans as of the preceding Due Date over the Certificate
Principal Balances of all Group I Certificates on such date (after taking into
account the payment of principal other than any Group I Extra Principal
Distribution Amount, on such Certificates on such Distribution Date).
Group I Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Group I Principal Funds for such
Distribution Date and (ii) any Group I Extra Principal Distribution Amount for
such Distribution Date.
Group I Principal Funds: With respect to the Group I Mortgage Loans,
the sum, without duplication, of (i) the scheduled principal collected during
the related Due Period or Advanced on or before the related Master Servicer
Advance Date, (ii) prepayments collected in the related Prepayment Period,
(iii) the Stated Principal Balance of each Mortgage Loan that was repurchased
by the Seller or the Master Servicer, (iv) the amount, if any, by which the
aggregate unpaid principal balance of any Replacement Mortgage Loan is less
than the aggregate unpaid principal balance of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds collected
during the related Due Period (to the extent such Liquidation Proceeds related
to principal) less all Nonrecoverable Advances relating to principal
reimbursed during the related Due Period.
Group I Remainder Excess Cashflow: With respect to any Distribution
Date, the Group I Excess Cashflow for such Distribution Date remaining after
the applications set forth in Section 4.04(f)(i) through (vii).
Group I Specified Overcollateralization Amount: Prior to the Group I
Stepdown Date, 1.0% of the Stated Principal Balance of the Group I Mortgage
Loans as of the Cut-off Date, and on and after the Group I Stepdown Date, 2.0%
of the Stated Principal Balance of the Group I Mortgage Loans as of the
preceding Due Date, subject to a minimum of 0.50% of the Stated Principal
Balance of the Group I Mortgage Loans as of the Cut-off Date; provided that,
if on any Distribution Date a Group I Trigger Event has occurred, the Group I
Specified Overcollateralization Amount shall not be reduced to the applicable
percentage of the then current Stated Principal Balance of the Group I
Mortgage Loans until the Distribution Date on which a Group I Trigger Event no
longer exists.
Group I Standard Rate: The lesser of 7.56% 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 September 2001 or (ii) the
first Distribution Date on which the Group I Class A Certificate Principal
Balance is less than or equal to 80.00% 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 MV-1, Class MV-2,
Class BV and/or Class BV-IO Certificates.
Group II Certificate Principal Balance: The sum of the Class AV-1,
Class MV-1, Class MV-2 and Class BV Certificate Principal Balances.
Group II Class A Certificate Principal Balance: The Class AV-1
Certificate Principal Balance.
Group II Class A Principal Distribution Amount: With respect to (i)
any Distribution Date prior to the Group II Stepdown Date or Distribution Date
on which a Group II Trigger Event has occurred, 100% of the Group II Principal
Distribution Amount for such Distribution Date and (ii) any Distribution Date
on or after the Group II Stepdown Date where a Group II Trigger Event has not
occurred, the excess of (A) the Group II Class A Certificate Principal Balance
immediately prior to such Distribution Date over (B) the lesser of (I) 71.00%
of the Stated Principal Balance of the Group II Mortgage Loans on the
immediately preceding Due Date and (II) the Stated Principal Balance of the
Group II Mortgage Loans on the immediately preceding Due Date less
approximately $902,535.
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 $902,535 provided that after the Group II Class A Certificate
Principal Balance, the Class MV-1 Certificate Principal Balance and the Class
MV-2 Certificate Principal Balance has been reduced to zero, the Group II
Class B Principal Distribution Amount for such Distribution Date will equal
100% of the Group II Principal Distribution Amount for such Distribution Date.
Group II Class MV-1 Principal Distribution Amount: With respect to
any Distribution Date on or after the Group II Stepdown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the Group
II Class A Certificate Principal Balance has been reduced to zero and a Group
II Trigger Event has occurred and is continuing, or, if any of the Class AV-1
Certificates are still outstanding and as long as a Group II Trigger Event has
not occurred and is not continuing, the excess of (i) the sum of (A) the Group
II Class A Certificate Principal Balance (after taking into account
distributions of the Group II Class A Principal Distribution Amount on such
Distribution Date) and (B) the Class MV-1 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 81.00%
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 $902,535.
Group II Class MV-2 Principal Distribution Amount: With respect to
any Distribution Date on or after the Group II Stepdown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the Group
II Class A Certificate Principal Balance and the Class MV-1 Certificate
Principal Balance have been reduced to zero and a Group II Trigger Event has
occurred and is continuing, or, if any of the Class AV-1 or Class MV-1
Certificates are still outstanding and as long as a Group II Trigger Event has
not occurred and is not continuing, the excess of (i) the sum of (A) the Group
II Class A Certificate Principal Balance (after taking into account
distributions of the Group II Class A Principal Distribution Amount on such
Distribution Date), (B) the Class MV-1 Certificate Principal Balance (after
taking into account distributions of the Group II Class MV-1 Principal
Distribution Amount on such Distribution Date) and (C) the Class MV-2
Certificate Principal Balance immediately prior to such Distribution Date over
(ii) the lesser of (A) 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
$902,535.
Group II Excess Cashflow: With respect to any Distribution Date, the
aggregate remaining amounts constituting Group II Excess Cashflow for such
Distribution Date pursuant to Sections 4.04(b)(v) and 4.04(e)(v).
Group II Extra Principal Distribution 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 Interest Funds: With respect to Group II Mortgage Loans and
any Master Servicer Advance Date, the sum, without duplication, of (i) all
scheduled interest collected during the related Due Period with respect to the
Group II Mortgage Loans less the Servicing Fee, (ii) all Advances relating to
interest with respect to the Group II Mortgage Loans, (iii) all Compensating
Interest with respect to the Group II Mortgage Loans and (iv) Liquidation
Proceeds with respect to the Group II Mortgage Loans (to the extent such
Liquidation Proceeds relate to interest) less all Nonrecoverable Advances
relating to interest reimbursed during the related Due Period.
Group II Mortgage Loans: The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having a Mortgage Rate which is
adjustable for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Group II Net Rate: The weighted average Net Mortgage Rate for Group
II Mortgage Loans. 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
- ---%.
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 in the related Prepayment
Period, (iii) the Stated Principal Balance of each Mortgage Loans that was
repurchased by the Seller or the Master Servicer, (iv) the amount, if any, by
which the aggregate unpaid principal balance of any Replacement Mortgage Loan
is less than the aggregate unpaid principal balance of the related Deleted
Mortgage Loans delivered by the Seller in connection with a substitution of a
Mortgage Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds
collected during the related Due Period (to the extent such Liquidation
Proceeds related to principal) less all Nonrecoverable Advances relating to
principal reimbursed during the related Due Period.
Group II Remainder Excess Cashflow: With respect to any Distribution
Date, the Group II Excess Cashflow for such Distribution Date remaining after
the applications set forth in Section 4.04(g)(i) through (vii).
Group II Specified Overcollateralization Amount: Prior to the Group
II Stepdown Date, 1.5% of the Stated Principal Balance of the Group II
Mortgage Loans as of the Cut-off Date, and on and after the Group II Stepdown
Date, 3.0% of the Stated Principal Balance of the Group II Mortgage Loans as
of the preceding Due Date, subject to a minimum of 0.50% of the Stated
Principal Balance of the Group II Mortgage Loans as of the Cut-off Date;
provided that, if on any Distribution Date a Group II Trigger Event has
occurred, the Group II Specified Overcollateralization Amount shall not be
reduced to the applicable percentage of the then current Stated Principal
Balance of the Group II Mortgage Loans until the Distribution Date on which a
Group II Trigger Event no longer exists.
Group II Standard Rate: The least of (i) the sum of (A) One Month
LIBOR plus (B) the Class BV Margin, (ii) the Weighted Maximum Rate Cap, and
(iii) the Available Funds Cap for the Group II Certificates for such
Distribution Date.
Group II Stepdown Date: With respect to Group II Mortgage Loans, the
later to occur of (i) the Distribution Date in September 2001 or (ii) the
first Distribution Date on which the Group II Class A Certificate Principal
Balance is less than or equal to 71.00% of the Stated Principal Balance of
Group II Mortgage Loans as of the preceding Due Date.
Group II Subordinated Certificates: The Class MV-1, MV-2 and Class BV
Certificates.
Group II Trigger Event: With respect to any Distribution Date after
the Group II Stepdown Date, (1) the product of (i) 2.5 times (ii) the quotient
of (A) the Stated Principal Balance of all Group I Mortgage Loans 60 or more
days delinquent (including Group I Mortgage Loans in foreclosure and REO
Properties) and (B) the Stated Principal Balance of the Group I Mortgage Loans
as of the preceding Master Servicer Advance Date (2) equals or exceeds the
Required Percentage.
Index: As to any Group II Mortgage Loan on any Adjustment Date
related thereto, the index for the adjustment of the Mortgage Rate set forth
as such in the related Mortgage Note, such index in general being either (i)
the average of the London interbank offered rates for six-month U.S. dollar
deposits in the London market, as set forth in The Wall Street Journal, or, if
the Index ceases to be published in The Wall Street Journal or becomes
unavailable for any reason, then the Index shall be a new index selected by
the Trustee, as holder of the Mortgage Note, based on comparable information
or (ii) is the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year, as made available by the Board of
Governors of the Federal Reserve System, in the case of both (i) and (ii)
above as most recently announced as of a date 45 days prior to such Adjustment
Date. The Master Servicer hereby agrees that should the Index become
unavailable, the Master Servicer, on behalf of the Trustee, will select a new
index that is based upon comparable information.
Initial Adjustment Date: As to any Group II Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the aggregate
of all amounts in respect of (i) principal of the Mortgage Loans due on or
after the Cut-off Date and received by the Master Servicer before the Closing
Date and not applied in computing the Cut-off Date Principal Balance thereof
and (ii) interest on the Mortgage Loans due on and after the Cut-off Date and
received by the Master Servicer before the Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Master Servicer or the trustee under the deed of trust and
are not applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account, in
each case other than any amount included in such Insurance Proceeds in respect
of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
Interest Determination Date: With respect to the Group II
Certificates for the first Accrual Period, August 26, 1998. With respect to
the Group II Certificates and any Accrual Period thereafter, the second LIBOR
Business Day preceding the commencement of such Accrual Period.
Interest Rate Cap Agreement: The interest rate cap contract referred
to in the last paragraph of Section 8.11 and all related provisions of this
Agreement.
Latest Possible Maturity Date: The Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by
applicable law governing the real property subject to the related Mortgage and
any security agreements and as to which the Master Servicer has certified (in
accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such
liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property,
less the sum of related unreimbursed Advances, Servicing Fees and Servicing
Advances.
Loan Group: Either of the Group I Mortgage Loans or the Group II
Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Master Servicer Advance Date: As to any Distribution Date, 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.
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 5.65234%
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 for all but one Group II
Mortgage Loan to not more than one and one-half percentage points, and as to
such one loan to not more than two percentage points, except that with respect
to the Initial Adjustment Date for certain of the 2/28 Mortgage Loans that are
subject to a provision that limits permissible increases and decreases in the
Mortgage Rate to not more than three percentage points.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates, or such lower rating as will not result in the downgrading
or withdrawal of the ratings then assigned to the Certificates by each
such Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each such
Rating Agency, or such lower rating as will not result in the downgrading
or withdrawal of the ratings then assigned to the Certificates by each
such Rating Agency;
(v) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or long
term unsecured debt obligations of such depository institution or trust
company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Moody's is not a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such securities, or
such lower ratings as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any such Rating Agency;
(vi) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency; (viii) repurchase obligations
with respect to any security described in clauses (i) and (ii) above, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two highest long
term ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such securities), or such lower rating as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency, as evidenced by a signed writing
delivered by each such Rating Agency;
(x) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable long term
rating by each such Rating Agency or such lower rating as will not result
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency;
(xi) short term investment funds sponsored by any trust company
or national banking association incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each such Rating Agency in their respective highest applicable
rating category or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency; and
(xii) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to each Rating
Agency as will not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any such Rating Agency, as evidenced
by a signed writing delivered by each such Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to investments
in units of money market funds pursuant to clause (vii) above); provided
further that no amount beneficially owned by any REMIC (including, without
limitation, any amounts collected by the Master Servicer but not yet deposited
in the Certificate Account) may be invested in investments (other than money
market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of Master Servicer, to the effect that such investment will not adversely
affect the status of any such REMIC as a REMIC under the Code or result in
imposition of a tax on any such REMIC. Permitted Investments that are subject
to prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in section 521 of
the Code) that is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by section 511 of the Code on unrelated business taxable
income) on any excess inclusions (as defined in section 860E(c)(1) of the
Code) with respect to any Class R Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (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 August 25,
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
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). If
any such organization or its successor is no longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization, or
other comparable Person, designated by the Depositor, 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) $10,000 over (ii) the amount of
funds on deposit in the 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, Inc.
