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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): June 27, 1997
MORGAN STANLEY ABS CAPITAL I INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 333-19779 13-3939229
<S> <C> <C>
(State or Other Jurisdiction Incorporation) (Commission File Number) (I.R.S. Employer of Identification Number)
</TABLE>
___________________________
1585 BROADWAY
2ND FLOOR
NEW YORK, NEW YORK 10036
(PRINCIPAL EXECUTIVE OFFICES)
(212) 761-4000
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Description of the Certificates and the Mortgage Pool
On June 27, 1997, a single series of certificates, entitled Ocwen Mortgage
Loan Asset Backed Certificates, Series 1997-1 (the "Certificates"), were issued
pursuant to a pooling and servicing agreement among Morgan Stanley ABS Capital I
Inc. (the "Depositor"), Ocwen Federal Bank FSB, as Seller and Master Servicer,
LMAC, Inc., as Seller, and Texas Commerce Bank National Association, as Trustee
(the "Pooling and Servicing Agreement"). The Certificates consist of five
classes: the Class A-1 and Class A-2 Certificates (collectively, the "Class A
Certificates"), the Class X-1 and Class X-2 Certificates (collectively, the
"Class X Certificates") and the Residual Certificates (the "Class R
Certificates"). The Certificates will represent in the aggregate the entire
beneficial ownership in a trust fund (the "Trust Fund") consisting primarily of
a segregated pool (the "Mortgage Pool") of conventional, one- to four-family
mortgage loans, all of which are secured by first liens, having original terms
to maturity ranging from 15 years to 30 years (the "Mortgage Loans"). The
Mortgage Pool will consist of a group of fixed-rate Mortgage Loans (the "Fixed
Rate Group") and a group of adjustable-rate Mortgage Loans (the "Adjustable Rate
Group") having an aggregate principal balance as of June 1, 1997 (the "Cut-off
Date") of approximately $104,845,480. The Mortgage Loans were purchased by the
Depositor from the Sellers pursuant to the Pooling and Servicing Agreement and
conveyed by the Depositor to the Ocwen Mortgage Loan Asset Backed Trust, Series
1997-1 pursuant the Pooling and Servicing Agreement.
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The Fixed Rate Group consists of approximately 211 fixed-rate Mortgage
Loans having an aggregate principal balance as of the Cut-off Date, after
application of scheduled payments due on or prior to the Cut-off Date whether or
not received, of approximately $17,727,255, subject to a permitted variance of
plus or minus 5%. The Mortgage Loans in the Fixed Rate Group have annual rates
at which such Mortgage Loans bear interest ("Mortgage Rates") that are fixed and
range from 8.25% per annum to 14.99% per annum, with a weighted average Mortgage
Rate as of the Cut-off Date of approximately 10.69% per annum. As of the
Cut-off Date, the Mortgage Loans in the Fixed Rate Group will have a weighted
average remaining term to a maturity of approximately 336 months.
The Adjustable Rate Group consists of approximately 685 adjustable-rate
Mortgage Loans having an aggregate principal balance as of the Cut-off Date,
after application of scheduled payments due on or prior to the Cut-off Date
whether or not received, of approximately $87,118,227, subject to a permitted
variance of plus or minus 5%. Each Mortgage Loan in the Adjustable Rate Group
provides for semi-annual adjustment to the Mortgage Rate thereon and for
corresponding adjustments to the monthly payment amount due thereon, in each
case on each adjustment date applicable thereto (each such date, an "Adjustment
Date"); provided, however, that the first Adjustment Date for 2.33% of the
Mortgage Loans will occur after an initial period of one year, in the case of
69.30% of the Mortgage Loans two years, in the case of 1.61% of the Mortgage
Loans three years, and in the case of 0.05% of the Mortgage Loans five years,
each by aggregate principal balance of the Mortgage Loans in the Adjustable Rate
Group as of the Cut-off Date, from the origination thereof. On each Adjustment
Date for each Mortgage Loan in the Adjustable Rate Group, the Mortgage Rate
thereon will be adjusted to equal the sum, rounded to the nearest multiple of
0.125%, of the Index and a fixed percentage amount (the "Gross Margin"), subject
to periodic and lifetime limitations as described herein. None of the Mortgage
Loans in the Adjustable Rate Group permits the related mortgagor to convert the
adjustable Mortgage Rate thereon to a fixed Mortgage Rate.
As of the Cut-off Date, the Mortgage Loans in the Adjustable Rate Group
have Mortgage Rates ranging from 6.13% per annum to 14.50% per annum, a weighted
average Mortgage Rate of approximately 9.94% per annum, a weighted average
months to next rate adjustment of 17 months, Gross Margins ranging from 3.45% to
8.50% and a weighted average Gross Margin of approximately 6.02%. As of the
Cut-off Date, the Mortgage Loans in the Adjustable Rate Group will have a
weighted average remaining term to maturity of approximately 358 months.
The Class A Certificates were sold to Morgan Stanley & Co. Incorporated,
an affiliate of the Depositor, pursuant to an Underwriting Agreement, dated
June 19, 1997 between Morgan Stanley & Co. Incorporated and the Depositor.
The Class X Certificates and the Class R Certificates were delivered by the
Depositor to the Sellers as partial consideration for the purchase of the
Mortgage Loans.
The Class A Certificates, and the Mortgage Loans are more particularly
described in the Prospectus, dated June 5, 1997, and the Prospectus Supplement,
dated June 19, 1997, as previously filed with the Securities and Exchange
Commission pursuant to Rule 424(b). The Class X and Class R Certificates have
not been and will not be publicly offered by the Depositor. Capitalized terms
used but not otherwise defined herein shall have the meanings assigned to them
in the Prospectus Supplement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Not applicable
(b) Not applicable
(c) Exhibits
EXHIBIT NO. DESCRIPTION
4.1 Pooling and Servicing Agreement, dated as of June 1, 1997, among
Morgan Stanley ABS Capital I Inc., as Depositor, Ocwen Federal
Bank FSB and LMAC, Inc., as Sellers, and Ocwen Federal Bank FSB,
as Master Servicer
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 thereunto duly authorized.
Dated: July 25, 1997
MORGAN STANLEY ABS CAPITAL I INC.
By: /s/ James Fadel
------------------------------
Name: James Fadel
Title: Vice President
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POOLING AND SERVICING AGREEMENT
Relating to
OCWEN MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 1997-1
Among
MORGAN STANLEY ABS CAPITAL I INC.,
as Depositor
OCWEN FEDERAL BANK FSB
LMAC, INC.,
as Sellers
OCWEN FEDERAL BANK FSB,
as Master Servicer
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
Dated as of June 1, 1997
<PAGE>
POOLING AND SERVICING AGREEMENT, Relating to OCWEN MORTGAGE LOAN
ASSET-BACKED CERTIFICATES, SERIES 1997-1, dated as of June 1, 1997 by and
among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, in its
capacity as Depositor (the "Depositor"), OCWEN FEDERAL BANK FSB, a federally
chartered savings bank, and LMAC, INC., a Delaware corporation, in their
capacities as Sellers (in such capacity, the "Sellers"), OCWEN FEDERAL BANK
FSB, a federally chartered savings bank, in its capacity as Master Servicer
(in such capacity, the "Master Servicer") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, in its capacity as the trustee
(the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and provide for
the allocation and sale of the beneficial interests therein and the
maintenance and distribution thereof;
WHEREAS, the Master Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed by the Depositor and authenticated by the Trustee, valid
instruments, and to make this Agreement a valid agreement, in
accordance with their and its terms, have been done;
WHEREAS, Texas Commerce Bank National Association is willing to
serve in the capacity of Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. is intended to be a
third-party beneficiary with the right to enforce this Agreement as if
it were a party to this Agreement and is hereby recognized by the
parties hereto to be a third-party beneficiary with the right to
enforce this Agreement as if it were a party to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Sellers, the Master
Servicer, and the Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or
interest on the Class A Certificates, the Class X Certificates and the
Class R Certificates in accordance with their terms, all of the sums
distributable under this Agreement with respect to the Certificates and
the performance of the covenants contained in this Agreement, the
Sellers hereby bargain, sell, convey, assign and transfer to the
Depositor and the Depositor hereby bargains, sells, conveys, assigns
and transfers to the Trustee, in trust, without recourse (except as
provided herein) and for the exclusive benefit of the Owners of the
Certificates and the Certificate Insurer, all of its respective right,
title and interest in and to any and all benefits accruing to it from
(a) the Mortgage Loans (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date without regard to whether
such payments have been received) listed in Schedules I-A and I-B to
this Agreement which the Sellers are causing to be delivered to the
Depositor and the Depositor is causing to be delivered to the Trustee
herewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06), together with the related Mortgage Loan documents and
the Sellers' and Depositor's interest in any Mortgaged Property which
secures a Mortgage Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Distribution Account
(other than (i) investment earnings on such amounts (except as
otherwise provided herein) and (ii) amounts transferred thereto from
the Policy Payments Account and such amounts as may be held by the
Master Servicer in the name of the Trustee in the Collection Account,
if any (other than investment earnings thereon (except as otherwise
provided herein)), whether in the form of cash, instruments, securities
or other properties (including any Permitted Investments held by the
Master Servicer); (c) the Mortgage Loan Purchase Agreement; and (d)
proceeds of all the foregoing (including, but not by way of
limitations, all proceeds of any mortgage insurance, hazard insurance
and title insurance policy relating to the Mortgage Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and
every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any
of the foregoing) to pay the Certificates as specified herein ((a)-(d)
above shall be collectively referred to herein as the "Trust Estate").
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The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties
herein.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have
the meanings set forth below, unless the context clearly indicates
otherwise:
"Account": Any account established in accordance with Section
7.02 or 8.08 hereof.
"Accrual Period": With respect to the Fixed Rate Certificates and
any Distribution Date, the calendar month immediately preceding the
month in which the Distribution Date occurs; a "calendar month" shall
be deemed to be 30 days. With respect to the Adjustable Rate
Certificates and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or the Startup Day in the case
of the first Distribution Date) and ending on the day immediately
preceding the current Distribution Date. All calculations of interest
on the Fixed Rate Certificates will be made on the basis of a 360-day
year assumed to consist of twelve 30-day months and calculations of
interest on the Adjustable Rate Certificates will be made on the basis
of the actual number of days elapsed in the related Accrual Period and
a year of 360 days.
"Adjustable Rate Certificates": The Class A-2 Certificates.
"Adjustable Rate Group": The pool of Mortgage Loans identified in
the related Schedule of Mortgage Loans as having been assigned to the
Adjustable Rate Group in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof. The beneficial
ownership of the Adjustable Rate Group is evidenced by Subsidiary REMIC
Interest 2 and the SR Interest.
"Adjustable Rate Group Available Funds": As defined in Section
7.02(d) hereof
"Adjustable Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Adjustable Rate Group Current Interest": With respect to any
Distribution Date, the Class A-2 Current Interest.
"Adjustable Rate Group Monthly Remittance Amount": As of any
Monthly Remittance Date, with respect to the Adjustable Rate Group, (a)
payments other than those specified in clauses (b) and (c) of this
definition collected on or prior to the related Determination Date with
respect to the related Due Period or advanced by the Master Servicer,
(b) any Prepayments collected during the related Prepayment Period and
(c) any Curtailments and Net Liquidation Proceeds collected during the
related Due Period, in each case, as remitted by the Master Servicer on
the Monthly Remittance Date, together with any Substitution Adjustment
and any Loan Purchase Price amount.
"Adjustable Rate Group Principal Distribution Amount": With
respect to the Class A-2 Certificates for any Distribution Date, the
lesser of:
(a) the Adjustable Rate Group Total Available Funds plus any
Insured Payment with respect to the Class A-2 Certificates minus the
Class A-2 Current Interest: and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) Reserved.
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(B) the principal collected (other than the principal
portion of Prepayments) by the Master Servicer with respect
to Mortgage Loans in the Adjustable Rate Group for the
related Due Period on or prior to the related Determination
Date or advanced by the Master Servicer for such Distribution
Date,
(C) the principal portion of all Prepayments received
by the Master Servicer during the Prepayment Period and
remitted to the Trustee as of the Monthly Remittance Date,
(D) the principal portion of any Loan Purchase Price of
each Mortgage Loan in the Adjustable Rate Group that was
repurchased by the Sellers or purchased by the Master
Servicer on or prior to the related Monthly Remittance Date,
to the extent such Loan Purchase Price is actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(E) the principal portion of any Substitution
Adjustments delivered by the Sellers on or prior to the
related Monthly Remittance Date in connection with a
substitution of a Mortgage Loan in the Adjustable Rate Group,
to the extent such Substitution Adjustments are actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(F) all Net Liquidation Proceeds and Curtailments
actually collected by the Master Servicer with respect to
Mortgage Loans in the Adjustable Rate Group during the
related Due Period (to the extent such Net Liquidation
Proceeds or Curtailments are related to principal) to the
extent such Net Liquidation Proceeds or Curtailments are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(G) the amount of any Subordination Deficit with
respect to the Adjustable Rate Group for such Distribution
Date,
(H) the portion of the proceeds received by the Trustee
with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds are
related to principal),
(I) the amount of any Subordination Increase Amount
with respect to the Adjustable Rate Group for such
Distribution Date, to the extent of any Net Monthly Excess
Cashflow available for such purpose, and
(J) the portion of any Carry Forward Amount relating to
principal with respect to the Adjustable Rate Group for such
Distribution Date;
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Distribution Date.