If S&P is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to S&P shall be Standard
& Poor's, 26 Broadway, 15th Floor, New York, New York 10004, Attention:
Mortgage Surveillance Monitoring, or such other address as S&P may hereafter
furnish to the Depositor and the Master Servicer.
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.
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 and the
Carryover Reserve Fund and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loan; and (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property.
Trustee: The Bank of New York, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving
any consolidation or merger to which it or its successors may be a party and
any successor trustee as may from time to time be serving as successor trustee
hereunder.
2/28 Mortgage Loan: A Mortgage Loan having a Mortgage Rate
that is fixed for 24 months after origination thereof before such Mortgage
Rate becomes subject to adjustment.
Voting Rights: The portion of the voting rights of all the
Certificates that is allocated to any Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Group I Certificates and Group II Certificates
(other than the Class B-IO Certificates), and 5% to the Class B-IO
Certificates and the Class R Certificates, with the allocation among the Group
I Certificates and Group II Certificates to be in proportion to the
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 98% of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Rate, and
that has such other terms as are described in Section 4.06.
Class T1-F2 Interest: A regular interest in REMIC 1 that is held as
an asset of REMIC 2, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Rate, and
that has such other terms as are described in Section 4.06.
Class T1-F3 Interest: A regular interest in REMIC 1 that is held as
an asset of REMIC 2, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Rate, and
that has such other terms as are described in Section 4.06.
Class T1-V1 Interest: A regular interest in REMIC 1 that is held as
an asset of REMIC 2, that has an initial principal balance equal to 98% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-V2 Interest: A regular interest in REMIC 1 that is held as
an asset of REMIC 2, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T1-V3 Interest: A regular interest in REMIC 1 that is held as
an asset of REMIC 2, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T2-F1 Interest: A regular interest in REMIC 2 that is
held as an asset of REMIC 3, that has an initial principal balance equal to
98% of the Stated Principal Balance of the Group I Mortgage Loans as of the
Cut-off Date, that bears interest at a per annum rate equal to the Group I Net
Rate, and has such other terms as are described in Section 4.06.
Class T2-F2 Interest: A regular interest in REMIC 2 that is held as
an asset of REMIC 3, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Rate, and has
such other terms as are described in Section 4.06.
Class T2-F3 Interest: A regular interest in REMIC 2 that is held as
an asset of REMIC 3, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Rate, and has
such other terms as are described in Section 4.06.
Class T2-F4 Interest: A regular interest in REMIC 2 that is held as
an asset of REMIC 3, that is entitled to 100% of the interest accruals on the
Class T1-F2 Interest in excess of interest accruals on the principal balance
of the Class T1-F2 Interest at a rate of 7.56%, and that has such other terms
as are described in Section 4.06. The Class T2-F4 interest shall not have a
principal balance.
Class T2-V1 Interest: A regular interest in REMIC 2 that is held as
an asset of REMIC 3, that has an initial principal balance equal to 98% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Rate,
and that has such other terms as are described in Section 4.06.
Class T2-V2 Interest: A regular interest in REMIC 2 that is held as
an asset of REMIC 3, that has an initial principal balance equal to 1% of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the 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 held as an asset
of REMIC 4, that has an initial principal balance of $35,000,000, 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-F2 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4, that has an initial principal balance of $26,500,000, 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-F3 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4, that has an initial principal balance of $14,924,000, 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-F4 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4, that has an initial principal balance of $10,000,000, that bears
interest at a rate equal to the 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 $4,274,000, 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 $2,850,000, 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 an initial principal balance of $1,425,000, 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-F8 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-F8 Distributable Amount: With respect to any Distribution
Date, an amount equal to the product of (i) a fraction, the numerator of which
is the number of days in the related Accrual Period and the denominator of
which is 360, (ii) the Class T3-F8 Notional Balance immediately before such
distribution date, and (iii) the Class T3-F8 Pass-Through Rate.
Class T3-F8 Notional Balance: A notional principal balance equal as
of any date to the sum of the principal balances of the Class T2-F1 and T2-F3
interests for such date.
Class T3-F8 Pass-Through Rate: With respect to any Distribution Date,
a per annum rate equal to (i) the excess of the Group I Net Rate for such date
over (ii) the product of two and a fraction, the numerator of which is the
product of (x) 7.56% and (y) the principal balance of the Class T2-F2 Interest
immediately prior to such Distribution Date, and the denominator of which is
the sum of the principal balances of the Class T2-F2 and T2-F3 Interests
immediately before such Distribution Date.
Class T3-F9 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4 that has such terms as are described in Section 4.06.
Class T3-F9 Distributable Amount: With respect to any Distribution
Date, an amount equal to the product of (i) a fraction, the numerator of which
is the number of days in the related Accrual Period and the denominator of
which is 360, (ii) the Class T3-F9 Notional Balance immediately before such
Distribution Date, and (iii) the Class T3-F9 Pass-Through Rate.
Class T3-F9 Notional Balance: A notional principal balance equal as
of any date to the principal balance of the Class T2-F2 interest for such
date.
Class T3-F9 Pass-Through Rate: With respect to any Distribution Date,
a per annum rate equal to (i) the excess of the 7.56% over (ii) the product of
two and a fraction, the numerator of which is the product of (x) 7.56% and (y)
the Class T2-F2 Interest immediately prior to such Distribution Date, and the
denominator of which is the sum of the principal balances of the Class T2-F2
and T2-F3 Interests immediately before such Distribution Date.
Class T3-F10 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4 that is entitled to receive 100% of the amounts distributable with
respect to the Class T2-F4 Interest, and has such terms as are described in
Section 4.06.
Class T3-F11 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 AF-2, Class AF-3, Class AF-4, Class
MF-1, Class MF-2 and Class BF Certificates on the Closing Date. The Class
T3-F11 Interest will bear interest at the Group I Standard Rate. Interest on
the Class T3-F11 Interest will accrue and be paid with principal on the Class
T3-F11 Interest following the reduction of the Certificate Principal Balances
of the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class MF-1, Class MF-2,
Class BF Certificates to zero.
Class T3-V1 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4 that has an initial principal balance of $157,039,000 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 $9,026,000 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 $7,221,000 and 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 such terms as are described in Section 4.06.
Class T3-V5 Distributable Amount: With respect to any Distribution
Date, an amount equal to the product of (i) a fraction, the numerator of which
is the number of days in the related Accrual Period and the denominator of
which is 360, (ii) the Class T3-V5 Notional Balance, and (iii) the Class T3-V5
Pass-Through Rate.
Class T3-V5 Notional Balance: A notional principal balance equal as
of any date to the sum of the principal balances of the Class T2-V1 and T2-V3
Interests for such date.
Class T3-V5 Pass-Through Rate: With respect to any Distribution Date,
a per annum rate equal to the excess of (i) the Group II Net Rate for such
date over (ii) the product of two and a fraction, the numerator of which is
the product of (x) the 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-V6 Distributable Amount: With respect to any Distribution
Date, an amount equal to the product of (i) a fraction, the numerator of which
is the number of days in the related Accrual Period and the denominator of
which is 360, (ii) the Class T3-V6 Notional Balance, and (iii) the Class T3-V6
Pass-Through Rate.
Class T3-V6 Notional Balance: A notional principal balance equal as
of any date to the principal balance of the Class T2-V2 Interests for such
date.
Class T3-V6 Pass-Through Rate: With respect to any Distribution Date,
a per annum rate equal to the excess of (i) the 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, and the denominator of
which is the sum of the principal balances of the Class T2-V2 and Class T2-V3
Interests immediately prior to such Distribution Date.
Class T3-V7 Interest: A regular interest in REMIC 3 held as an asset
of REMIC 4 that is entitled to receive 100% of the amounts distributable with
respect to the Class T2-V4 Interest, and has such terms as are described in
Section 4.06.
Class T3-V8 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 MV-1, Class MV-2 and Class BV
Certificates on the Closing Date. The Class T3-V8 Interest will bear interest
at the Group II Standard Rate. Interest on the Class T3-V8 Interest will
accrue and be paid with principal on the Class T3-V8 Interest following the
reduction of the Certificate Principal Balances of the Class AV-1, Class MV-1,
Class MV-2, Class BV Certificates to zero.
Class T4-F1 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $35,000,000 and bears interest at 6.22%.
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 $26,500,000 and bears interest at 6.070%.
Ownership of the Class T4-F2 Interest is evidenced by the Class AF-2
Certificates.
Class T4-F3 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $14,924,000 and bears interest at 6.600%.
Ownership of the Class T4-F3 Interest is evidenced by the Class AF-3
Certificates.
Class T4-F4 Interest: A regular interest in REMIC 4 that has
an initial principal balance of $10,000,000 and bears interest at 6.190%.
Ownership of the Class T4-F4 Interest is evidenced by the Class AF-4
Certificates.
Class T4-F5 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $4,274,000 and bears interest at 6.520%.
Ownership of the Class T4-F5 Interest is evidenced by the Class MF-1
Certificates.
Class T4-F6 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $2,850,000 and bears interest at 6.745%.
Ownership of the Class T4-F6 Interest is evidenced by the Class MF-2
Certificates.
Class T4-F7 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $1,425,000 and bears interest at the lesser of
7.560% and the Group I Net Rate, Ownership of the Class T4-F7 Interest is
evidenced by the Class BF-2 Certificates.
Class T4-F8 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F1 Interest in excess of the
Class AF-1 Certificate Pass-Through Rate. Ownership of the Class T4-F8
Interest is represented by the Class BF-IO Certificates.
Class T4-F9 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F2 Interest in excess of the
Class AF-2 Certificate Pass-Through Rate. Ownership of the Class T4-F9
Interest is evidenced by the Class BF-IO Certificates.
Class T4-F10 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F3 Interest in excess of the
Class AF-3 Certificate Pass-Through Rate. Ownership of the Class T4-F10
Interest is evidenced by the Class BF-IO Certificates.
Class T4-F11 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F4 Interest in excess of the
Class AF-4 Certificate Pass-Through Rate. Ownership of the Class T4-F11
Interest is evidenced by the Class BF-IO Certificates.
Class T4-F12 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F5 Interest in excess of the
Class MF-1 Certificate Pass-Through Rate. Ownership of the Class T4-F11
Interest is evidenced by the Class BF-IO Certificates.
Class T4-F13 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-F6 Interest in excess of the
Class MF-2 Certificate Rate. Ownership of the Class T4-F11 Interest is
evidenced by the Class BF-IO Certificates.
Class T4-F14 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the amounts distributable on the Class T3-F8, Class T3-F9, Class
T3-F10, and Class T3-F11 Interests.
Class T4-V1 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $157,039,000 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 $9,026,000 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-V2 Interest is evidenced by the Class MV-1
Certificates.
Class T4-V3 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $7,221,000 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-V3 Interest is evidenced by the Class MV-2
Certificates.
Class T4-V4 Interest: A regular interest in REMIC 4 that has an
initial principal balance of $7,221,000 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-V4 Interest is evidenced by the Class BV
Certificates.
Class T4-V5 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-V1 Interest in excess of the
Class AV-1 Pass-Through Rate. Ownership of the Class T4-V5 Interest is
evidenced by the Class BV-IO Certificates.
Class T4-V6 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-V2 Interest in excess of the
Class MV-1 Pass-Through Rate. Ownership of the Class T4-V6 Interest is
evidenced by the Class BV-IO Certificates.
Class T4-V7 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the interest accruals on the Class T3-V3 Interest in excess of the
Class MV-2 Pass-Through Rate. Ownership of the Class T4-V6 Interest is
evidenced by the Class BV-IO Certificates.
Class T4-V8 Interest: A regular interest in REMIC 4 that is entitled
to 100% of the amounts distributable with respect to the Class T3-V5, Class
T3-V6, Class T3-V7, and Class T3-V8 Interests.
Group I Adjusted Overcollateralization Amount: For any Distribution
Date, the excess of (a) the Stated Principal Balance of the Group I Mortgage
Loans as of the preceding Due Date over (b) the aggregate principal balance of
the Class T3-F1, Class T3-F2, Class T3-F-3, Class T3-F4, Class T3-F5, Class
T3-F6, and the Class T3-F7 Interests.
Group I Adjusted Overcollateralization Release Amount: For any
Distribution Date, the lesser of (a) the Group I Principal Distribution Amount
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-F2, Class
T3-F3, Class T3-F4, Class T3-F5, Class T3-F6 and Class T3-F7 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, and the Class T3-V4 Interests.
Group II Adjusted Overcollateralization Release Amount: For any
Distribution Date, the lesser of the (a) the Group II Principal Distribution
Amount 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, and Class T3-V4 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.
<PAGE>
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
The Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest
of the Seller in and to the Mortgage Loans, including all interest and
principal received and receivable by the Seller on or with respect to the
Mortgage Loans on and after the Cut-off Date (to the extent not applied in
computing the Cut-off Date Principal Balance thereof) or deposited into the
Certificate Account by the Seller as an Initial Certificate Account Deposit as
provided in this Agreement, other than principal due on the Mortgage Loans
prior to the Cut-off Date and interest accruing prior to August 1, 1998. The
Seller confirms that, concurrently with such transfer and assignment, it has
deposited into the Certificate Account the Initial Certificate Account
Deposit.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse,
all the right, title and interest of the Depositor in and to the Trust Fund.
In connection with any such transfer and assignment, the Depositor
has delivered to, and deposited with, the Trustee (or, in the case of the
Delay Delivery Mortgage Loans, will deliver to, and deposit with, the Trustee
within seven (7) Business Days following the Closing Date) (except as provided
in clause (vi) below) for the benefit of the Certificateholders, the following
documents or instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse, in the following
form: "Pay to the order of ____________________ without recourse", with
all intervening endorsements that show a complete chain of endorsement
from the originator to the Seller;
(ii) original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage to "The Bank of New
York, a New York banking corporation, as trustee under the Pooling and
Servicing Agreement dated as of August 11, 1998, CWABS, Inc.,
Asset-Backed Certificates, Series 1998-2, without recourse" (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or, in the event such original title policy has not been
received from the insurer, such original or duplicate original lender's
title policy and all riders thereto shall be delivered within one year of
the Closing Date.
In the event that in connection with any Mortgage Loan the Seller
cannot deliver the original recorded Mortgage or all interim recorded
assignments of the Mortgage satisfying the requirements of clause (ii), (iii)
or (iv) concurrently with the execution and delivery hereof, the Seller shall
deliver or cause to be delivered to the Trustee a true copy of such Mortgage
and of each such undelivered interim assignment of the Mortgage each certified
by the Seller, the applicable title company, escrow agent or attorney, or the
originator of such Mortgage, as the case may be, to be a true and complete
copy of the original Mortgage or assignment of Mortgage submitted for
recording. The Seller shall promptly deliver or cause to be delivered to the
Trustee such original Mortgage and such assignment or assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, or a copy thereof, certified, if appropriate, by the
relevant recording office, but in no event shall any such delivery be made
later than 270 days following the Closing Date; provided that in the event
that by such date the Seller is unable to deliver or cause to be delivered
each Mortgage and each interim assignment by reason of the fact that any such
documents have not been returned by the appropriate recording office, or, in
the case of each interim assignment, because the related Mortgage has not been
returned by the appropriate recording office, the Seller shall deliver or
cause to be delivered such documents to the Trustee as promptly as possible
upon receipt thereof. If the public recording office in which a Mortgage or
interim assignment thereof is recorded retains the original of such Mortgage
or assignment, a copy of the original Mortgage or assignment so retained, with
evidence of recording thereon, certified to be true and complete by such
recording office, shall satisfy the Seller's obligations in this Section 2.01.
If any document submitted for recording pursuant to this Agreement is (a) lost
prior to recording or rejected by the applicable recording office, the Seller
shall immediately prepare or cause to be prepared a substitute and submit it
for recording, and shall deliver copies and originals thereof in accordance
with the foregoing or (b) lost after recording, the Seller shall deliver to
the Trustee a copy of such document certified by the applicable public
recording office to be a true and complete copy of the original recorded
document. The Seller shall promptly forward or cause to be forwarded to the
Trustee (a) from time to time additional original documents evidencing an
assumption or modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Depositor or the Master Servicer to the
Trustee within the time periods specified in this Section 2.01.
With respect to each Mortgage Loan as to which the related Mortgaged
Property and Mortgage File are located in (a) the State of California or (b)
any other jurisdiction under the laws of which the recordation of the
assignment specified in clause (iii) above is not necessary to protect the
Trustee's and the Certificateholders, interest in the related Mortgage Loan,
as evidenced by an Opinion of Counsel, delivered by the Seller to the Trustee
and a copy to the Rating Agencies, in lieu of recording the assignment
specified in clause (iii) above, the Seller may deliver an unrecorded
assignment in blank, in form otherwise suitable for recording to the Trustee;
provided that if the related Mortgage has not been returned from the
applicable public recording office, such assignment, or any copy thereof, of
the Mortgage may exclude the information to be provided by the recording
office. As to any Mortgage Loan, the procedures of the preceding sentence
shall be applicable only so long as the related Mortgage File is maintained in
the possession of the Trustee in the State or jurisdiction described in such
sentence. In the event that (i) the Seller, the Depositor or the Master
Servicer gives written notice to the Trustee that recording is required to
protect the right, title and interest of the Trustee on behalf of the
Certificateholders in and to any Mortgage Loan, (ii) a court recharacterizes
the sale of the Mortgage Loans as a financing, or (iii) as a result of any
change in or amendment to the laws of the State or jurisdiction described in
the first sentence of this paragraph or any applicable political subdivision
thereof, or any change in official position regarding application or
interpretation of such laws, including a holding by a court of competent
jurisdiction, such recording is so required, the Trustee shall complete the
assignment in the manner specified in clause (iii) of the second paragraph of
this Section 2.01 and the Seller shall submit or cause to be submitted for
recording as specified above or, should the Seller fail to perform such
obligations, the Trustee shall cause the Master Servicer, at the Master
Servicer's expense, to cause each such previously unrecorded assignment to be
submitted for recording as specified above. In the event a Mortgage File is
released to the Master Servicer as a result of the Master Servicer's having
completed a Request for Release in the form of Exhibit M, the Trustee shall
complete the assignment of the related Mortgage in the manner specified in
clause (iii) of the second paragraph of this Section 2.01.
So long as the Trustee maintains an office in the State of
California, the Trustee shall maintain possession of and not remove or attempt
to remove from the State of California any of the Mortgage Files as to which
the related Mortgaged Property is located in such State. In the event that the
Seller fails to record an assignment of a Mortgage Loan as herein provided
within 90 days of notice of an event set forth in clause (i), (ii) or (iii) of
the above paragraph, the Master Servicer shall prepare and, if required
hereunder, file such assignments for recordation in the appropriate real
property or other records office. The Seller hereby appoints the Master
Servicer (and any successor servicer hereunder) as its attorney-in-fact with
full power and authority acting in its stead for the purpose of such
preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a Principal
Prepayment between the Closing Date and the Cut-off Date, the Seller shall
deposit or cause to be deposited in the Certificate Account the amount
required to be deposited therein with respect to such payment pursuant to
Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement, within
seven Business Days after the Closing Date, the Seller shall either (i)
deliver to the Trustee the Mortgage File as required pursuant to this Section
2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase the Delay
Delivery Mortgage Loan or (B) substitute the Delay Delivery Mortgage Loan for
a Replacement Mortgage Loan, which repurchase or substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, provided that if the Seller fails to deliver a Mortgage File for any
Delay Delivery Mortgage Loan within the period provided in the prior sentence,
the cure period provided for in Section 2.02 or in Section 2.03 shall not
apply to the initial delivery of the Mortgage File for such Delay Delivery
Mortgage Loan, but rather the Seller shall have 5 Business Days to cure such
failure to deliver. Upon delivery of the Mortgage File for each Delay Delivery
Mortgage Loan, the Trustee shall send an Initial Certification for such Delay
Delivery Mortgage Loan in accordance with the provisions of Section 2.02.
Section 2.02. Acceptance by Trustee of the Mortgage Loans.
The Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the form
annexed hereto as Exhibit G-1 and in the list of exceptions attached thereto,
of the documents referred to in clauses (i) and (iii) of Section 2.01 above
and all other assets included in the Trust Fund and declares that it holds and
will hold such documents and the other documents delivered to it constituting
the Mortgage Files, and that it holds or will hold such other assets included
in the Trust Fund, in trust for the exclusive use and benefit of all present
and future Certificateholders.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer and the Seller an Initial Certification in the
form annexed hereto as Exhibit G-1 to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid
in full or any Mortgage Loan specifically identified in such certification as
not covered by such certification), the documents described in Section 2.01(i)
and (iii) with respect to such Mortgage Loan are in its possession, and based
on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and relate to such Mortgage Loan. The
Trustee agrees to execute and deliver within 30 days after the Closing Date to
the Depositor, the Master Servicer and the Seller an Interim Certification in
the form annexed hereto as Exhibit G-2 to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid
in full or any Mortgage Loan specifically identified in such certification as
not covered by such certification), all documents required to be delivered to
it pursuant to this Agreement with respect to such Mortgage Loan are in its
possession (except those described in Section 2.01(v)) and based on its review
and examination and only as to the foregoing documents, (i) such documents
appear regular on their face and relate to such Mortgage Loan, and (ii) the
information set forth in items (i), (iv), (v), (vi), (viii) and (xiii) of the
definition of the "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. The Trustee shall be under no duty or obligation
to inspect, review or examine such documents, instruments, certificates or
other papers to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have actually been
recorded in the real estate records or that they are other than what they
purport to be on their face.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and the Seller (and to any
Certificateholder that so requests) a Final Certification in the form annexed
hereto as Exhibit H, with any applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Trustee shall review each Mortgage File to determine
that it contains the following documents:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse, in the following
form: "Pay to the order of _______________ without recourse", with all
intervening endorsements that show a complete chain of endorsement from
the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form
permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy and
all riders thereto if delivered pursuant to Section 2.06 (vi) (otherwise
such original or duplicate original lender's title policy and all riders
thereto shall be held in the Mortgage File upon delivery as provided in
such Section).
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include
such exceptions in such Final Certification (and Trustee shall state in such
Final Certification whether any Mortgage File does not then include the
original or duplicate original lender's title policy and all riders thereto).
If the public recording office in which a Mortgage or assignment thereof is
recorded retains the original of such Mortgage or assignment, a copy of the
original Mortgage or assignment so retained, with evidence of recording
thereon, certified to be true and complete by such recording office, shall be
deemed to satisfy the requirements of clause (ii), (iii) or (iv) above, as
applicable. The Seller shall promptly correct or cure such defect referred to
above within 90 days from the date it was so notified of such defect and, if
the Seller does not correct or cure such defect within such period, the Seller
shall either (a) if the time to cure such defect expires prior to the end of
the second anniversary of the Closing Date, substitute for the related
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
the date the Seller was notified of such defect in writing at the Purchase
Price of such Mortgage Loan; provided that any such substitution pursuant to
(a) above or repurchase pursuant to (b) above shall not be effected prior to
the delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof and any substitution pursuant to (a) above shall not be effected prior
to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit N. No substitution will be made in any
calendar month after the Determination Date for such month. The Purchase Price
for any such Mortgage Loan shall be deposited by the Seller in the Certificate
Account and, upon receipt of such deposit and certification with respect
thereto in the form of Exhibit N hereto, the Trustee shall release the related
Mortgage File to the Seller and shall execute and deliver at the Seller's
request such instruments of transfer or assignment as the Seller has prepared,
in each case without recourse, as shall be necessary to vest in the Seller, or
a designee, the Trustee's interest in any Mortgage Loan released pursuant
hereto.
The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth herein.
The Seller shall promptly deliver to the Trustee, upon the execution or
receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of the Seller
from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.01(i)-(vi) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor, and any
Certificateholder against the Seller.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to the
Depositor and the Trustee as follows, as of the date hereof:
(i) The Master Servicer is duly organized as a New York corporation
and is validly existing and in good standing under the laws of the State
of New York and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Master
Servicer in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Mortgage Loan, to service the Mortgage Loans in accordance with the terms
of this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Master Servicer has the full corporate power and authority
to sell and service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate
action on the part of the Master Servicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Master Servicer,
enforceable against the Master Servicer in accordance with its terms,
except that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer
under this Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance with
the terms hereof are in the ordinary course of business of the Master
Servicer and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Master Servicer or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Master Servicer is a
party or by which it may be bound, or (C) constitute a material violation
of any statute, order or regulation applicable to the Master Servicer of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Master Servicer; and the Master Servicer is
not in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Master Servicer's ability to perform or meet
any of its obligations under this Agreement.
(iv) The Master Servicer is an approved servicer of conventional
mortgage loans for FNMA or FHLMC and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened, against the Master Servicer that would materially
and adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Master Servicer to service the Mortgage
Loans or to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Master Servicer has obtained the same.