"Adjustable Rate Group Specified Subordinated Amount": As of (i)
any Distribution Date occurring less than 30 months after the Startup
Day, 3.00% of the aggregate Loan Balance of all Mortgage Loans in the
Adjustable Rate Group as of the Startup Day and (ii) any Distribution
Date occurring 30 months or more after the Startup Day, the lesser of
(x) the amount described in clause (i) above and (y) the sum of (I) 6%
of the aggregate Loan Balance of all Mortgage Loans in the Adjustable
Rate Group as of such Distribution Date, and (II) the product of (A)
the positive difference, if any, between the amount described in clause
(i) above and the amount described in clause (ii)(y)(I) above and (B)
the percentage equivalent of a fraction, the numerator of which equals
12 minus the number of immediately preceding consecutive months (not to
exceed 12) for which all of the Step Down Conditions have been
satisfied and the denominator of which equals 12, provided, however,
that the Adjustable Rate Group Specified Subordinated Amount shall not
be less than 0.50% of the aggregate Loan Balance of all Mortgage Loans
in the Adjustable Rate Group as of the Startup Day.
3
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"Adjustable Rate Group Subordinated Amount": As of any
Distribution Date, the excess, if any, of (x) the aggregate Loan
Balances of the Mortgage Loans in the Adjustable Rate Group as of the
close of business on the last day of the related Due Period (taking
into account all payments of principal, other than Prepayments, due
during the related Due Period and received on or prior to the related
Determination Date or, in connection with Curtailments and Net
Liquidation Proceeds, collected during the related Due Period together
with all Prepayments received on such Mortgage Loans in the Adjustable
Rate Group during the related Prepayment Period) over (y) the Class A-2
Certificate Principal Balance as of such Distribution Date (after
taking into account the payment of the Class A-2 Distribution Amount
thereon (except for any Subordination Deficit with respect to the
Adjustable Rate Group and Subordination Increase Amount with respect to
the Adjustable Rate Group) on such Distribution Date).
"Adjustable Rate Group Total Available Funds": As defined in
Section 7.02(d) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect
to the Adjustable Rate Group and any Distribution Date, the excess, if
any, of (i) the interest which is collected on the Mortgage Loans in
the Adjustable Rate Group prior to the related Determination Date for
payment due during the related Due Period or otherwise remitted in
connection with any Prepayments made during the related Prepayment
Period or the interest portion of any Net Liquidation Proceeds or Loan
Purchase Price received during the related Due Period less the
Servicing Fee, Premium and Trustee Fee with respect to Mortgage Loans
in the Adjustable Rate Group plus (x) the interest portion of any P&I
Advances and (y) Compensating Interest paid by the Master Servicer with
respect to the Adjustable Rate Group for such Due Period over (ii) the
Adjustable Rate Group Current Interest for such Distribution Date.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the
Weighted Average Pass-Through Rate plus (b) any portion of the Premium
and the Trustee Fee (calculated as a percentage of the outstanding
principal amount of the Certificates) then accrued and outstanding.
"Advisor": As defined in Section 9.03 hereof.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"Applicant": As defined in Section 6.13 hereof.
"Appraised Value": The appraised value of any Mortgaged Property
based upon the appraisal or other valuation made at the time of the
origination of the related Mortgage Loan, or, in the case of a Mortgage
Loan which is a purchase money mortgage, the sales price of the
Mortgaged Property at such time of origination, if such sales price is
less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of
such Person who is authorized to act for such Person in matters
relating to this Agreement, and whose action is binding upon such
Person, with respect to the Depositor, the Sellers and the Master
Servicer, initially including those individuals whose names appear on
the lists of Authorized Officers delivered at the Closing, with respect
to the Trustee, any Vice President, any Assistant Vice President, any
Assistant Secretary or any Assistant Treasurers.
"Available Funds": The Fixed Rate Group Available Funds or the
Adjustable Rate Group Available Funds, as the case may be.
"Available Funds Shortfall": A Fixed Rate Group Available Funds
Shortfall or Adjustable Rate Group Available Funds Shortfall, as the
case may be.
"Balloon Payment": A payment of the unamortized principal balance
of a Mortgage Loan in a single payment at the maturity of such Mortgage
Loan that is greater than the preceding monthly payment.
"Basis Risk Carryover Amount": With respect to any Distribution
Date, the sum of the Basis Risk Excess
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for such Distribution Date and any Basis Risk Excess which remains unpaid
from prior Distribution Dates.
"Basis Risk Excess": With respect to any Distribution Date as to
which the Class A-2 Pass-Through Rate is the Class A-2 Available Funds
Cap Rate, the excess of (i) the amount of interest the Class A-2
Certificates would be entitled to receive on such Distribution Date at
the lesser of (a) the Net Lifetime Cap for such Distribution Date and
(b) the then-applicable Class A-2 Pass-Through Rate without reference
to the Class A-2 Available Funds Cap Rate over (ii) the amount of
interest the Class A-2 Certificates will receive on such Distribution
Date at the Class A-2 Available Funds Cap Rate.
"Business Day": Any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in The City of New York,
in the city in which the principal Corporate Trust Office of the
Trustee is located, in the city in which the home office of the Master
Servicer is located or in the city in which the principal offices of
the Certificate Insurer are located, are authorized or obligated by law
or executive order to be closed.
"Carry Forward Amount": With respect to any Class of the Class A
Certificates for any Distribution Date, the sum of (x) the amount, if
any, by which (i) the Class A Distribution Amount allocable to such
Class as of the immediately preceding Distribution Date exceeded (ii)
the amount of the actual distribution made to the Owners of such Class
of the Class A Certificates on such immediately preceding Distribution
Date plus (y) 30 days' interest on such amount at the Pass-Through Rate
in effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, Class X
Certificates or Class R Certificates, each representing the interests
and the rights described in this Agreement.
"Certificate Insurance Policy": The Financial Guaranty Insurance
Policy (No. 50604-N) issued by the Certificate Insurer relating to the
Class A Certificates.
"Certificate Insurer": Financial Security Assurance Inc. or any
successor thereto, as issuer of the Certificate Insurance Policy.
"Certificate Insurer Default": The existence and continuance of
any of the following:
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policy in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency,
rehabilitation, reorganization or other similar law or (B) a decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganizing,
rehabilitation, arrangement, adjustment or composition of or in respect
of the Certificate Insurer under any applicable United States federal
or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar
official of the Certificate Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated as bankrupt or
insolvent, or the consent of the Certificate Insurer to the entry of a
decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law, or the acquiescence by the Certificate Insurer to the
filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate
Insurer to pay debts generally as they become due, or the admission by
the Certificate Insurer in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
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"Certificate Principal Balance": As of the Startup Day as to each
of the following Classes of Class A Certificates, the principal
balances thereof, as follows:
Class A-1 Certificates - $17,727,000
Class A-2 Certificates - $87,118,000
The Class X Certificates and the Class R Certificates do not
have a Certificate Principal Balance.
"Class": Any class of the Class A Certificates, the Class X
Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates or
Class A-2 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day
of all Class A Certificates less any amounts actually distributed on
such Class A Certificates with respect to the Class A Distribution
Amount pursuant to Section 7.03(c)(iii)(D) with respect to principal
thereon on all prior Distribution Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of
Insured Payments made in respect of principal).
"Class A Certificate Termination Date": With respect to the Class
A-1 Certificates, the Class A-1 Certificate Termination Date and with
respect to the Class A-2 Certificates, the Class A-2 Certificate
Termination Date.
"Class A Distribution Amount": The sum of the Class A-1
Distribution Amount and the Class A-2 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated
on the face thereof as a Class A-1 Certificate, substantially in the
form annexed hereto as Exhibit A, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day
of all Class A-1 Certificates less any amounts actually distributed
with respect to the Class A-1 Distribution Amount pursuant to Section
7.03(c)(iii)(D) hereof with respect to principal thereon on all prior
Distribution Dates (except, for purposes of effecting the Certificate
Insurer's subrogation rights, that portion of Insured Payments made in
respect of principal).
"Class A-1 Certificate Termination Date": The Distribution Date
on which the Class A-1 Certificate Principal Balance is reduced to
zero.
"Class A-1 Current Interest": With respect to any Distribution
Date, the amount of interest accrued on the Class A-1 Certificate
Principal Balance immediately prior to such Distribution Date during
the related Accrual Period at the Class A-1 Pass-Through Rate (net of
Net Prepayment Interest Shortfalls and the interest portion of
reductions due to the Relief Act) plus the portion of the Carry Forward
Amount, if any, with respect to the Class A-1 Certificates relating to
interest (net of Net Prepayment Interest Shortfalls and the interest
portion of reductions due to the Relief Act).
"Class A-1 Distribution Amount": The sum of (x) Class A-1 Current
Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-1 Certificates pursuant to Section
7.03(c)(iii)(A) or (D) hereof, as applicable.
"Class A-1 Pass-Through Rate": 7.05% per annum; provided,
however, that on each Distribution Date that occurs after the Optional
Termination Date, the Class A-1 Pass-Through Rate will be the lesser of
(a) 7.80% per annum and (b) the weighted average of the Mortgage Rates
on the Mortgage Loans in the Fixed Rate Group as of the first day of
the related Due Period.
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"Class A-2 Available Funds Cap Rate": On any Distribution Date,
the weighted average of the Mortgage Rates of the Mortgage Loans in the
Adjustable Rate Group as of the first day of the related Due Period
minus (i) the Expense Rate and (ii) on any Distribution Date on and
after the seventh Distribution Date, 0.50% per annum.
"Class A-2 Certificate": Any one of the Certificates designated
on the face thereof as a Class A-2 Certificate, substantially in the
form annexed hereto as Exhibit A, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day
of all Class A-2 Certificates less any amounts actually distributed
with respect to the Class A-2 Distribution Amount pursuant to Section
7.03(c)(iii)(D) hereof with respect to principal thereon on all prior
Distribution Dates (except, for purposes of effecting the Certificate
Insurer's subrogation rights, that portion of Insured Payments made in
respect of principal).
"Class A-2 Certificate Termination Date": The Distribution Date
on which the Class A-2 Certificate Principal Balance is reduced to
zero.
"Class A-2 Current Interest": With respect to any Distribution
Date, the amount of interest accrued on the Class A-2 Certificate
Principal Balance immediately prior to such Distribution Date during
the related Accrual Period at the Class A-2 Pass-Through Rate (net of
Net Prepayment Interest Shortfalls and the interest portion of
reductions due to the Relief Act) plus the portion of the Carry Forward
Amount, if any, with respect to the Class A-2 Certificates relating to
interest (net of Net Prepayment Interest Shortfalls and the interest
portion of reductions due to the Relief Act).
"Class A-2 Distribution Amount": The sum of (x) Class A-2 Current
Interest and (y) the Adjustable Rate Group Principal Distribution
Amount payable to the Owners of Class A-2 Certificates pursuant to
Section 7.03(c)(iii)(A) or (D) hereof, as applicable.
"Class A-2 Pass-Through Rate": For any Distribution Date in any
month prior to and including the month in which the Optional
Termination Date occurs, the lesser of (i) LIBOR plus 0.23% per annum
and (ii) the Class A-2 Available Funds Cap Rate for such Distribution
Date and for any Distribution Date in any month following the month in
which the Optional Termination Date occurs, the lesser of (i) LIBOR
plus 0.46% per annum and (ii) the Class A-2 Available Funds Cap Rate
for such Distribution Date.
"Class R Certificate": Any one of the Certificates designated on
the face thereof as a Class R Certificate, substantially in the form
annexed hereto as Exhibit C, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein,
and evidencing an investment unit comprising (i) the MR Interest, which
will be designated as the sole class of "residual interests" in the
Master REMIC and (ii) the SR Interest, which will be designated as the
sole class of "residual interests" in the Subsidiary REMIC, for the
purposes of the REMIC Provisions.
"Class R Optionholder": Any Owner of the Class R Certificates
which represent a Percentage Interest of 99.999% or greater.
"Class X Certificate": Any one of the Class X-1 Certificates or
Class X-2 Certificates.
"Class X-1 Carry Forward Amount": With respect to any
Distribution Date the sum of (a) the amount, if any, by which (x) the
Class X-1 Distribution Amount allocable as of the immediately preceding
Distribution Date exceeded (y) the amount of the actual distribution
made to Owners of the Class X-1 Certificates on such immediately
preceding Distribution Date.
"Class X-1 Certificate": Any one of the Certificates designated
on the face thereof as a Class X- I Certificate, substantially in the
form annexed hereto as Exhibit B, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
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"Class X-1 Distribution Amount": With respect to any Distribution
Date, an amount equal to (i) one-twelfth of the product of (x) the
Class X-1 Notional Amount and (y) the Class X-1 Pass-Through Rate;
reduced, but not below zero, by (ii) the sum of the following payments
allocable to the Fixed Rate Group on or in respect of the related
Distribution Date (in each case expressed as a percentage of the Class
X-1 Notional Amount): (A) the Servicing Fee, (B) the Premium, and (C)
the Trustee Fee; and (iii) increased by the Class X-1 Carry Forward
Amount.
"Class X-1 Notional Amount": As of any Distribution Date, an
amount equal to the aggregate balance of Subsidiary REMIC Interest 1 as
of the prior Distribution Date, which on any Distribution Date shall
equal the sum of the outstanding Loan Balances of the Mortgage Loans in
the Fixed Rate Group as of the beginning of the related Due Period.