(b) The Seller hereby represents and warrants to the Depositor and
the Trustee as follows, as of the date hereof (unless otherwise indicated or
the context otherwise requires, percentages with respect to the Mortgage Loans
in a Loan Group are measured by the Cut-off Date Principal Balance of the
Mortgage Loans in the related Loan Group):
(i) The Seller is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State of New
York and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller in
any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to sell
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on the part of the
Seller the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except that (a) the enforceability hereof may
be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Seller, the
sale of the Mortgage Loans by the Seller under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Seller and will not (A) result
in a material breach of any term or provision of the charter or by-laws
of the Seller or (B) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
the Seller is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to the
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller; and the Seller is
not in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Seller's ability to perform or meet any of its
obligations under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage loans
for FNMA or FHLMC and is a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to sections 203 and 211 of the National
Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Seller has obtained the same.
(vii) The information set forth on Exhibit F-1 hereto with respect to
each Mortgage Loan is true and correct in all material respects as of the
Closing Date.
(viii) The Seller will treat the transfer of the Mortgage Loans to
the Depositor as a sale of the Mortgage Loans for all tax, accounting and
regulatory purposes.
(ix) No Mortgage Loan is more than 59 days delinquent in payment of
principal and interest, and no more than 1% of the Group I Mortgage Loans
and no more than 1% of the Group II Mortgage Loans are 30-59 days
delinquent in the payment of principal and interest.
(x) No Group I Mortgage Loan that was secured by a first lien on the
related Mortgaged Property had a Loan-to-Value Ratio at origination in
excess of 90%; no Group I Mortgage Loan that was secured by a second lien
on the related Mortgaged Property had a Combined Loan-to-Value Ratio at
origination in excess of 100%; and no Group II Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of 95%.
(xi) Each Group I Mortgage Loan is secured by a valid and enforceable
first or second lien on the related Mortgaged Property and each Group I
Mortgage Loan is secured by a valid and enforceable first lien on the
related Mortgaged Property, in each case subject only to (1) the lien of
non-delinquent current real property taxes and assessments, (2)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related Mortgage
Loan, (3) other matters to which like properties are commonly subject
that do not materially interfere with the benefits of the security
intended to be provided by such Mortgage and (4) only in the case of each
such Group I Mortgage Loan which is secured by a valid and enforceable
second lien on the Mortgaged Property, any senior mortgage loan secured
by such Mortgaged Property and identified in the Mortgage File related to
such Mortgage Loan. Approximately 96.04% of the Group I Mortgage Loans
and 100% of the Group II Mortgage Loans were secured by first liens on
the related Mortgaged Properties. Approximately 3.96% of the Group I
Mortgage Loans were secured by second liens on the related Mortgaged
Properties.
(xii) Immediately prior to the assignment of the Mortgage Loans to
the Depositor, the Seller had good title to, and was the sole owner of,
each Mortgage Loan free and clear of any pledge, lien, encumbrance or
security interest and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to sell
and assign the same pursuant to this Agreement.
(xiii) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(xiv) There is no valid offset, claim, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to
pay the unpaid principal of or interest on such Mortgage Note.
(xv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property that are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those that are
insured against by the title insurance policy referred to in item (xix)
below.
(xvi) As of the Closing Date, to the best of the Seller's knowledge,
each Mortgaged Property is free of material damage and is in good repair.
(xvii) Each Mortgage Loan at origination complied in all material
respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(xviii) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written
instrument that has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been delivered to the Trustee);
satisfied, cancelled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification (except as expressly permitted above) or satisfaction with
respect thereto.
(xix) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance
of each such Mortgage Loan or a commitment (binder) to issue the same was
effective on the date of the origination of each Mortgage Loan, each such
policy is valid and remains in full force and effect, and each such
policy was issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located and acceptable to
FNMA or FHLMC and is in a form acceptable to FNMA or FHLMC, which policy
insures the Seller and successor owners of indebtedness secured by the
insured Mortgage, as to the first priority lien, of the Mortgage subject
to the exceptions set forth in paragraph (iv) above; to the best of the
Seller's knowledge, no claims have been made under such mortgage title
insurance policy and no prior holder of the related Mortgage, including
the Seller, has done, by act or omission, anything that would impair the
coverage of such mortgage title insurance policy.
(xx) No Mortgage Loan was the subject of a Principal Prepayment in
full between the Closing Date and the Cut-off Date.
(xxi) To the best of the Seller's knowledge, all of the improvements
that were included for the purpose of determining the Appraised Value of
the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property.
(xxii) To the best of the Seller's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of the Seller's
knowledge, all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities, unless the
lack thereof would not have a material adverse effect on the value of
such Mortgaged Property, and the Mortgaged Property is lawfully occupied
under applicable law.
(xxiii) The Mortgage Note and the related Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. To the best of the Seller's
knowledge, all parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties.
(xxiv) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, or closing or recording
the Mortgage Loans were paid.
(xxv) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure.
(xxvi) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(xxvii) Each Mortgage Note and each Mortgage is in substantially one
of the forms attached hereto as Exhibit P acceptable in form to FNMA or
FHLMC.
(xxviii) There exist no deficiencies with respect to escrow deposits
and payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under
the Mortgage or the related Mortgage Note.
(xxix) The origination, underwriting and collection practices used by
the Seller with respect to each Mortgage Loan have been in all respects
legal, prudent and customary in the mortgage lending and servicing
business.
(xxx) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations.
(xxxi) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature.
(xxxii) Each Mortgage Loan contains a customary "due on sale" clause.
(xxxiii) Approximately 3.71% of the Group I Mortgage Loans and
approximately 5.61% of the Group II Mortgage Loans are secured by two- to
four-family dwellings. Approximately 3.83% of the Group I Mortgage Loans
and approximately 4.72% of the Group II Mortgage Loans are secured by
condominium units. Approximately 82.44% of the Group I Mortgage Loans and
approximately 78.45% of the Group II Mortgage Loans are secured by
detached one-family dwellings.
(xxxiv) No Group I Mortgage Loan had a principal balance in excess of
$760,000 at origination and no Group II Mortgage Loan had a principal
balance in excess of $750,000 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 May
1997; each Group II Mortgage Loan other than a 2/28 Mortgage Loan had an
initial Adjustment Date no later than August 1, 2001; each 2/28 Mortgage
Loan had an initial Adjustment Date no later than September 1, 2000.
(xxxvii) Approximately 85.32% of the Group I Mortgage Loans and
approximately 72.71% of the Group II Mortgage Loans provide for a
prepayment penalty.
(xxxviii) No Mortgage Loan provides for primary mortgage insurance.
(xxxix) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 6.16% of the Group I
Mortgage Loans are secured by investor properties, and at least
approximately 92.24% of the owner-occupied Group I Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group I Mortgage Loans).
(xl) On the basis of representations made by the Mortgagors in their
loan applications, no more than approximately 6.32% of the Group II
Mortgage Loans are secured by investor properties, and at least
approximately 92.78% of the owner-occupied Group II Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group II Mortgage Loans).
(xli) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy with
a generally acceptable carrier that provides for fire and extended
coverage and coverage for such other hazards as are customary in the area
where the Mortgaged Property is located in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such
that the proceeds of such policy shall be sufficient to prevent the
Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the condominium unit. All such
individual insurance policies and all flood policies referred to in item
(xl) above contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and the
Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance, including flood insurance, at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor.
(xlii) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage not
less than the least of (A) the original outstanding principal balance of
the Mortgage Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis, or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973, as amended.
(xliii) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
the Mortgaged Property.
(xliv) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of the Seller's
knowledge, there is no material event that, with the passage of time or
with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration under
the Mortgage or the related Mortgage Note; and the Seller has not waived
any default, breach, violation or event of acceleration.
(xlv) Each Mortgaged Property is improved by a one- to four-family
residential dwelling, including condominium units and dwelling units in
PUDs, that, to the best of the Seller's knowledge, does not include
cooperatives or mobile homes and does not constitute other than real
property under state law.
(xlvi) Each Mortgage Loan is being serviced by the Master Servicer.
(xlvii) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the Mortgage
Loan Schedule. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan. The Mortgage Note does
not permit or obligate the Master Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(xlviii) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
that previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such
item that remains unpaid and that has been assessed, but is not yet due
and payable. Except for (A) payments in the nature of escrow payments,
and (B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day
that precedes by one month the Due Date of the first installment of
principal and interest, including without limitation, taxes and insurance
payments, the Master Servicer has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage.
(xlix) Each Mortgage Loan was underwritten in all material respects
in accordance with the Seller's underwriting guidelines for B and C
quality mortgage loans or, with respect to Mortgage Loans originated in
accordance with other underwriting guidelines, in substantial compliance
of the Seller's guidelines.
(l) Prior to the approval of the Mortgage Loan application, an
appraisal of the related Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct
or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval
or disapproval of the Mortgage Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(li) None of the Mortgage Loans is a graduated payment mortgage loan
or a growing equity mortgage loan, and no Mortgage Loan is subject to a
buydown or similar arrangement.
(lii) The Mortgage Rates borne by the Group I Mortgage Loans as of
the Cut-off Date ranged from 6.625% per annum to 15.125% per annum and
the weighted average Mortgage Rate as of the Cut-off Date was 9.342% per
annum.
(liii) The Mortgage Rates borne by the Group II Mortgage Loans as of
the Cut-off Date ranged from 5.500% per annum to 14.375% per annum and
the weighted average Mortgage Rate as of the Cut-off Date was 9.196% per
annum.
(liv) The Mortgage Loans were selected from among the outstanding
one- to four-family mortgage loans in the Master Servicer's portfolio at
the Closing Date as to which the representations and warranties made as
to the Mortgage Loans set forth in this Section 2.03(b) can be made. Such
selection was not made in a manner that would adversely affect the
interests of Certificateholders.
(lv) The Gross Margins on the Group II Mortgage Loans range from
approximately 4.450% to 9.375% and the weighted average Gross Margin was
approximately 6.277%.
(lvi) Except for 44 Group I Mortgage Loans representing approximately
3.28% of the Group I Mortgage Loans and except for 3 Group II Mortgage
Loans representing approximately 0.16% 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.
The Depositor hereby represents and warrants to the Master Servicer
and the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or
hold its properties and to conduct its business as now conducted by it
and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized, by
all necessary corporate action on its part, the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject,
as to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and (ii) general principles of equity, regardless of whether enforcement
is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the Depositor,
the consummation of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof are in the
ordinary course of business of the Depositor and will not (A) result in a
material breach of any term or provision of the charter or by-laws of the
Depositor or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under, the
terms of any other material agreement or instrument to which the
Depositor is a party or by which it may be bound or (C) constitute a
material violation of any statute, order or regulation applicable to the
Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency
or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or
meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Depositor to perform its obligations
under this Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the Closing Date, and following the
transfer of the Mortgage Loans to it by the Seller, the Depositor had good
title to the Mortgage Loans and the Mortgage Notes were subject to no offsets,
claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties
set forth in the two immediately preceding paragraphs shall survive delivery
of the Mortgage Files to the Trustee. Upon discovery by the Depositor or the
Trustee of a breach of any of the foregoing representations and warranties set
forth in the immediately preceding paragraph (referred to herein as a
"breach"), which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency. The Depositor hereby
covenants with respect to the representations and warranties made by it in
this Section 2.04 that within 90 days of the earlier of the discovery it or
receipt of written notice by it from any party of a breach of any
representation or warranty set forth herein made that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, it shall
cure such breach in all material respects and, if such breach is not so cured,
shall repurchase or replace the affected Mortgage Loan or Loans in accordance
with the procedure set forth in Section 2.03(c).
Section 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03 or
2.04 shall be made unless the Representing Party making such repurchase or
substitution delivers to the Trustee an Opinion of Counsel, addressed to the
Trustee, to the effect that such repurchase or substitution would not (i)
result in the imposition of the tax on "prohibited transactions" of the Trust
Fund or contributions after the Closing Date, as defined in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the Trust Fund
to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02, 2.03 or 2.04)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such loan and (b) receipt by the Trustee of an Opinion of Counsel
to the effect that such repurchase or substitution, as applicable, will not
result in the events described in clause (i) or clause (ii) of the preceding
sentence.
(b) Upon discovery by the Depositor, the Seller, the Master Servicer
or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of section 86OG(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within 5 Business Days
of discovery) give written notice thereof to the other parties. In connection
therewith, the Trustee shall require the Seller, at the Seller's option, to
either (i) substitute, if the conditions in Section 2.03(b) with respect to
substitutions are satisfied, a Replacement Mortgage Loan for the affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of
such discovery in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Section 2.03. The Trustee shall
reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement to the
best of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
Section 2.07. Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor, the Trustee as
follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Master Servicer
pursuant to this Agreement will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the information,
certificate, statement or report not misleading.
<PAGE>
ARTICLE III.
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with customary
and usual standards of practice of prudent mortgage loan lenders in the
respective states in which the Mortgaged Properties are located. In connection
with such servicing and administration, the Master Servicer shall have full
power and authority, acting alone and/or through subservicers as provided in
Section 3.02 hereof, to do or cause to be done any and all things that it may
deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) subject to Section 3.12(a),
to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan; provided that the Master
Servicer shall take no action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan or
the rights and interests of the Depositor and the Trustee under this
Agreement. The Master Servicer shall represent and protect the interest of the
Trust Fund in the same manner as it currently protects its own interest in
mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan and shall not make or permit any modification,
waiver or amendment of any term of any Mortgage Loan which would cause the
Trust Fund to fail to qualify as a REMIC or result in the imposition of any
tax under Section 860(a) or 860(d) of the Code, but in any case not in any
manner that is a lesser standard than that provided in the first sentence of
this Section 3.01. Without limiting the generality of the foregoing, the
Master Servicer, in its own name or in the name of the Depositor and the
Trustee, is hereby authorized and empowered by the Depositor and the Trustee,
when the Master Servicer believes it appropriate in its reasonable judgment,
to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, and with respect
to the Mortgaged Properties held for the benefit of the Certificateholders.
The Master Servicer shall prepare and deliver to the Depositor and/or the
Trustee such documents requiring execution and delivery by any or all of them
as are necessary or appropriate to enable the Master Servicer to service and
administer the Mortgage Loans. Upon receipt of such documents, the Depositor
and/or the Trustee shall execute such documents and deliver them to the Master
Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further
as provided in Section 3.08. All costs incurred by the Master Servicer, if
any, in effecting the timely payments of taxes and assessments on the
Mortgaged Properties and related insurance premiums shall not, for the purpose
of calculating monthly distributions to the Certificateholders, be added to
the Stated Principal Balance under the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.
The Master Servicer shall deliver a list of Servicing Officers to the
Trustee by the Closing Date.
Section 3.02. Subservicing; Enforcement of the Obligations of Master
Servicer.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer
or a subservicer or reference to actions taken through a Master Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from
the subservicer and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. Every subservicing agreement entered into by the Master Servicer shall
contain a provision giving the successor Master Servicer the option to
terminate such agreement in the event a successor Master Servicer is
appointed. All actions of each subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Master Servicer
with the same force and effect as if performed directly by the Master
Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a subservicer regardless of whether
such payments are remitted by the subservicer to the Master Servicer.
Section 3.03. Rights of the Depositor, the Trustee in Respect of 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 August 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 or the Carryover Reserve Fund shall invest the funds in
each such account, as directed by the Master Servicer, in Permitted
Investments, which shall mature not later than (i) in the case of the
Certificate Account, the 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 and the Carryover Reserve Fund, the Business Day
immediately preceding the first Distribution Date that follows the date of
such investment (except that if such Permitted Investment is an obligation of
the institution that maintains such Distribution Account or Carryover Reserve
Fund, then such Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or disposed of prior
to its maturity. All such Permitted Investments shall be made in the name of
the Trustee, for the benefit of the Certificateholders, except in connection
with Permitted Investments made with respect to funds in the Carryover Reserve
Fund which shall be made in the name of the Trustee, for the benefit of the
Class BV-IO Certificateholders. In the case of (x) the Certificate Account and
the Distribution Account, all income and gain net of any losses realized from
any such investment shall be for the benefit of the Master Servicer as
servicing compensation and shall be remitted to it monthly as provided herein
and (y) the Carryover Reserve Fund, all income and gain net of any losses
realized from any such investment shall be for the benefit of the Class BV-IO
Certificateholders and shall be remitted to the Class BV-IO Certificateholders
monthly as provided herein. The amount of any losses incurred in the
Certificate Account or the Distribution Account in respect of any such
investments shall be deposited by the Master Servicer 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 Fund
(or such investments) immediately as realized. The Trustee shall not be liable
for the amount of any loss incurred in respect of any investment or lack of
investment of funds held in the Certificate Account, the Distribution Account
or the Carryover Reserve Fund and made in accordance with this Section 3.05.
(f) The 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 or the 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 and the 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.
Section 3.09. [Reserved.]
Section 3.10. Maintenance of Hazard Insurance.
The Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the
proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. The Master Servicer shall also cause
flood insurance to be maintained on property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, to the extent described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Master Servicer
under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to
the Certificateholders or remittances to the Trustee for their benefit, be
added to the principal balance of the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It is
understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor or maintained on property acquired in respect of
a Mortgage other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
If the Mortgaged Property is located at the time of origination of the
Mortgage Loan in a federally designated special flood hazard area and such
area is participating in the national flood insurance program, the Master
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser
of (i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged
Property, or (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the Flood Disaster Protection Act of 1973, as
amended.
In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section 3.10, it being understood and agreed that
such policy may contain a deductible clause on terms substantially equivalent
to those commercially available and maintained by comparable servicers. If
such policy contains a deductible clause, the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section 3.10, and
there shall have been a loss that would have been covered by such policy,
deposit in the Certificate Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Depositor and the Trustee
for the benefit of the Certificateholders, claims under any such blanket
policy.
Section 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property
subject to a Mortgage has been or is about to be conveyed by the Mortgagor,
the Master Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies
the terms and conditions contained in the Mortgage Note and Mortgage related
thereto and the consent of the mortgagee under such Mortgage Note or Mortgage
is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Master Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.11(b), to take or enter into an assumption
and modification agreement from or with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and, unless prohibited by applicable state law, the
Mortgagor remains liable thereon, provided that the Mortgage Loan shall
continue to be covered (if so covered before the Master Servicer enters such
agreement) by the applicable Required Insurance Policies. The Master Servicer,
subject to Section 3.11(b), is also authorized with the prior approval of the
insurers under any Required Insurance Policies to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Mortgage Note. Notwithstanding the foregoing, the
Master Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Master Servicer
reasonably believes it is restricted by law from preventing.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.11(a) hereof, in any case in which
a Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master
Servicer shall prepare and deliver or cause to be prepared and delivered to
the Trustee for signature and shall direct, in writing, the Trustee to execute
the assumption agreement with the Person to whom the Mortgaged Property is to
be conveyed and such modification agreement or supplement to the Mortgage Note
or Mortgage or other instruments as are reasonable or necessary to carry out
the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. In connection with any such assumption, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Rate,
the amount of the Scheduled Payment, the Maximum Rate, the Minimum Rate, the
Gross Margin, the Periodic Rate Cap, the Adjustment Date and any other term
affecting the amount or timing of payment on the Mortgage Loan) may be
changed. In addition, the substitute Mortgagor and the Mortgaged Property must
be acceptable to the Master Servicer in accordance with its underwriting
standards as then in effect. The Master Servicer shall notify the Trustee that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee the original of such substitution or assumption agreement,
which in the case of the original shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by the
Master Servicer as additional servicing compensation.
Section 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized Losses; Repurchase of Certain
Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments.
In connection with such foreclosure or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities and the requirements of the insurer under any Required Insurance
Policy; provided that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or
foreclosure will increase the proceeds of liquidation of the Mortgage Loan
after reimbursement to itself of such expenses and (ii) that such expenses
will be recoverable to it through Liquidation Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Certificate Account
pursuant to Section 3.08 hereof). The Master Servicer shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided
that it shall be entitled to reimbursement thereof from the proceeds of
liquidation of the related Mortgaged Property, as contemplated in Section 3.08
hereof. If the Master Servicer has knowledge that a Mortgaged Property that
the Master Servicer is contemplating acquiring in foreclosure or by
deed-in-lieu of foreclosure is located within a one-mile radius of any site
with environmental or hazardous waste risks known to the Master Servicer, the
Master Servicer will, prior to acquiring the Mortgaged Property, consider such
risks and only take action in accordance with its established environmental
review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO Property
references this Agreement and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such REO Property. The Master Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as
specified by Sections 1445, 6050J and 6050P of the Code by preparing and
filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Trust Fund or, at the expense
of the Trust Fund, request more than 60 days prior to the day on which such
two-year period would otherwise expire, an extension of the two-year grace
period unless the Trustee shall have been supplied with an Opinion of Counsel
(such opinion not to be an expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
two-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the Trust
Fund to the imposition of any federal, state or local income taxes on the
income earned from such Mortgaged Property under section 860G(c) of the Code
or otherwise, unless the Master Servicer has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any
Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management and
net of unreimbursed Servicing Fees, Advances, Servicing Advances and any
management fee paid or to be paid with respect to the management of such
Mortgaged Property, shall be applied to the payment of principal of, and
interest on, the related defaulted Mortgage Loans (with interest accruing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited
into the Certificate Account. To the extent the income received during a
Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Master Servicer as provided above, shall be deposited in
the Certificate Account on the next succeeding Determination Date following
receipt thereof for distribution on the related Distribution Date, except that
any Excess Proceeds shall be retained by the Master Servicer as additional
servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Master Servicer for any related unreimbursed Servicing Advances
and Servicing Fees, pursuant to Section 3.08(a)(v) or this Section 3.12;
second, to reimburse the Master Servicer for any unreimbursed Advances,
pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on
the Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due
Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Master Servicer shall determine
the respective aggregate amounts of Excess Proceeds and Realized Losses, if
any, for the related Prepayment Period.
(c) The Master Servicer, in its sole discretion, shall have the right
to elect (by written notice sent to the Trustee) to purchase for its own
account from the Trust Fund any Mortgage Loan that is 91 days or more
delinquent at a price equal to the Purchase Price. The Purchase Price for any
Mortgage Loan purchased hereunder shall be delivered to the Trustee for
deposit in the Certificate Account and the Trustee, upon receipt of such
deposit and a Request for Release from the Master Servicer in the form of
Exhibit N hereto, shall release or cause to be released to the purchaser of
such Mortgage Loan the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation
to the Trustee or the Certificateholders with respect thereto.
Section 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will promptly notify
the Trustee by delivering a Request for Release substantially in the form of
Exhibit N. Upon receipt of such request, the Trustee shall promptly release
the related Mortgage File to the Master Servicer, and the Trustee shall at the
Master Servicer's direction execute and deliver to the Master Servicer the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage in each case
provided by the Master Servicer, together with the Mortgage Note with written
evidence of cancellation thereon. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Certificate Account, the Distribution Account, the Carryover Reserve Fund or
the related subservicing account. From time to time and as shall be
appropriate for the servicing or foreclosure of any Mortgage Loan, including
for such purpose, collection under any policy of flood insurance any fidelity
bond or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making
of any corrections to the Mortgage Note or the Mortgage or any of the other
documents included in the Mortgage File, the Trustee shall, upon delivery to
the Trustee of a Request for Release in the form of Exhibit M signed by a
Servicing Officer, release the Mortgage File to the Master Servicer. Subject
to the further limitations set forth below, the Master Servicer shall cause
the Mortgage File or documents so released to be returned to the Trustee when
the need therefor by the Master Servicer no longer exists, unless the Mortgage
Loan is liquidated and the proceeds thereof are deposited in the Certificate
Account, in which case the Trustee shall deliver the Request for Release to
the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Master Servicer shall cause possession of any Mortgage File or of the
documents therein that shall have been released by the Trustee to be returned
to the Trustee within 21 calendar days after possession thereof shall have
been released by the Trustee unless (i) the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Certificate Account, and the Master Servicer shall have delivered to
the Trustee a Request for Release in the form of Exhibit N or (ii) the
Mortgage File or document shall have been delivered to an attorney or to a
public trustee or other public official as required by law for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property and the Master Servicer shall have delivered to the
Trustee an Officer's Certificate of a Servicing Officer certifying as to the
name and address of the Person to which the Mortgage File or the documents
therein were delivered and the purpose or purposes of such delivery.
Section 3.14. Documents, Records and Funds in Possession of Master
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise
are collected by the Master Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan. All Mortgage Files and funds
collected or held by, or under the control of, the Master Servicer in respect
of any Mortgage Loans, whether from the collection of principal and interest
payments or from Liquidation Proceeds, including but not limited to, any funds
on deposit in the Certificate Account, shall be held by the Master Servicer
for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
Certificate Account, Distribution Account or Carryover Reserve Fund or in any
Escrow Account (as defined in Section 3.06), or any funds that otherwise are
or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy,
writ of attachment or other encumbrance, or assert by legal action or
otherwise any claim or right of set off against any Mortgage File or any funds
collected on, or in connection with, a Mortgage Loan, except, however, that
the Master Servicer shall be entitled to set off against and deduct from any
such funds any amounts that are properly due and payable to the Master
Servicer under this Agreement.
Section 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or 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.
<PAGE>
ARTICLE IV.
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.