"Class X-1 Pass-Through Rate": With respect to any Distribution
Date, the excess of (i) the net weighted average Mortgage Rate of the
Mortgage Loans in the Fixed Rate Group as of the beginning of the
related Due Period over (ii) the Class A-1 Pass-Through Rate for such
Distribution Date. The Class X-1 Pass-Through Rate may also be
expressed as the excess of the Subsidiary REMIC Regular Interest 1
Pass-Through Rate over the Class A-1 Pass-Through Rate for such
Distribution Date.
"Class X-2 Carry Forward Amount": With respect to any
Distribution Date the amount, if any, by which (x) the Class X-2
Distribution Amount allocable as of the immediately preceding
Distribution Date exceeded (y) the amount of the actual distribution
made to Owners of the Class X-2 Certificates on such immediately
preceding Distribution Date.
"Class X-2 Certificate": Any one of the Certificates designated
on the face thereof as a Class X-2 Certificate, substantially in the
form annexed hereto as Exhibit B, authenticated and delivered by the
Trustee, representing the right to distribution as set forth herein.
"Class X-2 Distribution Amount": With respect to any Distribution
Date, an amount equal to (i) one-twelfth of the product of (x) the
Class X-2 Notional Amount and (y) the Class X-2 Pass-Through Rate;
reduced, but not below zero, by (ii) the sum of the following payments
allocable to the Adjustable Rate Group on or in respect of the related
Distribution Date (in each case expressed as a percentage of the Class
X-2 Notional Amount): (A) the Servicing Fee, (B) the Premium, and (C)
the Trustee Fee; and increased by (iii) the Class X-2 Carry Forward
Amount.
"Class X-2 Notional Amount": As of any Distribution Date, an
amount equal to the balance of Subsidiary REMIC Interest 2 as of the
prior Distribution Date, which on any Distribution Date shall equal the
sum of the outstanding Loan Balances of the Mortgage Loans in the
Adjustable Rate Group as of the beginning of the related Due Period.
"Class X-2 Pass-Through Rate": With respect to any Distribution
Date, the excess of (i) the net weighted average Mortgage Rate of the
Mortgage Loans in the Adjustable Rate Group on the immediately
preceding Distribution Date, over (ii) the Class A-2 Pass-Through Rate
for such Distribution Date. The Class X-2 Pass-Through Rate may also
be expressed as the excess of the Subsidiary REMIC Regular Interest 2
Pass-Through Rate over the Class A-2 Pass-Through Rate for such
Distribution Date.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": One or more collection accounts created by
the Master Servicer pursuant to Section 8.08(a) hereof.
"Compensating Interest": As defined in Section 8.10(a) hereof.
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"Corporate Trust Office": The principal office of the Trustee at
600 Travis, 8th Floor, Houston, Texas 77002, Attention: Global Trust
Services--Ocwen Mortgage Loan Asset-Backed Certificates, Series 1997-1.
"Cram Down Losses": With respect to a Mortgage Loan, if a court
of appropriate jurisdiction in an insolvency proceeding shall have
issued an order reducing the Loan Balance or the Mortgage Rate of such
Mortgage Loan, the amount of such reduction in principal balance or
reduction in accrued interest. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination
thereof, the Cumulative Realized Losses as a percentage of the Original
Aggregate Principal Balance of the Mortgage Loans.
"Cumulative Realized Losses": As of any date of determination,
the aggregate amount of Realized Losses with respect to the Mortgage
Loans since the Cut-Off Date.
"Current Interest": With respect to any Distribution Date, the
sum of the Class A-1 Current Interest and the Class A-2 Current
Interest.
"Curtailments": Any partial prepayment of principal of a Mortgage
Loan which is received by the Master Servicer in advance of the
scheduled due date for the payment of such principal (other than the
principal portion of any Prepaid Installment or any Prepayment).
"Cut-Off Date": As of the close of business on June 1, 1997.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is past due on a contractual basis.
"Delivery Order": The delivery order in the form set forth as
Exhibit G hereto and delivered by the Depositor to the Trustee on the
Startup Day pursuant to Section 4.01 hereof.
"Depositor": Morgan Stanley ABS Capital I Inc., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New
York, New York 10004, and any successor Depository hereafter named.
"Determination Date": The 15th day of any month, or if such 15th
day is not a Business Day, the Business Day immediately preceding such
15th day, commencing in July 1997.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds
Class A Certificates from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning, set forth
from time to time in the definition thereof at Section 860E(e)(5) of
the Code (or any successor statute thereto) and applicable to the
Trust.
"Distribution Account": The distribution account established in
accordance with Section 7.02(a) hereof and maintained in the corporate
trust department of the Trustee; provided that the funds in such
account shall not be commingled with other funds held by the Trustee.
"Distribution Date": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 25th day of each
month or if such day is not a Business Day, the next Business Day
thereafter, commencing in the month following the Startup Day.
"Due Period": With respect to any Monthly Remittance Date, the
calendar month immediately preceding
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the calendar month in which such Monthly Remittance Date occurs.
"Eligible Account": Either an account that is (i) maintained with
a federal or state chartered depository institution or trust company
whose short-term unsecured debt obligations at the time of any deposit
therein have the highest short-term rating by the Rating Agencies, (ii)
one or more accounts with a depository institution or trust company
which accounts are fully insured by either the Savings Association
Insurance Fund or the Bank Insurance Fund of the Federal Deposit
Insurance Corporation and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an opinion of counsel
delivered to the Trustee, the Certificate Insurer and to each Rating
Agency, the holders of the Certificates 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, (iii) a segregated trust
account maintained with the Trustee or an affiliate of the Trustee in
its fiduciary capacity or (iv) otherwise acceptable to the Certificate
Insurer and each Rating Agency as evidenced by a letter from the
Certificate Insurer and each Rating Agency to the Trustee, without
reduction or withdrawal of their then current ratings of the Class A
Certificates. Eligible Accounts may bear interest.
"Event of Default": Any one of the events described in Section
8.20(a) or 8.20(b).
"Excess Subordinated Amount": With respect to any Mortgage Loan
Group and Distribution Date, the excess, if any, of (x) the
Subordinated Amount that would apply to the related Mortgage Loan Group
on such Distribution Date after taking into account the payment of the
related Class A Distribution Amounts on such Distribution Date (except
for any distributions of related Subordination Reduction Amounts on
such Distribution Date), over (y) the related Specified Subordinated
Amount for such Distribution Date, provided, however, that the Excess
Subordinated Amount for any Mortgage Loan Group shall equal zero for
any Distribution Date above if any of the following conditions are
satisfied:
(a) the Cumulative Loss Percentage for the preceding 12 months
(or such lesser number of months as may have occurred since the Startup
Day) exceeds the percentage set out for such period below (provided,
that for purposes of such purposes of such calculation, Realized Losses
attributable solely to Cram Down Losses should be excluded from the
calculation of Cumulative Loss Percentage):
Month after Startup Day
in which Distribution Date occurs Cumulative Loss Percentage
1-12 0.75%
13-24 1.25%
25-36 1.90%
37-48 2.40%
49 or more 3.00%;
(b) the average outstanding principal balance of Mortgage Loans
in the Trust more than 2 months Delinquent (including (i) Mortgage
Loans that have gone into foreclosure or have been discharged by reason
of bankruptcy and (ii) REO Property, as to which the principal balance
for purposes of this definition shall be deemed the underlying mortgage
balance at the time such property became REO Property) over the prior 3
months, each computed as of the last day of the related Due Period,
exceeds 10% of the aggregate outstanding principal balance of the
Mortgage Loans as of the last day of such period; or
(c) as of the Distribution Date, the aggregate losses in respect
of the Trust within the preceding twelve months exceed 1.40% of the
aggregate principal balance of the Mortgage Loans as of the first day
of such period.
"Expense Rate": For any Distribution Date and each of the Fixed
Rate Group and the Adjustable Rate
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Group, the sum of the rates at which the Servicing Fee, the Premium and the
Trustee Fee applicable to each of the Fixed Rate Group and the Adjustable
Rate Group are calculated.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.05 hereof pertaining to a particular Mortgage Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.04(a) hereof.
"Final Scheduled Distribution Date": For each Class of Class A
Certificates, as set out in Section 2.08(e).
"Fixed Rate Certificate": The Class A-1 Certificates.
"Fixed Rate Group": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to the Fixed
Rate Group in Schedule 1-A hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof. The beneficial ownership
of the Fixed Rate Group is evidenced by Subsidiary REMIC Interest 1 and
the SR Interest.
"Fixed Rate Group Available Funds": As defined Section 7.02(c)
hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Fixed Rate Group Current Interest". With respect to any
Distribution Date, the Class A-1 Current Interest.
"Fixed Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, with respect to the Fixed Rate Group, (a) payments
other than those specified in clauses (b) and (c) of this definition
collected or advanced on or prior to the related Determination Date
with respect to the related Due Period, (b) any Prepayments collected
during the related Prepayment Period and (c) any Curtailments and Net
Liquidation Proceeds collected during the related Due Period, in each
case, as remitted by the Master Servicer on the Monthly Remittance
Date, together with any Substitution Adjustment and any Loan Purchase
Price amount.
"Fixed Rate Group Principal Distribution Amount": With respect to
the Fixed Rate Certificates for any Distribution Date, the lesser of:
(a) the Fixed Rate Group Total Available Funds plus any Insured
Payment with respect to the Fixed Rate Certificates minus the Fixed
Rate Group Current Interest; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) Reserved,
(B) the principal (other than the principal portion of
Prepayments) collected by the Master Servicer with respect to
Mortgage Loans in the Fixed Rate Group for the related Due Period
on or prior to the related Determination Date or advanced by the
Master Servicer for such Distribution Date,
(C) the principal portion of all Prepayments received by the
Master Servicer during the Prepayment Period and remitted to the
Trustee as of the Monthly Remittance Date;
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(D) the principal portion of any Loan Purchase Price of each
Mortgage Loan in the Fixed Rate Group that was repurchased by the
Sellers or purchased by the Master Servicer on or prior to the
related Monthly Remittance Date, to the extent such Loan Purchase
Price is actually received by the Trustee on or prior to the
related Monthly Remittance Date,
(E) the principal portion of any Substitution Adjustments
delivered by the Seller on or prior to the related Monthly
Remittance Date in connection with a substitution of a Mortgage
Loan in the Fixed Rate Group, to the extent such Substitution
Adjustments are actually received by the Trustee on or prior to
the related Monthly Remittance Date,
(F) all Net Liquidation Proceeds and Curtailments actually
collected by the Master Servicer with respect to Mortgage Loans in
the Fixed Rate Group during the related Due Period (to the extent
such Net Liquidation Proceeds or Curtailments are related to
principal) to the extent such Net Liquidation Proceeds or
Curtailments are actually received by the Trustee on or prior to
the related Monthly Remittance Date,
(G) the amount of any Subordination Deficit with respect to
the Fixed Rate Group for Such Distribution Date,
(H) the portion of the proceeds received by the Trustee with
respect to the Fixed Rate Group from any termination of the Trust
(to the extent such proceeds related to principal),
(I) the amount of any Subordination Increase Amount with
respect to the Fixed Rate Group for such Distribution Date, to the
extent of any Net Monthly Excess Cashflow available for such
purpose, and
(J) the portion of any Carry Forward Amount relating to
principal with respect to the Fixed Rate Group for such
Distribution Date;
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Fixed Rate Group for such Distribution Date.
"Fixed Rate Group Specified Subordinated Amount": As of (i) any
Distribution Date occurring less than 30 months after the Startup Day,
2.25% of the aggregate Loan Balance of all Mortgage Loans in the Fixed
Rate Group as of the Startup Day, and (ii) any Distribution Date
occurring 30 months or more after the Startup Day, the lesser of (x)
the amount described in clause (i) above and (y) the sum of (I) 4.5% of
the aggregate Loan Balance of all Mortgage Loans in the Fixed Rate
Group as of such Distribution Date, and (II) the product of (A) the
positive difference, if any, between the amount described in clause (i)
above and the amount described in clause (ii)(y)(I) above and (B) the
percentage equivalent of a fraction the numerator of which equals 12
minus the number of immediately preceding consecutive months (not to
exceed 12) for which all of the Step Down Conditions have been
satisfied and the denominator of which equals 12, provided, however,
that the Fixed Rate Group Specified Subordinated Amount shall not be
less than 0.50% of the aggregate Loan Balance of all Mortgage Loans in
the Fixed Rate Group as of the Startup Day.
"Fixed Rate Group Subordinated Amount": As of any Distribution
Date, the excess, if any, of (x) the aggregate Loan Balances of the
Mortgage Loans in the Fixed Rate Group as of the close of business on
the last day of the related Due Period (taking into account all
payments of principal, other than Prepayments, due during the related
Due Period and received on or prior to the related Determination Date
or, in connection with Curtailments and Net Liquidation Proceeds,
collected during the related Due Period together with all Prepayments
received on such Mortgage Loans in the Fixed Rate Group during the
related Prepayment Period) over (y) the Class A-1 Certificate Principal
Balance as of such Distribution Date (after taking into account the
payment of the Fixed Rate Group Principal Distribution Amount thereon
(except for any Subordination Deficit with respect to the Fixed
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Rate Group and Subordination Increase Amount with respect to the Fixed Rate
Group) on such Distribution Date).