Subject to the conditions of this Article IV, the Master Servicer, as
required below, shall make an Advance and deposit such Advance in the
Certificate Account. Each such Advance shall be remitted to the Certificate
Account no later than 1:00 p.m. Pacific time on the Master Servicer Advance
Date in immediately available funds. The Master Servicer shall be obligated to
make any such Advance only to the extent that such advance would not be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it
has made a Nonrecoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Nonrecoverable Advance, the Master
Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance,
if applicable, and (ii) to the Depositor, each Rating Agency and the Trustee
an Officer's Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own
funds, the Master Servicer may (i) cause to be made an appropriate entry in
its records relating to the Certificate Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01.
Section 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Master Servicer shall, to the extent of one-half of
the Servicing Fee for such Distribution Date, deposit into the Certificate
Account, as a reduction of the Servicing Fee (but not in excess of one-half
thereof) for such Distribution Date, no later than the close of business on
the Business Day immediately preceding such Distribution Date, an amount equal
to the Prepayment Interest Shortfall; and in case of such deposit, the Master
Servicer shall not be entitled to any recovery or reimbursement from the
Depositor, the Trustee, the Trust Fund or the Certificateholders.
Section 4.03. REMIC Distributions.
On each Distribution Date the Trustee shall allocate distributions to
the REMIC 1 Regular Interests, the REMIC 2 Regular Interests, the REMIC 3
Regular Interests, and the REMIC 4 Regular Interests in accordance with
Section 4.06 hereof.
Section 4.04. Distributions.
(a) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Interest Funds in the following order of priority (unless otherwise
specified):
(i) to each Class of the Group I Class A Certificates, the Group I
Class A Current Interest and any Group I Class A Interest Carryforward
Amount for each such Class of Group I Class A Certificates; provided that
if the Group I Interest Funds are not sufficient to make a full
distribution of all Group I Class A Current Interest and any Group I
Class A Interest Carryforward Amount for all Classes of Group I Class A
Certificates, the Group I Interest Funds will be distributed pro rata
among each Class of the Group I Class A Certificates based on the ratio
of (x) the Group I Class A Current Interest and any Group I Class A
Interest Carryforward Amount for such Class of the Group I Class A
Certificates to (y) the total amount of Group I Class A Current Interest
and any Group I Class A Interest Carryforward Amount for all Classes of
Group I Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current
Interest;
(iv) to the Class BF Certificates, the Class BF Current Interest; and
(v) any remainder shall constitute part of the Group I Excess
Cashflow for such Distribution Date.
(b) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Interest Funds in the following order of priority:
(i) to the Group II Class A Certificates, the Class AV-I Current
Interest and any Class AV-I Interest Carryforward Amount for the Group II
Class A Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current
Interest;
(iv) to the Class BV Certificates, the Class BV Current Interest; and
(v) any remainder shall constitute part of the Group II Excess
Cashflow for such Distribution Date.
(c) On each Distribution Date, the Trustee shall make the following
allocation from the Distribution Account of an amount equal to the Group I
Principal Distribution Amount in the following order of priority:
(i) to the Group I Class A Certificates, the Group I Class A
Principal Distribution Amount to be distributed in the priority and as
provided in Section 4.04(d);
(ii) to the Class MF-1 Certificates, the Class MF-1 Principal
Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2 Principal
Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount; and
(v) any remainder shall constitute part of the Group I Excess
Cashflow for such Distribution Date.
(d) On each Distribution Date, the Group Class A Principal
Distribution Amount allocated under Section 4.04(c)(i) to the Group I Class A
Certificates is required to be further allocated by the Trustee to the Group I
Class A Certificates in the following priority: first to the Class AF-4
Certificates, the Class AF-4 Principal Distribution Amount, and then the
remainder sequentially to the Class AF-1, Class AF-2, Class AF-3 and Class
AF-4 Certificates, in that order until the respective Certificate Principal
Balances thereof are reduced to zero; provided that on any Distribution Date
on which the Group I Class A Certificate Principal Balance is greater than the
Stated Principal Balance as of such Distribution Date of the Group I Mortgage
Loans, the Group I Class A Principal Distribution Amount will be distributed
pro rata and not sequentially.
(e) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Principal Distribution Amount in the following order of priority:
(i) to the Group II Class A Certificates, the Class A Principal
Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Principal
Distribution Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2 Principal
Distribution Amount;
(iv) to the Class BV Certificates, the Class BV Principal
Distribution Amount; and
(v) any remainder shall constitute part of the Group II Excess
Cashflow for such Distribution Date.
(f) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of, first, the Group I Excess
Cashflow and, second, of the Group II Remainder Excess Cashflow, in the
following order of priority:
(i) for distribution as part of the Group I Principal Distribution
Amount, the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest
Carryforward Amount;
(iii) to the Class MF-1 Certificates, the Class MF-1 Unpaid Realized
Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 Interest
Carryforward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid Realized
Loss Amount;
(vi) to the Class BF Certificates, the Class BF Interest Carryforward
Amount;
(vii) to the Class BF Certificates, the Class BF Unpaid Realized Loss
Amount; and
(viii) the remainder (except for amounts representing Group II
Remainder Excess Cashflow) shall constitute Group I Remainder Excess
Cashflow 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(g);
(ii) to the Class BF-IO Certificates, the Class BF-IO Distributable
Amount;
(iii) to the Master Servicer, in payment of the Extra Master
Servicing Fee pursuant to Section 4.08 hereof for such Distribution Date;
and
(iv) any remainder to the Class R Certificates.
(i) On each Distribution 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(f);
(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 BF-IO Certificates pursuant to Section
4.08(c) and (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 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
(iii) and (iv) shall be deemed to have been distributed first to the Class
BV-IO Certificateholders for applicable tax purposes.
(k) On each Distribution Date, the Trustee shall allocate the Applied
Realized Loss Amount for the Group I Certificates to reduce the Certificate
Principal Balances of the Group I Subordinated Certificates in the following
order of priority:
(i) to the Class BF Certificates until the Class BF Certificate
Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class MF-2 Certificate
Principal Balance is reduced to zero; and
(iii) to the Class MF-1 Certificates until the Class MF-1 Certificate
Principal Balance is reduced to zero.
(l) On each Distribution Date, the Trustee shall allocate the Applied
Realized Loss Amount for the Group II Certificates to reduce the Certificate
Principal Balances of the Group II Subordinated Certificates in the following
order of priority:
(i) to the Class BV Certificates until the Class BV Certificate
Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2 Certificate
Principal Balance is reduced to zero; and
(iii) to the Class MV-1 Certificates until the Class MV-1 Certificate
Principal Balance is reduced to zero.
(m) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least 5 Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
aggregate principal denominations of not less than $1,000,000 or evidencing a
Percentage Interest aggregating 10% or more with respect to such Class or, if
not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the
name of a Depository shall be made to such Depository in immediately available
funds.
On or before 5:00 p.m. Pacific time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement to Certificateholders and
make the required distributions for the related Distribution Date (the
"Remittance Report"). The Trustee shall, not later than 9:00 a.m. Pacific time
on the Master Servicer Advance Date, other than any Master Servicer Advance
Date relating to any Distribution Date on which the proceeds of any Optional
Termination are being distributed, (i) furnish by telecopy a statement to the
Master Servicer (the information in such statement to be made available to
Certificateholders by the Trustee on request) setting forth the Group I
Interest Funds, Group I Principal Funds, Group II Interest Funds and Group II
Principal Funds for such Distribution Date and the amount to be withdrawn from
the Certificate Account and (ii) determine (and notify the Master Servicer by
telecopy of the results of such determination) the amount of Advances to be
made by the Master Servicer in respect of the related Distribution Date;
provided that no Advance shall be made if it would be a Nonrecoverable
Advance; provided further that any failure by the Trustee to notify the Master
Servicer will not relieve the Master Servicer from any obligation to make any
such Advances. The Trustee shall not be responsible to recompute, recalculate
or verify information provided to it by the Master Servicer and shall be
permitted to conclusively rely on any information provided to it by the Master
Servicer.
Section 4.05. Monthly Statements to Certificateholders.
(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 for the following Distribution Date;
(v) the related amount of the Servicing Fees paid to or retained by
the Master Servicer;
(vi) the Pass-Through Rate for each Class of Certificates with
respect to the current Accrual Period;
(vii) any Interest Carryforward Amount for each such Class;
(viii) the Group I Net Rate and the Group II Net Rate;
(ix) the amount of Advances for each Certificate Group included in
the distribution on such Distribution Date;
(x) the cumulative amount of Applied Realized Loss Amounts for each
Certificate Group to date;
(xi) the number and aggregate principal amounts of Mortgage Loans in
each Loan Group (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 days, (2) 31 to 60 days, (3) 61 to 90 days and (4) 91
or more days, and (B) in foreclosure and delinquent (1) 30 days, (2) 31
to 60 days, (3) 61 to 90 days and (4) 91 or more days, in each case as of
the close of business on the last day of the calendar month preceding
such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month in each Loan Group, the loan number
and Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date and
the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties
in each Loan Group as of the close of business on the Determination Date
preceding such Distribution Date;
(xiv) the Stated Principal Balance of all Liquidated Loans in each
Loan Group;
(xv) with respect to any Liquidated Loan in each Loan Group, the loan
number and Stated Principal Balance relating thereto;
(xvi) with respect to each Loan Group, whether a Trigger Event has
occurred; and
(xvii) the Adjustable Rate Certificate Carryover (if any) with
respect to each Class of Group II Certificates.
(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, Class T1-F2,
and Class T1-F3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date.
On each Distribution Date, 98% of all Group I Principal Funds for the related
Due Period shall be allocated to the Class T1-F1 Interest. Remaining amounts
of Group I Principal Funds for the related Due Period shall be allocated first
to the Class T1-F3 Interest up to an amount equal to 2% of any amount that
represents a Group I Adjusted Overcollateralization Release Amount with
respect to such Distribution Date and then equally between the Class T1-F2 and
Class T1-F3 Interests. Interest accruing on the Class T1-F3 Interest in
respect of each Distribution Date in an amount equal to 1% of the increase in
the Group I Adjusted Overcollateralization Amount from the immediately
preceding Distribution Date shall be deferred and added to the principal
balance of the Class T1-F3 Interest. The amount of interest accrued and
deferred on the Class T1-F3 Interest in accordance with the preceding sentence
in respect of each Distribution Date shall be distributed as principal on such
date to the Class T1-F2 Interest.
(b) On each Distribution Date, Realized Losses with respect to the
Group I Mortgage Loans for such date shall be allocated 98% to the Class T1-F1
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class T1-F3 Interest to the extent that the principal balance of the Class
T1-F3 Interest exceeds 1% of the aggregate of the Stated Principal Balance of
the Group I Mortgage Loans as of such date and then equally between the Class
T1-F2 and Class T1-F3 Interests.
(c) The initial principal balances of the Class T1-V1, Class T1-V2,
and Class T1-V3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
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, Class T2-F2,
and Class T2-F3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off Date.
The Class T2-F4 Interest shall not have a principal balance. On each
Distribution Date, 98% of all Group I Principal Funds for the related Due
Period shall be allocated to the Class T2-F1 Interest. Remaining amounts of
Group I Principal Funds for the related Due Period shall be allocated first to
the Class T2-F3 Interest up to an amount equal to 2% of any amount that
represents a Group I Adjusted Overcollateralization Release Amount with
respect to such Distribution Date and then equally between the Class T2-F2 and
Class T2-F3 Interests. Interest accruing on the Class T2-F3 Interest in
respect of each Distribution Date in an amount equal to 1% of the increase in
the Group I Adjusted Overcollateralization Amount from the immediately
preceding Distribution Date shall be deferred and added to the principal
balance of the Class T2-F3 Interest. The amount of interest accrued and
deferred on the Class T2-F3 Interest in accordance with the preceding sentence
in respect of each Distribution Date shall be distributed as principal on such
date to the Class T2-F2 Interest.
(f) On each Distribution Date, Realized Losses with respect to the
Group I Mortgage Loans for such date shall be allocated 98% to the Class T2-F1
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class T2-F3 Interest to the extent that the principal balance of the Class
T2-F3 Interest exceeds 1% of the aggregate of the Stated Principal Balance of
the Group I Mortgage Loans as of such date and then equally between the Class
T2-F2 and Class T2-F3 Interests.
(g) The initial principal balances of the Class T2-V1, Class T2-V2,
and Class T2-V3 Interests shall equal 98%, 1%, and 1%, respectively, of the
Stated Principal Balance of the Group II Mortgage Loans as of the Cut-off
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-F2, Class
T3-F3, Class T3-F4, Class T3-F5, Class T3-F6, Class T3-F7, Class T3-V1, Class
T3-V2, Class T3-V3 and Class T3-V4 Interests shall be entitled to receive
principal distributions that correspond to the principal distributions on the
corresponding class of Interests in REMIC 4 (the Class T4-F1, Class T4-F2,
Class T4-F3, Class T4-F4, Class T4-F5, Class T4-F6, Class T4-F7, Class T4-V1,
Class T4-V2, Class T4-V3, and Class T4-V4 Interests, respectively).