"Fixed Rate Group Total Available Funds": As defined in Section
7.02(c) hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to
the Fixed Rate Group and any Distribution Date, the excess, if any, of
(i) the interest which is collected on the Mortgage Loans in the Fixed
Rate Group prior to the related Determination Date for payment due
during the related Due Period or otherwise remitted in connection with
any Prepayments made during the related Prepayment Period or the
interest portion of any Net Liquidation Proceeds or Loan Purchase Price
received during the related Due Period less the Expense Rate with
respect to Mortgage Loans in the Fixed Rate Group plus (x) the interest
portion of any P&I Advances and (y) Compensating Interest paid by the
Master Servicer with respect to the Fixed Rate Group for such Due
Period over (ii) Fixed Rate Group Current Interest for such
Distribution Date.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the
Federal National Mortgage Association Charter Act, as amended, or any
Successor thereof.
"Guaranteed Distribution": As defined in the Certificate
Insurance Policy.
"Highest Lawful Rate": As defined in Section 11.13.
"Indemnification Agreement": The Indemnification Agreement dated
as of June 27, 1997 among the Certificate Insurer, the Sellers and the
Underwriter.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"Insolvency Proceeding": As defined in Section 7.11.
"Insurance Agreement": The Insurance and Indemnity Agreement
dated as of June 27, 1997, among the Depositor, the Sellers, the Master
Servicer and the Certificate Insurer, as it may be amended from time to
time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan plus any amount remitted
under Section 8.11 hereof.
"Insurance Proceeds": Proceeds of any Insurance Policy or other
insurance policy relating to a Mortgage Loan and/or the Mortgaged
Property securing any Mortgage Loan, to the extent proceeds are not to
be applied to the restoration of the related Mortgaged Property in
accordance with the express requirements of the related Mortgage or
Note or other documents included in the related File or in accordance
with prudent and customary servicing practices.
"Insured Payment": With respect to the related Mortgage Loan Group
and any Distribution Date, without duplication, the excess, if any, of
(i) the sum of (a) the aggregate amount of interest accrued at the
related Pass-Through Rate during the preceding Accrual Period on the
Class A Certificate Principal Balance of the related Class A
Certificates (net of any Prepayment Interest Shortfall and the interest
portion of reductions due to the Relief Act), (b) the portion of the
Carry Forward Amount related to interest with respect to each Class of
the related Class A Certificates (net of any Prepayment Interest
Shortfall and the interest portion of reductions due to the Relief Act)
and (c) the then existing Subordination Deficit for the related
Mortgage Loan Group, if any, over (ii) Total Available Funds for the
related Mortgage Loan Group (net of the Premium for the related
Mortgage Loan Group) after taking into account the
cross-collateralization provisions of the Trust.
"Latest Possible Maturity Date": With respect to each of the
Master REMIC and the Subsidiary REMIC, the Distribution Date following
the second anniversary of the last payment with respect to the Mortgage
Loan with the latest scheduled maturity date included in the Trust as
of the Startup Day, which date shall be July 25, 2027.
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The prepayment of such Mortgage Loan, or the removal of such Mortgage Loan,
or the addition of any Qualified Replacement Mortgage shall not affect the
Latest Possible Maturity Date.
"LIBOR": As determined pursuant to Section 7.04.
"LIBOR 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 of London, England are authorized or
obligated by law or executive order to be closed.
"LIBOR Determination Date ": With respect to any Accrual Period
for the Adjustable Rate Certificates, the second LIBOR Business Day
preceding the commencement of such Accrual Period.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed the Liquidation
Proceeds, which are incurred by the Master Servicer in connection with
the liquidation of any defaulted Mortgage Loan or property acquired in
respect thereof, such expenses including, without limitation, legal
fees and expenses, committee or referee fees, and, if applicable,
brokerage commissions and conveyance taxes, and any Servicing Advances
expended by the Master Servicer pursuant to this Agreement with respect
to such Mortgage Loan on such property not previously reimbursed from
collections or other proceeds therefrom.
"Liquidation Proceeds": Any amounts (including Insurance Proceeds)
recovered by the Master Servicer in connection with (i) the taking of a
Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) any Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise, (iii) the sale of a defaulted Mortgage
Loan or an REO Property in accordance with Section 8.13, or (iv) the
sale of all of the Mortgage Loans in accordance with Article IX.
"Loan Balance": With respect to each Mortgage Loan and as of any
date of determination, the outstanding principal balance thereof on the
Cut-Off Date less any principal payments relating to such Mortgage Loan
included in previous Monthly Remittance Amounts, provided, however,
that the Loan Balance for any Mortgage Loan that has become a
Liquidated Loan shall be zero as of the first day of the Due Period
following the Due Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03,
3.04, 3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan
Balance of such Mortgage Loan as of the date of purchase (assuming that
the Monthly Remittance Amount, less amounts that the Master Servicer is
permitted to withdraw from the Collection Account, to be remitted by
the Master Servicer on such Monthly Remittance Date has already been
remitted), plus one month's interest on the outstanding Loan Balance
thereof as of the beginning of the related Due Period computed at the
then applicable Mortgage Rate net of the Servicing Rate, together with
(without duplication) the aggregate amounts of (i) all unreimbursed P&I
Advances and Servicing Advances theretofore made with respect to such
Mortgage Loan, (ii) all P&I Advances and Servicing Advances which the
Master Servicer has theretofore failed to remit with respect to such
Mortgage Loan and (iii) all reimbursed P&I Advances with respect to
such Mortgage Loan to the extent that reimbursement is not from the
Mortgagor or from Liquidation Proceeds from such Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date with respect to
any Loan, the percentage obtained by dividing the Appraised Value into
the original principal balance of the Note relating to such Loan.
"Master REMIC": As described in Section 2.08 hereof.
"Master Servicer": Ocwen Federal Bank FSB, and its permitted
successors and assigns.
"Master Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Master Servicer or which is 50% or
more owned by the Master Servicer and (ii) which is qualified to
service
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residential mortgage loans.
"Minimum Termination Amount": As of any time after the Optional
Termination Date, an amount equal to the greater of (i) the sum of (a)
the Class A-1 Certificate Principal Balance, (b) any shortfall in
interest due to the Owners of the Class A-1 Certificates in respect of
prior Distribution Dates, (c) one month's interest on the Class A-1
Certificate Principal Balance at the Class A-1 Pass-Through Rate, (d)
the Class A-2 Certificate Principal Balance, (e) any shortfall in
interest due to the Owners of the Class A-2 Certificates in respect of
prior Distribution Dates, (f) one month's interest on the Class A-2
Certificate Principal Balance at the Class A-2 Pass-Through Rate, and
(g) any Reimbursement Amounts due the Certificate Insurer and (ii) the
sum of 100% of the aggregate Loan Balance of the related Mortgage Loans
as of the day of purchase and any Reimbursement Amounts not otherwise
paid to the Certificate Insurer minus amounts remitted from the
Collection Account to the Distribution Account representing collections
of principal on the Mortgage Loans during the current Due Period, plus
one month's interest on such amount computed at the weighted average
Mortgage Rate net of the Servicing Rate, plus all accrued and unpaid
Servicing Fees plus the aggregate amount of any unreimbursed P&I
Advances and Servicing Advances plus P&I Advances which the Master
Servicer has theretofore failed to remit.
"Monthly Remittance Amount": The sum of the Fixed Rate Group
Monthly Remittance Amount and the Adjustable Rate Group Monthly
Remittance Amount.
"Monthly Remittance Date": With respect to any Distribution Date,
no later than noon, New York time, on the Business Day immediately
preceding the Distribution Date.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in
real property securing a Note.
"Mortgage Loan Group": or "Group": The Fixed Rate Group or the
Adjustable Rate Group, as the case may be. References herein to the
related Class of Class A Certificates, when used with respect to a
Mortgage Loan Group, shall mean (A) in the case of the Fixed Rate
Group, the Fixed Rate Certificates and (B) in the case of the
Adjustable Rate Group, the Adjustable Rate Certificates.
"Mortgage Loans": Such of the mortgage loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with
any Qualified Replacement Mortgages substituted therefor in accordance
with this Agreement, as from time to time are held as a part of the
Trust Estate, the mortgage loans originally so held being identified in
the Schedules of Mortgage Loans. The term "Mortgage Loan" includes any
Mortgage Loan which is Delinquent, which relates to a foreclosure or
which relates to a Mortgaged Property which is REO Property prior to
such Mortgaged Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the
Depositor, in fact was not transferred and assigned to the Trust for
any reason whatsoever, shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement.
"Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
Agreement dated as of June 27, 1997 between Ocwen Financial Services,
Inc. and LMAC, Inc.
"Mortgage Rate": The rate of interest borne by each Note.
"Mortgaged Property": The underlying property securing a Mortgage
Loan.
"Mortgagor": The obligor on a Note.
"MR Interest": The sole class of "residual interest" in the Master
REMIC.
"Net Lifetime Cap": With respect to any Distribution Date, the
weighted average of the maximum
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Mortgage Rates on the Mortgage Loans in the Adjustable Rate Group as of the
first day of the related Due Period, minus the sum of (a) the Expense Rate
and (b) commencing on the seventh Distribution Date, 0.50% per annum.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed P&I Advances and
Servicing Advances relating to such Mortgage Loan. In no event shall
Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(c)(ii)
hereof.
"Net Prepayment Interest Shortfall": As of any Distribution Date,
the excess of any Prepayment Interest Shortfall over the Compensating
Interest.
"Nonrecoverable Advance": Any portion of a P&I Advance or a
Servicing Advance proposed to be made or previously made which has not
been previously reimbursed to the Master Servicer, and which the Master
Servicer has determined in its good faith business judgment will not
or, in the case of a proposed P&I Advance or Servicing Advance, would
not, be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds, Liquidation Proceeds and other
collections on or in respect of the related Mortgage Loan. The
determination by the Master Servicer that it has made a Nonrecoverable
Advance or that any proposed P&I Advance or Servicing Advance, if made,
would constitute a Nonrecoverable Advance shall be evidenced by an
Officer's Certificate delivered to the Trustee, the Certificate Insurer
and the Depositor setting forth such determination and the procedures
and considerations of the Master Servicer forming the basis of such
determination, which shall include a copy of any information or reports
obtained by the Master Servicer which may support such determinations.
Notwithstanding the above, the Trustee shall be entitled to rely upon
any determination of the Master Servicer that any P&I Advance or
Servicing Advance previously made is a Nonrecoverable Advance or that
any proposed P&I Advance or Servicing Advance, if made, would
constitute a Nonrecoverable Advance.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee.
"Operative Documents": Collectively, this Agreement, the
Certificate Insurance Policy, the Certificates, the Indemnification
Agreement, the Insurance Agreement and the Mortgage Loan Purchase
Agreement.
"Optional Termination Date": The first Distribution Date on which
the aggregate of the Loan Balances of the Mortgage Loans is less than
10% of the Original Aggregate Loan Balance.
"Original Aggregate Loan Balance": The aggregate Loan Balances of
all Mortgage Loans as of the Startup Day, i.e., $104,845,482.05.
"Outstanding": With respect to all Certificates of a Class, as of
any date of determination, all such Certificates theretofore executed
and delivered hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in
trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which
other Certificates have been executed and delivered pursuant to
this Agreement, unless proof satisfactory to the Trustee is
presented that any such Certificates are held by a bona fide
purchaser;
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(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as
provided for in Section 5.05 hereof, and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such certificate is ever
returned to the Trustee.
"Owner": The Person in whose name a Certificate is registered in
the Register, and the Certificate Insurer, to the extent described in
Section 5.06 and Section 7.03(c) hereof, respectively; provided that
solely for the purposes of determining the exercise of any voting
rights hereunder, if Class A Certificates are beneficially owned by the
Depositor, any Seller or any affiliate thereof, neither the Depositor,
such Seller nor such affiliate shall be considered an Owner hereunder.
"P&I Advance": As defined in Section 8.09(a) hereof.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate or the
Class A-2 Pass-Through Rate.
"Paying Agent": Initially, the Trustee, and thereafter, the
Trustee or any other Person that meets the eligibility standards for
the Paying Agent specified in Section 11.15 hereof and is authorized by
the Trustee and the Depositor to make payments on the Certificates on
behalf of the Trustee.
"Percentage Interest": With respect to a Class A Certificate, a
fraction, expressed as a percentage, the numerator of which is the
Class A Certificate Principal Balance represented by such Class A
Certificate on such date of determination (prior to giving effect to
any distribution of principal on such date) and the denominator of
which is the Certificate Principal Balance attributable to the related
Class of Class A Certificates as of such date of determination (prior
to giving effect to any distribution of principal on such date). With
respect to a Class X or a Class R Certificate, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of
such Certificate, all of which shall total 100% with respect to the
related Class.
"Permitted Investments": Those investments so designated pursuant
to Section 7.07 hereof.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Policy Payments Account": The account established in accordance
with Section 7.02(b) hereof and maintained in the Corporate Trust
Department of the Trustee, provided that the funds in such account
shall not be commingled with other funds held by the Trustee.
"Pool Certification": As defined in Section 3.06(a) hereof.
"Preference Claim": As defined in Section 7.02(b) hereof.
"Premium": As defined in the Premium Letter, dated as of June 27,
1997, among the Certificate Insurer, the Sellers and Ocwen Financial
Services, Inc.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof, and interest thereon received by the
Master Servicer prior to the scheduled due date for such installment,
intended by the Mortgagor as an early payment thereof and not as a
Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment in full of principal of a Mortgage Loan
which is received by the Master Servicer in advance of the scheduled
due date for the payment of such principal (other than the principal
portion of any Prepaid Installment). Any Substitution Adjustment, the
portion of the Loan Purchase Price of any Mortgage Loan purchased from
the Trust pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof
representing principal and the Insurance Proceeds which are to be
applied as a payment of principal on the related Mortgage Loan shall be
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deemed to be Prepayments for all purposes of this Agreement.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, the amount of any shortfall in the payment of interest on the
Mortgage Loans which arises from Prepayments (net of any excess in the
payment of interest on the Mortgage Loans which arise from
Prepayments).
"Prepayment Period": With respect to any Distribution Date, the
period commencing on the calendar day after the prior Determination
Date and ending on the related Determination Date.
"Preservation Expenses": Expenditures made by the Master Servicer
in connection with a foreclosed Mortgage Loan prior to the liquidation
thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums. property restoration or
preservation and certain amounts due with respect to Senior Liens.
"Principal Distribution Amount": The sum of the Fixed Rate Group
Principal Distribution Amount and the Adjustable Rate Group Principal
Distribution Amount.
"Prohibited Transaction": The meaning set forth from time to time
in the definition thereof at Section 860F(a)(2) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Prospectus": The Prospectus dated June 5, 1997 constituting part
of the Registration Statement.
"Prospectus Supplement": The Ocwen Mortgage Loan Asset-Backed
Certificates, Series 1997-1 Prospectus Supplement dated June 19, 1997
to the Prospectus.
"Purchase Option Period": As defined in Section 9.04(a) hereof.
"Qualified Insurer": An insurance company or security or bonding
company qualified to write the related insurance policy in the relevant
jurisdiction, which shall have a claims paying ability of "AA" or
better by either Rating Agency or which has a General Policy Rating of
four crowns or better under Standard & Poor's Ratings Services'
syndicate stability rankings, unless each of the Rating Agencies has
confirmed in writing that an insurance company with a lower claims
paying ability shall not result, in an of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by such Rating
Agency to any Class of Certificates and such insurance company or
security or bonding company is acceptable to the Certificate Insurer.
"Qualified Liquidation": The meaning set forth from time to time
in the definition thereof at Section 860F(a)(4) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in
the definition thereof at Section 860G(a)(3) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has
a Mortgage Rate at least equal to the Mortgage Rate of the Mortgage
Loan being replaced, (ii) is of the same property type (or is a single
family dwelling) and the same occupancy status (or is a primary
residence) as the replaced Mortgage Loan, (iii) shall have an original
term to maturity that is no later than one month following the maturity
of the Mortgage Loan for which it was substituted, (iv) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than
the Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (v)
shall be of the same or higher credit quality classification
(determined in accordance with (a) the credit underwriting guidelines
pursuant to which the replaced Mortgage Loan was underwritten at the
time the replaced Mortgage Loan was underwritten, or (b) the standards
acceptable to the Rating Agencies, which would not cause a downgrade or
removal of the ratings assigned to the Class A Certificates (without
giving effect to any Certificate Insurance Policy) as the Mortgage Loan
which such Qualified Replacement Mortgage replaces, (vi) has a Loan
Balance as of the related Replacement Cut-Off Date equal to or less
than the Loan Balance of the replaced Mortgage Loan as of such
Replacement Cut-Off Date, (vii) shall not provide for a "balloon"
payment if the related
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<PAGE>
Mortgage Loan did not provide for a "balloon" payment (and if such related
Mortgage Loan provided for a "balloon" payment, such Qualified Replacement
Mortgage shall have an original maturity of not greater than (and not more
than one year less than) the original maturity of such related Mortgage
Loan), (viii) shall be a fixed rate Mortgage Loan with the same lien priority
as the replaced Mortgage Loan if the Mortgage Loan being replaced is in the
Fixed Rate Group and shall be an adjustable rate Mortgage Loan with the same
lien priority as the replaced Mortgage Loan if the Mortgage Loan being
replaced is in the Adjustable Rate Group, (ix) satisfies the criteria set
forth from time to time in the definition thereof at Section 860G(a)(4) of
the Code (or any successor statute thereto) and applicable to the Trust and
(x) satisfies the representations and warranties made pursuant to Schedule I
hereof as of the date of substitution.
"Rating Agencies": Collectively, Moody's and Standard &
Poor's or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which the Loan Balance thereof as of the date of
liquidation is in excess of Net Liquidation Proceeds realized
thereon applied in reduction of such Loan Balance.
"Record Date": With respect to each Distribution Date, the
last day of the calendar month immediately preceding the calendar
month in which such Distribution Date occurs.
"Reference Banks": Any leading banks selected by the Trustee
which are engaged transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of
or under common control with the Sellers or any affiliate
thereof, (iii) whose quotations appear on Telerate Page 3750 on
the relevant LIBOR Determination Date and (iv) which have been
designated as such by the Trustee. The initial Reference Banks
may include Banker's Trust Company of California, N.A., Barclay's
Bank PLC, The Chase Manhattan Bank and National Westminster Bank
PLC.
"Register": The register maintained by the Registrar in
accordance with Section 5.04 hereof, in which the names of the
Owners are set forth.
"Registrar": The Trustee, acting in its capacity as
Registrar appointed pursuant to Section 5.04 hereof, or any duly
appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed
by the Depositor with the Securities and Exchange Commission
(Registration Number 333-19779), including all amendments thereto
and including the Prospectus Supplement relating to the Class A
Certificates constituting a part thereof.
"Reimbursement Amount": As of any Distribution Date, the
sum, without duplication, of (x)(i) all Insured Payments
previously paid to the Trustee by the Certificate Insurer and not
previously repaid to the Certificate Insurer pursuant to Section
7.03(c)(i)(C) and (D) hereof or pursuant to the Insurance
Agreement plus (ii) interest accrued on each such Insured Payment
not previously repaid calculated at the Reimbursement Late
Payment Rate and (y)(i) any amounts then due and owing to the
Certificate Insurer under the Insurance Agreement plus (ii)
interest on such amounts to the extent provided in the Insurance
Agreement. The Certificate Insurer shall notify the Trustee, the
Depositor and the Sellers of the amount of any Reimbursement
Amount.
"Reimbursement Late Payment Rate": Means the lesser of (a)
the then applicable highest rate of interest on any Certificate
and (b) the maximum rate payable under applicable usury or
similar laws limiting interest rates. The Reimbursement Late
Payment Rate shall be computed on the basis of the actual number
of days elapsed and a year of 360 days.
"Related Loan Group": The Fixed Rate Group or the Adjustable
Rate Group, as the case may be.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
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"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which
appear at Section 860A through 860G of Part IV of Subchapter M of
Chapter 1 of the Code, related provisions of the Code, and
Treasury regulations and revenue rulings promulgated thereunder,
as the foregoing may be in effect from time to time.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the
Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the
Class A Certificates registered in the Register under the nominee
name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any
Distribution Date, the aggregate Net Monthly Excess Cashflow, if
any, remaining after the making of all applications, transfers
and disbursements described in Sections 7.03(c)(i), 7.03(c)(ii)
and 7.03(c)(iii)(A) through (G) hereof.
"Schedules of Mortgage Loans": The schedules of Mortgage
Loans, separated by Mortgage Loan Group listing each Mortgage
Loan in the related Mortgage Loan Group to be conveyed on the
Startup Day. Such Schedules of Mortgage Loans shall identify
each Mortgage Loan by (i) the Master Servicer's loan number and
(ii) the Mortgagor's name and address (including the state) of
the Mortgaged Property and shall set forth as to each Mortgage
Loan (iii) the lien status thereof, (iv) the Loan-to-Value Ratio
and (v) the Loan Balance as of the Cut-Off Date or Replacement
Cut-Off Date, (vi) the Mortgage Rate thereof (and with respect to
the Mortgage Loans in the Adjustable Rate Group the margin),
(vii) the current scheduled monthly payment of principal and
interest, (viii) the maturity of the related Note, (ix) the
property type, (x) occupancy status, (xi) Appraised Value, (xii)
original term-to-maturity thereof and whether or not such
Mortgage Loan (including related Note) has been modified, and
(xiii) the original principal amount of the Note.
"Scheduled Payment": As of any date of calculation, with
respect to a Mortgage Loan, the then stated scheduled monthly
installment of principal and interest payable thereunder which,
if timely paid, would result in the full amortization of
principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization
purposes, without regard to the actual maturity date).
"Securities Act": The Securities Act of 1933, as amended.
"Sellers": Ocwen Federal Bank FSB and LMAC, Inc.
"Servicing Advance": As defined in Section 8.09(b) and
Section 8.13(a) hereof.
"Servicing Fee": With respect to any Mortgage Loan, an
amount retained by the Master Servicer as compensation for
servicing and administration duties relating to such Mortgage
Loan pursuant to Section 8.15 and equal to 0.50% per annum of the
then outstanding principal amount of such Mortgage Loan as of the
first day of the related Due Period payable on a monthly basis.
"Simple Interest Loans": Any Mortgage Loan as to which,
pursuant to the Note relating thereto, interest is computed and
charged to the Mortgagor at the Mortgage Rate on the outstanding
principal balance of such Note based on the number of days
elapsed between receipt of the Mortgagor's last payment through
receipt of the Mortgagor's most current payment.
"Specified Subordinated Amount": As applicable, the Fixed
Rate Group Specified Subordinated Amount or the Adjustable Rate
Group Specified Subordinated Amount.
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"SR Interest": The sole class of "residual interest" in the
Subsidiary REMIC.
"Standard & Poor's": Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies.
"Startup Day": June 27, 1997 which shall be the "Startup
Day" for each of the Master REMIC and the Subsidiary REMIC within
the meaning of Section 860G(a)(9) of the Code.
"Step Down Conditions": The Step Down Conditions are as
follows:
(a) the Cumulative Loss Percentage for the month in which
the Distribution Date occurs does not exceed the percentage set
out for such period below (provided, that for purposes of such
calculation Realized Losses attributable solely to Cram Down
Losses should be excluded from the calculation of Cumulative Loss
Percentage):
Month after Startup Day in Cumulative Loss
which Distribution Date occurs Percentage
------------------------------ ---------------
30-41 1.50%
42-53 2.00%
54-65 2.40%
66 or more 2.75%;
(b) the average outstanding principal balance of Mortgage
Loans in the Trust more than 2 months Delinquent (including (i)
Mortgage Loans that have gone into foreclosure or have been
discharged by reason of bankruptcy and (ii) REO Property, as to
which the principal balance for purposes of this definition shall
be deemed to be the underlying mortgage balance at the time such
property became REO Property) over the prior 3 months, each
computed as of the last day of the related Due Period, does not
exceed 8% of the aggregate outstanding principal balance of the
Mortgage Loans as of the last day of such period; or
(c) as of the Distribution Date, the aggregate losses in
respect of the Trust within the preceding twelve months do not
exceed 1.00% of the aggregate principal balance of the Mortgage
Loans as of the first day of such period.
"Subordinate Certificates": Collectively, the Class R
Certificates and the Class X Certificates.
"Subordinated Amount": The Fixed Rate Group Subordinated
Amount or the Adjustable Rate Group Subordinated Amount, as the
case may be.
"Subordination Deficiency Amount": With respect to any
Mortgage Loan Group and Distribution Date, the excess, if any, of
(i) the Specified Subordinated Amount applicable to such Mortgage
Loan Group and Distribution Date over (ii) the Subordinated
Amount applicable to such Mortgage Loan Group and Distribution
Date prior to taking into account the payment of any related
Subordination Increase Amounts on such Distribution Date.
"Subordination Deficit": With respect to any Mortgage Loan
Group and Distribution Date, the excess, if any, by which (x) the
aggregate of the related Class A Certificate Principal Balances
relating to such Mortgage Loan Group, after taking into account
all distributions to be made on such Distribution Date exceeds
(y) the aggregate Loan Balances of the Mortgage Loans in the
related Mortgage Loan Group as of the close of business on the
last day of the related Due Period (taking into account all
payments of principal, other than Prepayments, due during the
related Due Period and received on or prior to the related
determination Date or, in connection with Curtailments and Net
Liquidation Proceeds, collected during the related Due Period,
together with all Prepayments received on such Mortgage Loans in
such Loan Group during the related Prepayment Period).
"Subordination Increase Amount": With respect to any
Mortgage Loan Group and Distribution Date, the
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aggregate amount of Net Monthly Excess Cashflow allocated to such Mortgage
Loan Group pursuant to Sections 7.03(c)(ii)(A) and (B) on such Distribution
Date.
"Subordination Reduction Amount": With respect to any
Mortgage Loan Group and Distribution Date, an amount equal to the
lesser of (x) the Excess Subordinated Amount for such Mortgage
Loan Group and Distribution Date and (y) the amount available for
distribution on account of principal with respect to the Class A
Certificates relating to such Mortgage Loan Group on such
Distribution Date.
"Subsidiary REMIC": As described in Section 2.08 hereof.
"Subsidiary REMIC Interest": Either of the Subsidiary REMIC
Regular Interests as described in Section 2.08(f) hereof or the
SR Interest.
Principal of and interest on the Subsidiary REMIC Regular
Interests and the SR Interest shall be allocated to the
corresponding Classes of Certificates in the manner set forth in
the following table:
Corresponding Class of Certificates(1)
<TABLE>
<CAPTION>
Subsidiary REMIC Initial Principal Allocation Allocation
Interest Balance Interest Rate of Principal of Interest
---------------- ----------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
1 $17,727,000 WAC A-1 A-1, X-1
2 $87,118,000 WAC A-2 A-2, X-2
SR (2) (2) R(3) R(3)
</TABLE>
_________________
(1) The amount of principal and interest allocable from a
Subsidiary REMIC Regular Interest to its Corresponding Class
of Certificates on any Distribution Date shall be 100%.
(2) The SR Interest will have no principal balance and will not
bear interest.