(j) On each Distribution Date, interest that accrues with respect to
the Class T3-F8, Class T3-F9 and Class T3-F10 Interests shall be distributed
as principal on the Class T3-F1, Class T3-F2, Class T3-F3, Class T3-F4, Class
T3-F5, Class T3-F6 and Class T3-F7 Interests to achieve the Group I Specified
Overcollateralization Amount for such Distribution Date, and to the extent not
needed for this purpose, shall be distributed as principal on the Class T3-V1,
Class T3-V2, Class T3-V3, and Class T3-V4 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-F8, Class T3-F9 and Class T3-F10 Interests in proportion to their
entitlements to current and accrued undistributed interest. On each
Distribution Date, interest that accrues with respect to the Class T3-V5,
Class T3-V6, and Class T3-V7 Interests shall be distributed as principal on
the Class T3-V1, Class T3-V2, Class T3-V3, and Class T3-V4 Interests to
achieve the Group II Specified Overcollateralization Amount for such
Distribution Date, and to the extent not needed for this purpose, shall be
distributed as principal on the Class T3-F1, Class T3-F2, Class T3-F3, Class
T3-F4, Class T3-F5, Class T3-F6, and Class T3-F7 Interests to achieve the
Group II 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-V5, Class T3-V6, and Class T3-V7 Interests in proportion to
their entitlements to current and accrued undistributed interest. Interest
that accrues on the Class T3-F8, Class T3-F9, Class T3-F10, Class T3-V5, Class
T3-V6, and Class T3-V7 Interests shall not itself bear interest.
Notwithstanding any provision herein, on any Distribution Date, (1)
in no event shall the interest that accrues with respect to the Class T3-V5,
Class T3-V6, and Class T3-V7 Interests that is distributed as principal on the
Class T3-F1, Class T3-F2, Class T3-F3, Class T3-F4, Class T3-F5, Class T3-F6,
and Class T3-F7 Interests to achieve the Group I Specified
Overcollateralization Amount for such Distribution Date 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-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-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 and Class T3-V4 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-V5, Class T3-V6 and Class T3-V7 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 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F1 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
second, to the Class T3-F2 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F2 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
third, to the Class T3-F3 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F3 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
fourth, to the Class T3-F4 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F4 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
fifth, to the Class T3-F5 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F5 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
sixth, to the Class T3-F6 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F6 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
seventh, to the Class T3-F7 Interest to the extent that its principal
balance exceeds the principal balance of the Class T4-F7 Interest on
such Distribution Date (after giving effect to any distributions made
on such date);
eighth, proportionately to the accrued interest balances of the
T3-F8, Class T3-F9, Class T3-F10 Interests; and
ninth, in a manner that will cause any amount due on each REMIC 3
Regular Interest to equal the amount due on the corresponding Class
of REMIC 4 Regular Interests.
(l) On each Distribution Date, 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, proportionately to the accrued interest balances of the T3-V5,
Class T3-V6, Class T3-V7 Interests; and
sixth, in a manner that will cause any amount due on each REMIC 3
Regular Interests to equal the amount due on the corresponding Class
of REMIC 4 Regular Interests.
(m) On each Distribution Date, the Class T4-F1, Class T4-F2, Class
T4-F3, Class T4-F4, Class T4-F5, Class T4-F6, Class T4-F7, Class T4-V1, Class
T4-V2, Class T4-V3, and Class T4-V4 Interests shall be entitled to receive
distributions of principal and interest equal to the principal and interest
distributions required to be paid with respect to the corresponding Class of
Certificates (determined as if the distributions on the Certificates were
computed without regard to the amounts distributed under Section 4.04(i)
hereof from the Carryover Reserve Fund). On each Distribution Date, interest
that accrues with respect to the Class T4-F8, Class T4-F9, Class T4-F10, Class
T4-F11, Class T4-F12, Class T4-F13, Class T4-F14, during the related Accrual
Period shall be distributed as Group I Excess Cashflow and Group I Remainder
Excess Cashflow in accordance with Section 4.04 (f), (g) and (h), and interest
that accrues with respect to the Class T4-V5, Class T4-V6, Class T4-V7, and
Class T4-V8 Interests during the related Accrual Period shall be distributed
as Group II Excess Cashflow and as Group II Remainder Excess Cashflow in
accordance with Section 4.04(f), (g) and (i) hereof. Interest that accrues on
the Class T4-F8, Class T4-F9, Class T4-F10, Class T4-F11, Class T4-F12, Class
T4-F13, Class T4-F14, Class T4-V5, Class T4-V6, Class T4-V7, and Class T4-V8
Interests shall not itself bear interest.
(n) On each Distribution Date, the Applied Realized Loss Amount for
the Group I Certificates and the Applied Realized Loss Amount for the Group II
Certificates shall be allocated among the REMIC 4 Regular Interests in
accordance with the allocations provided in Section 4.04 (k) and (l) hereof
for the corresponding classes of Certificates.
Section 4.07. Extra Master Servicing Fee.
(a) REMIC 4 shall pay to the Master Servicer the Extra Master
Servicing Fee as an additional fee for services rendered as Master Servicer.
Such fee shall be due and payable on any Distribution Date only to the extent
their are amounts remaining after all amounts required to be distributed with
respect to the REMIC 4 Regular Interests have been made for that Distribution
Date. Furthermore, if for any Distribution Date an amount would be required to
be paid from the Carryover Reserve Fund pursuant to Section 4.04(j), the
Master Servicer shall make an advance to 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 Class T3-F1
Interest principal balance over the Class T4-F1 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(ii) an amount equal to the product of the Class AF-2 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F2
Interest principal balance over the Class T4-F2 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(iii) an amount equal to the product of the Class AF-3 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F3
Interest principal balance over the Class T4-F3 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(iv) an amount equal to the product of the Class AF-4 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F4
Interest principal balance over the Class T4-F4 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(v) an amount equal to the product of the Class MF-1 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F5
Interest principal balance over the Class T4-F5 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(vi) an amount equal to the product of the Class MF-2 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-F6
Interest principal balance over the Class T4-F6 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(vii) an amount equal to the product of the Class AV-1 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-V1
Interest principal balance over the Class T4-V1 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date);
(viii) an amount equal to the product of the Class MV-1 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-V2
Interest principal balance over the Class T4-V2 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date); and
(ix) an amount equal to the product of the Class MV-2 Pass-Through
Rate for such Distribution Date and the excess of the Class T3-V3
Interest principal balance over the Class T4-V3 Interest principal
balance (before giving effect to any reductions of such balances on such
Distribution Date).
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 the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AV-1, Class
MV-1, Class MV-2, and Class BV Certificates, the Carryover Reserve Fund. The
Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled
with, any other moneys, including without limitation, other moneys held by the
Trustee pursuant to this Agreement.
(b) On each Distribution Date 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 $10,000
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.
<PAGE>
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in registered form, in the
minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate in of each Class may be issued in a different
amount which must be in excess of the applicable minimum dollar denomination)
and aggregate dollar denominations as set forth in the following table:
<TABLE>
<CAPTION>
Integral Original
Multiples Certificate
Minimum in Excess of Principal
Class Denomination Minimum Balance
- ------------------ ---------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
AF-1 $25,000 $1,000 $35,000,000
AF-2 $25,000 $1,000 $26,500,000
AF-3 $25,000 $1,000 $14,924,000
AF-4 $25,000 $1,000 $10,000,000
MF-1 $25,000 $1,000 $4,274,000
MF-2 $25,000 $1,000 $2,850,000
BF $25,000 $1,000 $1,425,000
BF-IO N/A N/A N/A
AV-1 $25,000 $1,000 $157,039,000
MV-1 $25,000 $1,000 $9,026,000
MV-2 $25,000 $1,000 $7,221,000
BV $25,000 $1,000 $7,221,000
BV-IO N/A N/A N/A
R-1 0.001% N/A N/A
R-2 99.999% N/A N/A
</TABLE>
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication
and delivery. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration
of Transfer of any Certificate, the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of Transfer or exchange shall be accompanied by a
written instrument of Transfer in form satisfactory to the Trustee duly
executed by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) No Transfer of a Class B-IO or Class R Certificate shall be made
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or is exempt
from the registration requirements under the Securities Act and such state
securities laws. In the event that a Transfer is to be made in reliance upon
an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder
desiring to effect such Transfer and such Certificateholder's prospective
transferee shall each certify to the Trustee in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit J (the
"Transferor Certificate") and (x) deliver a letter in substantially the form
of either Exhibit K (the "Investment Letter") or Exhibit L (the "Rule 144A
Letter") or (y) there shall be delivered to the Trustee an opinion of counsel
that such Transfer may be made pursuant to an exemption from the Securities
Act, which opinion of counsel shall not be an expense of the Depositor, the
Seller, the Master Servicer or the Trustee. The Depositor shall provide to any
Holder of a Class B-IO or Class R Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for Transfer
of any such Certificate without registration thereof under the Securities Act
pursuant to the registration exemption provided by Rule 144A. The Trustee and
the Master Servicer shall cooperate with the Depositor in providing the Rule
144A information referenced in the preceding sentence, including providing to
the Depositor such information regarding the Certificates, the Mortgage Loans
and other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of a
Class B-IO or Class R Certificate desiring to effect such Transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor, the Seller and the
Master Servicer against any liability that may result if the Transfer is not
so exempt or is not made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or
using the assets of any such plan, (ii) if such purchaser is an insurance
company, a representation that the purchaser is an insurance company that is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60, or (iii) in the
case of any such ERISA Restricted Certificate presented for registration in
the name of an employee benefit plan subject to ERISA, or a plan subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on
behalf of any such plan, an opinion of counsel satisfactory to the Trustee and
the Master Servicer to the effect that the purchase or holding of such ERISA
Restricted Certificate will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those expressly undertaken in
this Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Master Servicer. For purposes of clause (i) of the preceding
sentence, such representation shall be deemed to have been made to the Trustee
by the transferee's acceptance of an ERISA Restricted Certificate (or the
acceptance by a Certificate Owner of the beneficial interest in any such Class
of ERISA Restricted Certificates) unless the Trustee shall have received from
the transferee an alternative representation acceptable in form and substance
to the Master Servicer and the Depositor. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA Restricted Certificate to
or on behalf of an employee benefit plan subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code without the delivery to the Trustee
and the Master Servicer of an opinion of counsel satisfactory to the Trustee
and the Master Servicer as described above shall be void and of no effect;
provided that the restriction set forth in this sentence shall not be
applicable if there has been delivered to the Trustee and the Master Servicer
an opinion of counsel satisfactory to the Trustee and the Master Servicer to
the effect that the purchase or holding of an ERISA Restricted Certificate
will not result in the assets of the Trust Fund being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee or the Master Servicer to any obligation
in addition to those expressly undertaken in this Agreement. The Trustee shall
be under no liability to any Person for any registration of transfer of any
ERISA Restricted Certificate that is in fact not permitted by this Section
5.02(b) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA
Restricted Certificate that was in fact an employee benefit plan subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code or a Person
acting on behalf of any such plan at the time it became a Holder or, at such
subsequent time as it became such a plan or Person acting on behalf of such a
plan, all payments made on such ERISA Restricted Certificate at and after
either such time. Any such payments so recovered by the Trustee shall be paid
and delivered by the Trustee to the last preceding Holder of such Certificate
that is not such a plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be registered
on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class R Certificate unless, in addition to
the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder
of a Class R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored
to all rights as Holder thereof retroactive to the date of registration
of Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and either the Rule 144A Letter or the Investment Letter. The
Trustee shall be entitled but not obligated to recover from any Holder of
a Class R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so recovered
by the Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
(v) The Master Servicer shall use its best efforts to make available,
upon receipt of written request from the Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the
Code as a result of a Transfer of an Ownership Interest in a Class R
Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, the Seller or the
Master Servicer to the effect that the elimination of such restrictions will
not cause the Trust Fund to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the
Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 shall not be an expense of the Trust
Fund, the Trustee, the Depositor, the Seller or the Master Servicer.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is
delivered to the Master Servicer and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like Class, tenor and Percentage Interest. In connection
with the issuance of any new Certificate under this Section 5.03, the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any replacement Certificate issued pursuant to this Section 5.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time. All Certificates surrendered to the
Trustee under the terms of this Section 5.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability on
its part.
Section 5.04. Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master Servicer
or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the
contrary.
Section 5.05. Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a Certificate,
agree that the Trustee shall not be held accountable by reason of the
disclosure of any such information as to the list of the Certificateholders
hereunder, regardless of the source from which such information was derived.