(3) The beneficial ownership of the SR Interest (or any
Percentage Interest therein) is represented by the Class R
Certificates.
"Subsidiary REMIC Regular Interest": Any one of the "regular
interests" in the Subsidiary REMIC described in Section 2.08
hereof.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies the
requirements set forth in Section 8.03 hereof in respect of the
qualification of a Sub-Servicer.
"Sub-Servicing Agreement": Any sub-servicing agreement
between the Master Servicer and any Sub-Servicer relating to
servicing and/or administration of certain Mortgage Loans as
permitted by Section 8.03, or any successor agreement.
"Substitution Adjustment": As defined in Section 3.03
hereof.
"Tax Matters Certificate": The Certificate representing the
Tax Matters Person Residual Interest, initially issued to the
Trustee as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust
pursuant to Section 11.18 hereof to act as the
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Tax 11.18 Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest
in the "residual interest" in each of the Master REMIC and
Subsidiary REMIC, which shall be issued to and held by the
Trustee throughout the term hereof unless another Person shall
accept an assignment of such interest and the designation of Tax
Matters Person pursuant to Section 11.18 hereof.
"Termination Notice": As defined in Section 9.04(a) hereof.
"Total Available Funds": As defined in Section 7.02(d)
hereof.
"Total Monthly Excess Cashflow": As defined in Section
7.03(c)(i) hereof.
"Total Monthly Excess Spread": The Fixed Rate Group Total
Monthly Excess Spread or the Adjustable Rate Group Total Monthly
Excess Spread, as the case may be.
"Trust": Ocwen Mortgage Loan Asset-Backed Certificates,
Series 1997-1, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under
this Agreement.
"Trustee": Texas Commerce Bank National Association, a
national banking association, the Corporate Trust Office of which
is located on the date of execution of this Agreement at 600
Travis, 8th Floor, Houston, Texas 77002, Attention: Global Trust
Services--Ocwen Mortgage Loan Asset-Backed Certificates, Series
1997-1, not in its individual capacity but solely as Trustee
under this Agreement, and any successor hereunder.
"Trustee Fee": The fee payable monthly on each Distribution
Date in an amount equal to one-twelfth of 0.02% multiplied by the
then-outstanding Class A Certificate Principal Balance.
"Underwriter": Morgan Stanley & Co. Incorporated.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. As of
any date of determination, the Voting Rights shall be allocated
among the Owners of the Certificates in proportion to the
Percentage Interests of their respective Certificates on such
date.
"Weighted Average Pass-Through Rate": As to the Class A
Certificates and any Distribution Date, the weighted average of
the Class A-1 Pass-Through Rate and the Class A-2 Pass-Through
Rate (such rate calculated for this purpose on the basis of a
360-day year assumed to consist of twelve 30 day months) weighted
by the respective Certificate Principal Balances of the related
Class, as of such Distribution Date prior to taking into account
any distributions to be made on such Distribution Date.
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant
to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "Ocwen Mortgage
Loan Asset-Backed Certificates, Series 1997-1," which shall
contain two separate pools of Mortgage Loans.
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Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
600 Travis, 8th Floor, Houston, Texas 77002, Attention: Global Trust
Services--Ocwen Mortgage Loan Asset-Backed Certificates, Series 1997-1, or at
such other address as the Trustee may designate by notice to the Depositor,
the Sellers, the Master Servicer, the Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Mortgage Loans and the Trust Estate for the benefit of
the Owners in connection therewith; (ii) activities that are necessary,
suitable or convenient to accomplish the foregoing or are incidental thereto
or connected therewith, including the investment of moneys in accordance with
this Agreement; and (iii) such other activities as may be required in
connection with conservation of the Trust Estate and distributions to the
Owners.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties
set forth herein. The Trustee hereby acknowledges and accepts such
appointment, represents and warrants its eligibility as of the Startup Day to
serve as Trustee pursuant to Section 10.08 hereof and declares that it will
hold the Trust Estate in trust upon and subject to the conditions set forth
herein for the benefit of the Owners.
Section 2.05 Reserved.
Section 2.06 Ownership of the Trust.
On the Startup Day, the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be
evidenced by sale of the Certificates as described therein. Thereafter,
transfer of any ownership interest shall be governed by Sections 5.04 and
5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created
under the laws of the State of New York.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The Trust for federal income tax purposes will consist of two
REMICs. The assets of the Subsidiary REMIC will consist of all of the assets
constituting the Trust Estate. The Subsidiary REMIC will issue classes of
interests which will be the Subsidiary REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC) and the SR Interest, which will be the sole class of "residual
interests" in the Subsidiary REMIC. The Trustee will hold the Subsidiary
REMIC Regular Interests in trust for the benefit of the Master REMIC. The
assets of the Master REMIC will consist of the Subsidiary REMIC Regular
Interests. The Master REMIC will issue the Class A-1, Class A-2, Class X-1
and Class X-2 Certificates (which will represent the "regular interests" in
the Master REMIC) and the MR Interest, which will be the sole class of
"residual interests" in the Master REMIC. The Class R Certificates will
represent beneficial ownership of the SR Interest and the MR Interest. The
Owner of the Class R Certificate representing the Tax Matters Person Residual
Interest Percentage is hereby designated as "tax matters person" as defined
in the REMIC Provisions with respect to each of the Master REMIC and the
Subsidiary REMIC.
(b) The Trustee shall, for federal income tax purposes, maintain books
for each of the Master REMIC and the Subsidiary REMIC on a calendar year
basis and report income of each of the Master REMIC and the
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Subsidiary REMIC on an accrual basis.
(c) The Trustee shall cause each of the Master REMIC and the Subsidiary
REMIC to elect to be treated as a REMIC under Section 860D of the Code and
any applicable state tax law. Such elections shall be made by the Trustee on
Form 1066 and any appropriate state tax return for the taxable year ending on
the last day of the calendar year in which the Certificates and the
uncertificated Subsidiary REMIC interests are issued. The Trustee shall
prepare, and shall cause to be timely filed on behalf of each of the Master
REMIC and the Subsidiary REMIC an application for a taxpayer identification
number on Form SS-4, and, upon receipt of such numbers, shall notify the
Master Servicer of such numbers. The Trustee shall prepare and file Form
8811 on behalf of each REMIC within 30 days after the Startup Day, and shall
designate the appropriate person to respond to inquiries of the Owners
regarding original issue discount and related information in accordance with
applicable provisions of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of the Trust shall be resolved in a
manner that preserves the validity of such election of each of the Master
REMIC and the Subsidiary REMIC to be treated as a REMIC.
(d) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the
information described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or
any successor regulation thereto with respect to the Trust. Such information
will be provided in the manner described in Treasury Regulation Section
1.860E-2(a)(5), or any successor regulation thereto.
(e) For federal income tax purposes, the Final Scheduled Distribution
Date for each Class of Certificates is hereby set to be the Distribution Date
indicated below:
Final Scheduled
Class Distribution Date
----- -----------------
Class A-1 Certificates July 25, 2027
Class A-2 Certificates July 25, 2027
Class X-1 Certificates July 25, 2027
Class X-2 Certificates July 25, 2027
Class R Certificates July 25, 2027
(f) The Subsidiary REMIC Regular Interests will consist of Subsidiary
REMIC Regular Interest 1 and Subsidiary REMIC Regular Interest 2. The
Subsidiary REMIC Regular Interest 1 will bear interest at the rate equal to
the weighted average of the Mortgage Rates of the Mortgage Loans in the Fixed
Rate Group. The Subsidiary REMIC Regular Interest 2 will bear interest at
the rate equal to the weighted average of the Mortgage Rates of the Mortgage
Loans in the Adjustable Rate Group. The initial Subsidiary REMIC balance of
Subsidiary REMIC Regular Interest 1 will be equal to the outstanding balances
of the Mortgage Loans in the Fixed Rate Group. Such Subsidiary REMIC balance
will be reduced by amounts distributed in respect of the Principal
Distribution Amount, until the Subsidiary REMIC balance of Subsidiary REMIC
Regular Interest 1 has been reduced to zero. The initial Subsidiary REMIC
balance of Subsidiary REMIC Regular Interest 2 will be equal to the
outstanding balances of the Mortgage Loans in the Adjustable Rate Group.
Such Subsidiary REMIC balance will be reduced by amounts distributed in
respect of the Principal Distribution Amount, until the Subsidiary REMIC
balance of Subsidiary REMIC Regular Interest 2 has been reduced to zero.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Sellers and the Master Servicer for the benefit of the Certificate
Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary except where the failure to so qualify would not have
a material adverse effect on the Depositor, the Owners or the Certificate
Insurer. The Depositor has all requisite corporate power and authority to
own and operate its properties, to carry out its business as presently
conducted and as proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Operative Documents to which
it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not (i)
violate the Depositor's Certificate of Incorporation or Bylaws, (ii)
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or (iii) violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having Jurisdiction over the Depositor or any of its properties,
except where the failure to so comply would not have a material adverse
effect on the Depositor, the Owners or the Certificate Insurer.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in accordance
with the terms hereof and thereof, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity
or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and
adversely affect the condition (financial or other) or operations of the
Depositor or its properties or the consequences of which would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Depositor is a party.
(e) No litigation is pending or, to the best of the Depositor's
knowledge, threatened against the Depositor which litigation is likely to
have consequences that would prohibit its entering into this Agreement or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or is likely to
have consequences that would materially and adversely affect its performance
hereunder.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are
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attributable to the Depositor therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Depositor required to be
stated therein or necessary to make the statements contained therein with
respect to the Depositor, in light of the circumstances under which they were
made, not misleading. The Registration Statement does not contain any untrue
statement of a material fact required to be stated therein or omit to state
any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained to or by the Depositor, as the case may be, by or
from any federal, state or other governmental authority or agency (other than
any such actions, approvals, etc. under any state securities laws, real
estate syndication or "Blue Sky" statutes, as to which the Depositor makes no
such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution
and delivery by the Depositor of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part
of the Depositor and the performance by the Depositor of its obligations
under this Agreement and such of the other Operative Documents to which it is
a party.
(i) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency of the Depositor, the Sellers or the Master Servicer.
(j) The transactions contemplated by the Agreement are in the ordinary
course of business of the Depositor.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Section 3.02 Representations and Warranties of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Trustee for the benefit of each of the Trustee, the Depositor, the
Certificate Insurer and the Owners that as of the Startup Day:
(a) The Master Servicer is a federally chartered savings bank duly
organized, validly existing and in good standing under the laws of the United
States of America and is in compliance with the laws of each state in which
any Mortgaged Property is located to the extent necessary to enable it to
perform its obligations hereunder. The Master Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to
enter into and discharge its obligations under this Agreement and the other
Operative Documents to which it is a party. The Master Servicer is
designated as an approved seller-servicer by FNMA for first and second
mortgage loans and has combined equity and subordinated debt of at least
$1,500,000, as determined in accordance with generally accepted accounting
principles.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the Master
Servicer and will not (i) violate the Master Servicer's Federal Stock Charter
or Bylaws, (ii) constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in the breach
of, any material contract, agreement or other instrument to which the Master
Servicer is a party or by which the Master Servicer is bound or (iii) violate
any statute or any order, rule or regulation of any court,
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governmental agency or body or other tribunal having jurisdiction over the
Master Servicer or any of its properties, except where the failure to so
comply would not have a material adverse effect on the Master Servicer, the
Owners, the Trust or the Certificate Insurer.
(c) This Agreement and the Operative Documents to which the Master
Servicer is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or otherwise)
or operations of the Master Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under the other Operative Documents to which the Master Servicer
is a party.
(e) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which litigation is likely
to have consequences that would prohibit its entering into this Agreement or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or is
likely to have consequences that would materially and adversely affect its
performance hereunder.
(f) No certificate of an officer of the Master Servicer delivered
pursuant to the terms hereof by the Master Servicer contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which
are attributed to the Master Servicer therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Master Servicer or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein with respect to the Master Servicer, in light of
the circumstances under which they were made, not misleading.
(h) Neither the Master Servicer nor any affiliate thereof will report
on any financial statements any part of the Servicing Fee as an adjustment to
the sales price of the Mortgage Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained to or by the Master Servicer, as the case may be,
by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which the Master
Servicer makes no such representation or warranty), that are necessary or
advisable in connection with the execution and delivery by the Master
Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated by
this Agreement and the other Operative Documents on the part of the Master
Servicer and the performance by the Master Servicer of its obligations under
this Agreement and such of the other Operative Documents to which it is a
party.
(j) The collection practices used by the Master Servicer with respect
to the Mortgage Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage servicing business.
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(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Mortgage Loans to
the Trustee.
Upon discovery by any of the Depositor, the Sellers, the Master
Servicer, the Certificate Insurer, any Owner or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Owners or of the
Certificate Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Within 60 days of its discovery or its
receipt of notice of breach, the Master Servicer shall cure such breach in
all material respects and, upon the Master Servicer's continued failure to
cure such breach, may thereafter be removed by the Trustee pursuant to
Section 8.20 hereof, provided, however, that if any party can establish to
the reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the
written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Sellers.
Each Seller hereby severally represents, warrants and covenants to the
Trustee for the benefit of the Certificate Insurer and the Owners that as of
the Startup Day:
(a) The Seller is a corporation or federally chartered savings bank
duly organized, validly existing and in good standing under the laws
governing its creation and existence and, if applicable, is in good standing
as a foreign corporation in each jurisdiction in which the nature of its
business, or the properties owned or leased by it, make such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the Seller, the Owners, the Trust and the Certificate
Insurer. The Seller has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted
and as proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Operative Documents to which
it is a party.
(b) The execution and delivery of this Agreement by the Seller and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Seller and will not (i) violate
the Seller's Certificate of Incorporation or Bylaws, (ii) constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in a breach of, any material contract,
agreement or other instrument to which the Seller is a party or by which the
Seller is bound or (iii) violate any statute or any order, rule or regulation
of any court, governmental agency or body or other having jurisdiction over
the Seller or any of its properties, except where the failure to so comply
would not have a material adverse effect on the Seller, the Owners, the Trust
and the Certificate Insurer.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles
of equity (whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect
the condition (financial or otherwise) or operations of the Seller or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
the Seller is a party.
(e) No litigation is pending or, to the best of the Seller's knowledge,
threatened against the Seller
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which litigation is likely to have consequences that would prohibit its
entering into this Agreement or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Seller or its
properties or is likely to have consequences that would materially and
adversely affect its performance hereunder.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is
responsible in accordance with the Operative Documents or which are
attributable to the Seller therein are true and correct in all material
respects. The Registration Statement does not contain any untrue statement
of a material fact required to be stated therein, or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(h) With respect to each Mortgage Loan transferred by the Seller, upon
the receipt of each Mortgage Loan (including the related Note) and other
items of the Trust Estate by the Trustee under this Agreement, the Trust will
have good title to such Mortgage Loan (including the related Note) and such
other items of the Trust Estate free and clear of any lien, charge, mortgage,
encumbrance or rights of others.
(i) Neither the Seller nor any affiliate thereof will report on any
financial statement any part of the Servicing Fee as an adjustment to the
sales price of the Mortgage Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained to or by the Seller, as the case may be, by or
from any federal, state or other governmental authority or agency (other than
any such actions, approvals, etc., under any state securities laws, real
estate syndication or "Blue Sky" statutes, as to which the Seller makes no
such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution
and delivery by the Seller of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part
of the Seller and the performance by the Seller of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
(k) The origination practices used by the Seller or, to the Seller's
knowledge, the respective originators of the Mortgage Loans with respect to
such Mortgage Loans have been in all material respects, legal, proper,
prudent and customary in the mortgage lending business in the jurisdiction in
which the related Mortgage Properties are located.
(l) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is the Seller aware of any pending
insolvency of any Seller, the Depositor or the Master Servicer.
(m) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(n) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by any of the Master Servicer, the Sellers, the
Depositor, the Certificate Insurer or the
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Trustee (each, for purposes of this paragraph, a "party") of a breach of any
of the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners or the
Certificate Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Each Seller hereby covenants and agrees
that within 60 days of its discovery or its receipt of notice of breach, it
shall cure such breach in all material respects or, the Seller may (or may
cause an affiliate of the Seller to) on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) substitute in lieu of any
Mortgage Loan not in compliance with such representation and warranty a
Qualified Replacement Mortgage and, if the outstanding principal amount of
such Qualified Replacement Mortgage as of the applicable Replacement Cut-Off
Date is less than the Loan Balance of such Mortgage Loan as of such
Replacement Cut-Off Date, deliver an amount equal to such difference together
with the aggregate amount of (A) all P&I Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan, to the extent
unreimbursed to the Master Servicer and (B) all P&I Advances and Servicing
Advances which the Master Servicer has theretofore failed to remit with
respect to such Mortgage Loan (a "Substitution Adjustment") to the Master
Servicer for deposit in the Collection Account or (ii) purchase such Mortgage
Loan from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the Master Servicer for deposit in the Collection Account.
Notwithstanding any provision of this Agreement to the contrary, with respect
to any Mortgage Loan which is not in default or as to which no default is
imminent, no repurchase or substitution pursuant to Section 3.03, 3.04 or
3.06 shall be made unless the Seller, at its own expense, obtains for the
Trustee and the Certificate Insurer an opinion of counsel experienced in
federal income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for the Trust or
otherwise subject the Trust to tax and would not jeopardize the status of
either the Master REMIC or the Subsidiary REMIC as a REMIC (a "REMIC
Opinion") addressed to the Trustee and the Certificate Insurer and acceptable
to the Certificate Insurer and the Trustee. Any Mortgage Loan as to which
repurchase or substitution was delayed pursuant to this Section shall be
repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Mortgage Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Sellers to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations.
(a) Each Seller hereby makes the representations set forth on Schedule
I hereto with respect to the Mortgage Loans transferred by such Seller.
(b) Upon the discovery by any Seller, the Master Servicer, the
Certificate Insurer, or the Trustee (i) that any of the statements set forth
in Schedule I hereto were untrue as of the Startup Day with the result that
the interests of the Owners or the Certificate Insurer are materially and
adversely affected or (ii) that statements set forth in clause (rr) of
Schedule I hereto were untrue in any material respect as of the Startup Day,
the party discovering such breach shall give prompt written notice to the
other parties. Upon the earliest to occur of any Seller's discovery or its
receipt of notice of breach from any one of the other parties, such Seller
hereby covenants and warrants that it shall promptly cure such breach in all
material respects or, subject to the last two sentences of Section 3.03, it
shall on the second Monthly Remittance Date next succeeding such discovery or
receipt of notice (i) substitute in lieu of each Mortgage Loan which has
given rise to the requirement for action by such Seller a Qualified
Replacement Mortgage and deliver the Substitution Adjustment to the Master
Servicer for deposit in the Collection Account or (ii) purchase such Mortgage
Loan from the Trust at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Master Servicer for
deposit in the Collection Account. Other than as specified in Section 6.12
hereof, it is understood and agreed that the foregoing obligation of such
Seller so to substitute or purchase any Mortgage Loan shall constitute the
sole remedy respecting a discovery of any such statement which is untrue in
any material respect in this Section 3.04 available to the Owners, the
Trustee and the Certificate Insurer.
(c) In the event that the Trustee receives written notice that any such
repurchase has resulted in a Prohibited Transaction tax, the Trustee shall
immediately notify the applicable Seller in writing thereof and such Seller
will, within 10 days of receiving notice thereof from the Trustee, deposit
the amount due from the Trust with the Trustee for the payment thereof,
including any interest and penalties, in immediately available funds. In the
event that any Qualified Replacement Mortgage is delivered by any Seller to
the Trust pursuant to Section 3.03,
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Section 3.04 or Section 3.06 hereof, such Seller shall be obligated to take
the actions described in Section 3.04(b) with respect to such Qualified
Replacement Mortgage upon the discovery by any of the Owners, any Seller, the
Master Servicer, the Certificate Insurer, or the Trustee that the statements
set forth in clause (rr) of Schedule I hereto are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the
Trust or that any of the other statements set forth in Schedule I hereto are
untrue on the date such Qualified Replacement Mortgage is conveyed to the
Trust such that the interests of the Owners or the Certificate Insurer in the
related Qualified Replacement Mortgage are materially and adversely affected;
provided, however, that for the purposes of this subsection (c) the
statements in Schedule I hereto referring to items "as of the Cut-Off Date"
or "as of the Startup Day" shall be deemed to refer to such items as of the
date such Qualified Replacement Mortgage is conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to
the occurrence of any condition requiring the repurchase or substitution of
any Mortgage Loan pursuant to this Article III or the eligibility of any
Mortgage Loan for the purpose of this Agreement.
Notwithstanding the fact that a representation contained in Schedule I
hereto may be limited to a Seller's knowledge, such limitation shall not
relieve such Seller of its repurchase obligation under the Section 3.05
hereof, or its obligations under Section 6.12 hereof.
(f) The representations and warranties contained in Section 3.03 and
3.04 shall not be impaired by any review and examination of Files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Depositor to review or examine such Files or documents and shall
inure to the benefit of any assignee, transferee or designee of the
Depositor, including the Trustee for the benefit of holders of Certificates
evidencing an interest in all or a portion of the Mortgage Loans.
With respect to the representations and warranties contained in Sections
3.03 and 3.04 that are made to the knowledge or the best of knowledge of a
Seller or as to which the Seller has no knowledge (other than Section
3.03(e), the penultimate sentence of Schedule I, subparagraph (o), and
Schedule I, subparagraph (v)), if it is discovered that the substance of any
such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest therein of the Depositor, its assignee, transferee, or
designee, then notwithstanding the Seller's lack of knowledge with respect to
the substance of such representation and warranty being inaccurate at the
time of representation and warranty was made, the Seller shall take such
action described in the last paragraph of Section 3.03, if such
representation and warranty is contained in Section 3.03, or Section 3.04(b),
if such representation and warranty is contained in Section 3.04, in respect
of such Mortgage Loan.
Section 3.05 Conveyance of the Mortgage Loans and Qualified Replacement
Mortgages.
(a) On the Startup Day, each Seller, concurrently with the execution
and delivery hereof, hereby transfers, assigns, sets over and otherwise
conveys to the Depositor and the Depositor, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys,
without recourse, to the Trustee for the benefit of the Owners all of its
respective right, title and interest in and to the Trust Estate; provided,
however, that each Seller reserves and retains all of its right, title and
interest in and to principal (including Prepayments) and interest collected
on each Mortgage Loan transferred by it on or prior to the Cut-Off Date. The
transfer by the Depositor of the Mortgage Loans set forth on the Schedule of
Mortgage Loans to the Trustee is absolute and is intended by the Owners and
all parties hereto to be treated as a sale by the Depositor.
It is intended (i) that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Mortgage Loans conveying good
title thereto free and clear of any liens and encumbrances from each Seller
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to the Depositor and from the Depositor to the Trust except as set forth in
item (g) of Schedule I and except for other liens that will be simultaneously
released and (ii) that the Mortgage Loans not be part of the Depositor's or
the Sellers' estates in the event of insolvency. In the event that such
conveyance is deemed to be a loan, the parties intend that each Seller shall
be deemed to have granted to the Depositor and the Depositor shall be deemed
to have granted to the Trustee a first priority perfected security interest
in the Trust Estate, and that this Agreement shall constitute a security
agreement under applicable law.
(b) In connection with the transfer and assignment of the Mortgage
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the
Startup Day with respect to each Mortgage Loan, (A) the original
Note, endorsed by the applicable Seller or the originator of such
Mortgage Loan, without recourse, in the following form: "Pay to the
order of Texas Commerce Bank National Association as Trustee or
Texas Commerce Bank National Association as custodian without
recourse", with all intervening endorsements necessary to show a
complete chain of endorsement from the originator to the Trustee,
or, if such original Note cannot be located, a photocopy thereof
together with a lost Note affidavit duly executed by an Authorized
Officer of the applicable Seller; (B) the original recorded
Mortgage or a copy thereof certified as true and correct by the
applicable public recording office; (C) a duly executed assignment
of the Mortgage (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); (D) the original
recorded assignment or assignments or a copy of the Mortgage
together with all interim recorded assignments of such Mortgage
certified as true and correct by the applicable public recording
office; (E) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
and (F) the original lender's title policy or attorney's opinion of
title or a copy thereof certified as true and correct by the
applicable insurer 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; and
(ii) Reserved;
(iii) deliver the title insurance policy, title
opinion or title searches, the original Mortgages and such
recorded assignments, together with originals or duly
certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by the Depositor
(but in any event, with respect to any Mortgage as to which
original recording information has been made available to
the Depositor, within one year after the Startup Day).
The Master Servicer, at its own expense, shall promptly (and in no event
later than five Business Days following the Closing Date) submit or cause to
be submitted for recording in the appropriate public office for real property
records, each assignment of Mortgage referred to in Section 3.05(b)(i)(C)
above. In the event that any such assignment of Mortgage is lost or returned
unrecorded because of a defect therein, the applicable Seller shall promptly
prepare or cause to be prepared a substitute assignment of Mortgage or cure
or cause to be cured such defect, as the case may be, and thereafter the
Master Servicer shall cause each such assignment of Mortgages to be duly
recorded.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Master Servicer shall be deemed to
have satisfied its obligations hereunder upon delivery to the Trustee of a
copy of such assignment or assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof.
The Depositor hereby appoints the Trustee its attorney-in-fact for the
purpose of, and with full power in, preparing, executing and recording, on
its behalf, all assignments of Mortgages in the event that the Depositor
fails to do so on a timely basis.
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Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Master Servicer.
(c) In the case of Mortgage Loans which have been prepaid in full after
the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer of the Depositor in the form
set forth in Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of such Seller
in and to any Qualified Replacement Mortgage delivered to the Trustee on
behalf of the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06
hereof and all its right, title and interest to principal and interest on
such Qualified Replacement Mortgage after the applicable Replacement Cut-Off
Date; provided, however, that such Seller shall reserve and retain all right,
title and interest in and to payments of principal and interest received on
such Qualified Replacement Mortgage on or prior to the applicable Replacement
Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, on the applicable Seller's order, all of its right, title and
interest in and to such released Mortgage Loan and all the Trust's right,
title and interest to principal and interest on such released Mortgage Loan
after the applicable Replacement Cut-Off Date; provided, however, that the
Trust shall reserve and retain all right, title and interest in and to
payments of principal and interest on such released Mortgage Loan on or prior
to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller
agrees to (i) deliver without recourse to the Trustee on the date of delivery
of such Qualified Replacement Mortgage the documents set forth in Section
3.05 (b) (i) and (ii) deliver the original Qualified Replacement Mortgage,
together with original or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt thereof by such Seller
(but in any event within 120 days after the date of conveyance of such
Qualified Replacement Mortgage).