Section 5.06. Book-Entry Certificates.
The Regular Certificates (other than the Class B-IO Certificates),
upon original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
Depository by or on behalf of the Depositor. Such Certificates shall initially
be registered on the Certificate Register in the name of the Depository or its
nominee, and no Certificate Owner of such Certificates will receive a
definitive certificate representing such Certificate Owner's interest in such
Certificates, except as provided in Section 5.08. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
the Certificate Owners of such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Master Servicer and the Trustee may deal with
the Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 5.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may
be given by Certificate Owners (acting through the Depository and the
Depository Participants) owning Book-Entry Certificates evidencing the
requisite percentage of principal amount of such Class of Certificates.
Section 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
Section 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to
any Certificates, (a) the Depositor advises the Trustee that the Depository is
no longer willing or able to discharge properly its responsibilities under the
Depository Agreement with respect to such Certificates and the Trustee or the
Depositor is unable to locate a qualified successor, (b) the Depositor, at its
sole option, advises the Trustee that it elects to terminate the book-entry
system with respect to such Certificates through the Depository or (c) after
the occurrence and continuation of an Event of Default, Certificate Owners of
such Book-Entry Certificates having not less than 51% of the Voting Rights
evidenced by any Class of Book-Entry Certificates advise the Trustee and the
Depository in writing through the Depository Participants that the
continuation of a book-entry system with respect to Certificates of such Class
through the Depository (or its successor) is no longer in the best interests
of the Certificate Owners of such Class, then the Trustee shall notify all
Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon
surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall authenticate and deliver such Definitive Certificates.
Neither the Depositor nor the Trustee shall be liable for any delay in
delivery of such instructions and each may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or
to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
Section 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its offices at 101 Barclay Street, Floor 12E, New York,
New York 10286, Attention: Corporate Trust MBS Administration, as offices for
such purposes. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or
agency.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 MV-1, Class
MV-2, and Class BV Certificateholders to receive payments from the Carryover
Reserve Fund rights in an interest rate cap contract written by the Class
BV-IO Certificateholder in favor of the Class AV-1, Class MV-1, Class MV-2,
and Class BV Certificateholders. Thus each Class AV-1, Class MV-1, Class MV-2,
and Class BV Certificate shall be treated as representing ownership of not
only REMIC 4 Regular Interests, but also ownership of an interest in an
interest rate cap contract. For purposes of determining the issue price of the
REMIC 4 Regular interests, the Trustee shall assume that the interest rate cap
contract has a value of $10,000.
<PAGE>
ARTICLE IX.
TERMINATION
Section 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the Seller and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the
repurchase by the Master Servicer of all of the Mortgage Loans (and REO
Properties) remaining in the each Loan Group at the price equal to the sum of
(i) 100% of the Stated Principal Balance of each Mortgage Loan in such Loan
Group (other than in respect of REO Property), (ii) accrued interest thereon
at the applicable Mortgage Rate (or, if such repurchase is effected by the
Master Servicer, at the applicable Net Mortgage Rate), (iii) the appraised
value of any REO Property in such Loan Group (up to the Stated Principal
Balance of the related Mortgage Loan), such appraisal to be conducted by an
appraiser mutually agreed upon by the Master Servicer and the Trustee and (iv)
any unreimbursed Servicing Advances, and the principal portion of any
unreimbursed Advances, made on the Mortgage Loans in such Loan Group prior to
the exercise of such repurchase and (b) the later of (i) the maturity or other
liquidation (or any Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property and (ii)
the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late Ambassador of the United States to the Court of
St. James, living on the date hereof and (ii) the Latest Possible Maturity
Date.
The right to repurchase all Mortgage Loans and REO Properties in a
Loan Group pursuant to clause (a) above shall be conditioned upon the Stated
Principal Balance of the Mortgage Loans in such Loan Group, at the time of any
such repurchase, aggregating ten percent or less of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans in such Loan Group.
Section 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Certificate Account, the Master
Servicer shall direct the Trustee to send a final distribution notice promptly
to each Certificateholder or (ii) the Trustee determines that a Class of
Certificates shall be retired after a final distribution on such Class, the
Trustee shall notify the Certificateholders within five (5) Business Days
after such Determination Date that the final distribution in retirement of
such Class of Certificates is scheduled to be made on the immediately
following Distribution Date. Any final distribution made pursuant to the
immediately preceding sentence will be made only upon presentation and
surrender of the related Certificates at the Corporate Trust Office of the
Trustee. If the Master Servicer elects to terminate the Trust Fund pursuant to
clause (a) of Section 9.01, at least 20 days prior to the date notice is to be
mailed to the affected Certificateholders, such electing party shall notify
the Depositor and the Trustee of the date such electing party intends to
terminate the Trust Fund and of the applicable repurchase price of the
Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders mailed not earlier
than the 10th day and no later than the 15th day of the month immediately
preceding the month of such final distribution. Any such notice shall specify
(a) the Distribution Date upon which final distribution on the Certificates
will be made upon presentation and surrender of Certificates at the office
therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made, and (d) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein
specified. The Master Servicer will give such notice to each Rating Agency at
the time such notice is given to Certificateholders.
In the event such notice is given, the Master Servicer shall cause
all funds in the Certificate Account to be remitted to the Trustee for deposit
in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of
the Certificates. Upon such final deposit with respect to the Trust Fund and
the receipt by the Trustee of a Request for Release therefor, the Trustee
shall promptly release to the Master Servicer the Mortgage Files for the
Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Distribution Account (and, if
applicable, the Carryover Reserve Fund) in the order and priority set forth in
Section 4.04 hereof on the final Distribution Date and in proportion to their
respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in
the above mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within six months after the second notice all the applicable Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject hereto.
Section 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase option on
both of the Group I Mortgage Loans and the Group II Mortgage Loans as provided
in Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Master Servicer, to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of a REMIC, or (ii) cause a REMIC to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day liquidation
period and notify the Trustee thereof, which shall in turn specify the first
day of such period in a statement attached to the Trust Fund's final Tax
Return pursuant to Treasury Regulation Section 1.860F-1. The Master Servicer
shall satisfy all the requirements of a qualified liquidation under Section
860F of the Code and any regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Master Servicer;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Master Servicer
as agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on hand
(other than cash retained to meet claims), and the Trust Fund shall terminate
at that time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to specify the 90-day liquidation period
for the Trust Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the
Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Master Servicer.
<PAGE>
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Seller and the Trustee, without the consent of any of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, or to make such other provisions with respect to matters or
questions arising under this Agreement, as shall not be inconsistent with any
other provisions herein if such action shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates, it being
understood and agreed that any such letter in and of itself will not represent
a determination as to the materiality of any such amendment and will represent
a determination only as to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee, the Depositor, the Master Servicer and the
Seller may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of the Trust Fund as a REMIC
under the Code or to avoid or minimize the risk of the imposition of any tax
on the Trust Fund pursuant to the Code that would be a claim against the Trust
Fund at any time prior to the final redemption of the Certificates, provided
that the Trustee have been provided an Opinion of Counsel, which opinion shall
be an expense of the party requesting such opinion but in any case shall not
be an expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Seller and the Trustee and the Holders of
each Class of Certificates affected thereby evidencing not less than 51% of
the Voting Rights of such Class for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect
in any material respect the interests of the Holders of any Class of
Certificates in a manner other than as described in (i), without the consent
of the Holders of Certificates of such Class evidencing 66% or more of the
Voting Rights of such Class or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such
amendment without the consent of the Holders of all such Certificates then
outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have
first received an Opinion of Counsel, which opinion shall be an expense of the
party requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of
any tax on the Trust Fund or the Certificateholders or cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement
and that all requirements for amending this Agreement have been complied with;
and (ii) either (A) the amendment does not adversely affect in any material
respect the interests of any Certificateholder or (B) the conclusion set forth
in the immediately preceding clause (A) is not required to be reached pursuant
to this Section 10.01.
Section 10.02. Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at its
expense.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and the same instrument.
Section 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
Section 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee.
However, in the event that, notwithstanding the intent of the parties, such
assets are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in such
assets, then (i) this Agreement shall be deemed to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York and
(ii) the conveyance provided for in this Agreement shall be deemed to be an
assignment and a grant by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the assets that
constitute the Trust Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for
the benefit of the Certificateholders.
Section 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Master Servicer or the
Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 2.04 and 3.12; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
(i) Each report to Certificateholders described in Section 4.04;
(ii) Each annual statement as to compliance described in Section
3.17; and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case
of the Depositor, CWABS, Inc., 4500 Park Granada, Calabasas, California 91302,
Attention: Dave Walker, with a copy to the same address, Attention: Legal
Department; (b) in the case of the Seller or the Master Servicer, Countrywide
Home Loans, Inc., 4500 Park Granada, Calabasas, California 91302, Attention:
Dave Walker, with a copy to the same address, Attention: Legal Department, or
such other address as may be hereafter furnished to the Depositor and the
Trustee by the Master Servicer in writing; (c) in the case of the Trustee, The
Bank of New York, 101 Barclay Street, 12E, New York, New York Attention:
Corporate Trust MBS Administration or such other address as the Trustee may
hereafter furnish to the Depositor or the Master Servicer; and (d) in the case
of the Rating Agencies, (i) Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., Attention: Mortgage Surveillance, 25
Broadway, 20th Floor, New York, NY 10007 and (ii) Moody's Investors Service,
Attention: Residential Mortgage Monitoring, 99 Church Street, New York, New
York 10004. Notices to Certificateholders shall be deemed given when mailed,
first class postage prepaid, to their respective addresses appearing in the
Certificate Register.
Section 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Master Servicer without the prior written consent of the Trustee and
Depositor.
Section 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates shall also have made
written request to the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 10.09. Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it will
permit any representative of the Depositor or the Trustee during the Master
Servicer's normal business hours, to examine all the books of account,
records, reports and other papers of the Master Servicer relating to the
Mortgage Loans, to make copies and extracts therefrom, to cause such books to
be audited by independent certified public accountants selected by the
Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and independent
public accountants (and by this provision the Master Servicer hereby
authorizes such accountants to discuss with such representative such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any out-of-pocket expense incident to the exercise by
the Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall
be borne by the Master Servicer.
Section 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for
any reason whatsoever, and that the Certificates, upon due authentication
thereof by the Trustee pursuant to this Agreement, are and shall be deemed
fully paid.
* * *
<PAGE>
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:
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____th day of February, 1998, before me, a notary public in
and for said State, appeared David Walker, personally known to me on the basis
of satisfactory evidence to be the Executive Vice President of Countrywide
Home Loans, Inc., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
corporation and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this ____th day of February, 1998, before me, a notary public in
and for said State, appeared David Walker, personally known to me on the basis
of satisfactory evidence to be the Vice President of CWABS, Inc., one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of such corporation and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of February, 1998, before me, a notary public in and
for said State, appeared _______________________, personally known to me on
the basis of satisfactory evidence to be a Assistant Treasurer, of The Bank of
New York, a New York banking corporation that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
Exhibit A-1
through A-13
[Exhibits A-1 through A-13 are
photocopies of such Certificates as
delivered.]
[see appropriate documents delivered at closing]
<PAGE>
Exhibit B
[Reserved]
<PAGE>
Exhibit C
[Reserved]
<PAGE>
Exhibit D
[Exhibit D is a photocopy
of the Class R Certificate
as delivered.]
[see appropriate documents delivered at closing]
<PAGE>
Exhibit E
[Exhibit E is a photocopy
of the Tax Matters Person Class R Certificate
as delivered.]
[see appropriate documents delivered at closing]
<PAGE>
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of August __, 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 1998-2 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.
<PAGE>
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:
<PAGE>
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of August __, 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
1998-2
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.
<PAGE>
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:
<PAGE>
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
[Seller]
Re: Pooling and Servicing Agreement dated as of August __,
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
1998-2
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:
<PAGE>
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 August __, 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.
* * *
<PAGE>
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__.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 1998-2
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 August __, 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:
<PAGE>
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 1998-2
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 August __, 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:
<PAGE>
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 1998-2
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 August __, 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:
<PAGE>
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.
<PAGE>
--- 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.
<PAGE>
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:
-----------------------------
<PAGE>
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.
<PAGE>
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:
---------------------------------
<PAGE>
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 1998-2, 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 August , 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
---------------
.
-------------
<PAGE>
( ) 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
----------------- --
<PAGE>
EXHIBIT N
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full, Repurchased or Replaced]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 1998-2
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
<PAGE>
Exhibit O
[Exhibit O is a photocopy
of the Depository Agreement
as delivered.]
[see appropriate documents delivered at closing]
<PAGE>
EXHIBIT P
FORM OF MORTGAGE NOTE AND MORTGAGE