(g) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage, the Trustee shall deliver
on the date of conveyance of such Qualified Replacement Mortgage and on the
order of the applicable Seller (i) the original Note relating thereto,
endorsed in blank, (ii) the original Mortgage so released and all assignments
relating thereto, including an assignment of such Mortgage to such Seller and
(iii) such other documents as constituted the File with respect thereto.
(h) If a Mortgage assignment is lost or is returned from the recorder's
office unrecorded due to a defect therein, the applicable Seller shall
prepare a substitute assignment or cure such defect, as the case may be, and
thereafter cause such substitute or cured assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions
of Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by the Sellers or the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto,
as well as any other assets included in the definition of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the
conditions set forth herein for the benefit of the Owners. The Trustee
agrees, for the benefit of the Owners and the Certificate Insurer, to review
such items within 45 days after the Startup Day (or, with respect to any
document delivered after the Startup Day, within 45 days of receipt and with
respect to any Qualified Replacement Mortgage, within 45 days after the
assignment thereof) and to deliver to the Depositor, the Sellers, the Master
Servicer and the Certificate Insurer a certification in the form attached
hereto as Exhibit F (a "Pool Certification") to the effect that, as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any
Mortgage Loan paid in full or any
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Mortgage Loan specifically identified in such Pool Certification as not
covered by such Pool Certification), (i) all documents required to be
delivered to it pursuant to Section 3.05(b)(i) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing documents, the information
set forth in clauses (i) and (ii) of the definition of the Schedule of
Mortgage Loans, accurately reflects the information set forth in the File,
subject, in each case, to such exceptions as provided in Section 3.06(b). The
Trustee shall have no responsibility for reviewing any File except as
expressly provided in this subsection 3.06(a). Without limiting the effect of
the preceding sentence, in reviewing any File, the Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment is in proper form, whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any applicable
jurisdiction, but shall only be required to determine whether a document has
been executed, that it appears to be what it purports to be and, where
applicable, that it purports to be recorded. The Trustee shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face, nor shall the Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received,
or is unrelated to the Mortgage Loans identified in the Schedule of Mortgage
Loans, or that any Mortgage Loan does not conform to the description thereof
as set forth in the Schedule of Mortgage Loans, the Trustee shall promptly so
notify the Depositor, the Sellers, the Certificate Insurer and the Owners.
In performing any such review, the Trustee may conclusively rely on the
Sellers as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Trustee's review
of the items delivered by the Sellers pursuant to Section 3.05 (b) (i) is
limited solely to confirming that the documents listed in Section 3.05 (b)
(i) have been executed and received, relate to the Files identified in the
Schedule of Mortgage Loans and conform to the description thereof in the
Schedule of Mortgage Loans. The Sellers agree to use reasonable efforts to
remedy a material defect in a document constituting part of a File of which
it is so notified by the Trustee. If, however, within 30 days after the
Trustee's notice to it respecting such defect the Sellers have not remedied
the defect and the defect materially and adversely affects the interest in
the related Mortgage Loan of the Owners or of the Certificate Insurer, the
applicable Seller will (or will cause an affiliate of such Seller to) on the
next succeeding Monthly Remittance Date (i) substitute in lieu of such
Mortgage Loan a Qualified Replacement Mortgage and deliver the Substitution
Adjustment to the Master Servicer for deposit in the Collection Account;
provided, however, that in all events, any such substitution shall occur not
later than 3 months from the Startup Day, or, in the case of a Mortgage Loan
that is a "defective" obligation under the REMIC Provisions, within two years
of the Startup Day or (ii) purchase such Mortgage Loan at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Master Servicer for deposit in the Collection Account.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 12th month after the Startup Day indicating the current
status of the exceptions previously indicated on the Pool Certification (the
"Final Certification"). After delivery of the Final Certification, the
Trustee shall provide to the Certificate Insurer no less frequently than
monthly updated certifications indicating the then current status of
exceptions, until all such exceptions have been eliminated.
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the
Trustee shall authenticate and deliver the Certificates on behalf of the
Trust.
Section 4.02 Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York (or at such other location acceptable to the Sellers), the Sellers will
sell and convey the Mortgage Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will sell and
convey the Mortgage Loans and the money, instruments and other property
related thereto to the Trustee, and the Trustee will deliver (i) to the
Underwriter the Class A Certificates with an aggregate Percentage Interest in
each Class equal to 100%, registered in the name of Cede & Co., or in such
other names as the Underwriter shall direct, against payment of the purchase
price thereof by wire transfer of immediately available funds to the Trustee
for the Depositor, and (ii) to the respective registered owners thereof, a
Class X-1 Certificate and a Class X-2 Certificate, each with a Percentage
Interest equal to 86.9994%, registered in the name of the Ocwen Federal Bank
FSB and a Class X-1 Certificate and a Class X-2 Certificate, each with a
Percentage Interest equal to 13.0006%, registered in the name of LMAC, Inc.,
and (iii) a Class R Certificate with a Percentage Interest in each component
interest thereof equal to 86.9985%, registered in the name of the Ocwen
Federal Bank FSB, a Class R Certificate with a Percentage Interest in each
component interest thereof equal to 13.0005% registered in the name of LMAC,
Inc. and a Class R Certificate with a Percentage Interest in each component
interest thereof equal to .001%, registered in the name of the Trustee.
Upon the Trustee's receipt of the entire net proceeds of the sale of the
Class A Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTEREST
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein
with respect to the Certificates to "principal" and "interest", no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and except for the rights
of the Trustee on behalf of the Owners of the Class A Certificates with
respect to the Certificate Insurance Policy). Subject to Section 8.09, the
Certificates are payable solely from payments received on or with respect to
the Mortgage Loans, moneys in the Collection Account, earnings on moneys and
the proceeds of property held as a part of the Trust Estate and, with respect
to the Class A Certificates upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive
monthly on each Distribution Date, in order of priority of distributions with
respect to such Class of Certificates as set forth in Section 7.03, a
specified portion of such payments with respect to the Mortgage Loans (and,
with respect to the Owners of the Class A Certificates, Insured Payments
deposited in the Distribution Account), pro rata in accordance with such
Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has
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made the final distribution thereon shall be deemed cancelled and shall no
longer be outstanding for any purpose of this Agreement and the related
Certificate Insurance Policy, whether or not such Certificate is ever
returned to the Trustee, except to the extent of a Reimbursement Amount on
such Class of Certificates, in which case the Certificate Insurer will be
subrogated to the rights of such Owner and the Class of Certificate will not
be deemed cancelled.
Section 5.02 Forms.
The Class A Certificates, the Class X Certificates and the Class R
Certificates shall be in substantially the forms set forth in Exhibits A, B
and C hereof, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement or as may be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any applicable
securities laws.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the manual
or facsimile signature of one of the Trustee's Authorized Officers and shall
be authenticated by the manual or facsimile signature of one of the Trustee's
Authorized Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication
of such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and the
registration of transfer of Certificates. The Trustee is hereby initially
appointed Registrar for the purpose of registering Certificates and transfers
of Certificates as herein provided. The Certificate Insurer, the Owners and
the Trustee shall have the right to inspect the Register during the Trustee's
normal hours and to obtain copies thereof, and the Trustee shall have the
right to rely upon a certificate executed on behalf of the Registrar by an
Authorized Officer thereof as to the names and addresses of the Owners of the
Certificates and the principal amounts and numbers of such Certificates.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as
the location of the Register, upon the direction of the Registrar the Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of a like Class and
in the aggregate principal amount or Percentage Interest of the Certificate
so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate original principal amount or percentage interest
and bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and
deliver the Certificate or Certificates which the Owner making the exchange
is entitled to receive.
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(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or
exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer
or exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise
provided in subsection (h), be initially issued in the form of a single fully
registered Class A Certificate of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the
Register in the name of Cede & Co., or any successor thereto, as nominee for
the Depository.
On the Startup Day, the Class A-1 Certificates and the Class A-2
Certificates shall be issued in denominations of no less than $1,000 and
multiples of $1,000 in excess thereof (except that one certificate in each
class may be issued in an amount less than $1,000 or in an integral multiple
other than $1,000).
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Certificate
Insurer, the Depositor, the Master Servicer, the Sellers and the Trustee
shall have no responsibility or obligation to Direct or Indirect Participants
or beneficial owners for which the Depository holds Class A Certificates from
time to time as a Depository. Without limiting the immediately preceding
sentence, the Depositor, the Certificate Insurer, the Master Servicer, the
Sellers and the Trustee shall have no responsibility or obligation with
respect to (i) the accuracy of the records of the Depository, Cede & Co. , or
any Direct or Indirect Participant with respect to the ownership interest in
the Class A Certificates, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a registered Owner of a Class A
Certificate as shown in the Register, of any notice with respect to the Class
A Certificates or (iii) the payment to any Direct or Indirect Participant or
any other Person, other than a registered Owner of a Class A Certificate as
shown in the Register, of any amount with respect to any distribution of
principal or interest on the Class A Certificates. No Person other than a
registered Owner of a Class A Certificate as shown in the Register shall
receive a certificate evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of principal and interest by the mailing of checks or drafts to the
registered Owners of Class A Certificates appearing as registered Owners in
the registration books maintained by the Trustee at the close of business on
a Record Date, the name "Cede & Co." in this Agreement shall refer to such
new nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing, qualified or
able to discharge properly its responsibilities as nominee and depository
with respect to the Class A Certificates and the Depositor or the Trustee is
unable to locate a qualified successor, (ii) the Depositor at its sole option
elects to terminate the book-entry system through the Depository or (iii)
after the occurrence of an Event of Default, beneficial owners having not
less than 51% of the Voting Rights evidenced by the Class A Certificates
advise the Trustee and the Depository through the Direct Participants in
writing that the continuation of a book-entry system through the Depository
is no longer in the best interests of
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beneficial owners, the Class A Certificates shall no longer be restricted to
being registered in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the Depositor may
determine that the Class A Certificates shall be registered in the name of
and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense,
or such depository's agent or designee but, if the Depositor does not select
such alternative global book-entry system, then the Class A Certificates may
be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(1) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such
Class A Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) 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 (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in
the case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee and the Certificate Insurer harmless,
then, in the absence of notice to the Trustee or the Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately
with any and all other Certificates of the same Class duly issued hereunder
and such mutilated, destroyed, lost or stolen Certificate shall not be valid
for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Certificate Insurer, the Trustee and any agent of 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 with respect to
such Certificate and for all other purposes whatsoever, and neither the
Certificate Issuer, the Trustee nor any agent of the Trustee shall be
affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement.
All cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights of Subordinate
Certificates.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether
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pursuant to a purchase, a transfer resulting from a default under a secured
lending agreement or otherwise) shall be made to a Disqualified Organization
or an agent of a Disqualified Organization or any Person that is not a
"United States person" as defined in Section 7701(a)(30) of the Code. The
transfer, sale or other disposition of a Class R Certificate (whether
pursuant to a purchase, a transfer resulting from a default under a secured
lending agreement or otherwise) to a Disqualified Organization shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate.
Furthermore, in no event shall the Trustee accept surrender for transfer or
registration of transfer, or register the transfer, of any Class R
Certificate nor authenticate and make available any new Class R Certificate
unless the Trustee has received an affidavit from the proposed transferee in
the form attached hereto as Exhibit H. Each holder of a Class R Certificate
by his acceptance thereof, shall be deemed for all purposes to have consented
to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership
of a Class X Certificate or a Class R Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act
and any applicable state securities laws or is made in accordance with said
Act and laws. In the event such a transfer is to be made within two years
from the Startup Day, (i) the Trustee shall require (a) if such transfer is
purportedly being made in reliance on Rule 144A under the Securities Act of
1933, as amended, written certifications from the Owner desiring to effect
the transfer and from such Owner's prospective transferee, substantially in
the forms of Exhibits D, H and J hereto (with respect to the Class R
Certificates) or Exhibit D hereto (with respect to the Class X Certificates)
or (b) in all other cases a written opinion of counsel acceptable to and in
form and substance satisfactory to the Depositor, the Registrar, the Trustee
and the Certificate Insurer in the event that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and
laws, which opinion of counsel shall not be an expense of the Trustee, the
Trust Estate, the Registrar, the Master Servicer, the Sellers, the Depositor
or the Certificate Insurer, and (ii) the Trustee shall require the transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Depositor, the Registrar, the Trustee and the Certificate
Insurer certifying to the Trustee, the Certificate Insurer, the Registrar and
the Depositor the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee, the Trust Estate, the Certificate
Insurer, the Registrar, the Master Servicer, the Sellers or the Depositor.
The Owner of a Class X Certificate or a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Certificate Insurer, the Depositor, the Master Servicer, the Registrar
and the Sellers against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.
(c) No transfer of a Class X or Class R Certificate shall be made
unless the Registrar and Trustee shall have received either: (i) a
representation letter from the transferee of such Class X or Class R
Certificate, acceptable to and in form and substance satisfactory to the
Registrar, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 4975
of the Code (collectively, a "Plan") nor is acting on behalf of any Plan nor
using the assets of any Plan to effect such transfer or in the case of an
insurance company purchasing such Certificates, with funds from its general
account, the transfer is covered by the Prohibited Transaction Class
Exemption 95-60 or (ii) in the event that any Class X or Class R Certificates
is purchased by a Plan, or by a person or entity acting on behalf of any Plan
or using the assets of any Plan to effect such transfer, an opinion of
counsel, acceptable to and in form and substance satisfactory to the
Depositor, the Trustee, the Certificate Insurer and the Registrar, which
opinion of counsel shall not be at the expense of the Trustee or the Trust,
to the effect that the purchase or holding of any Class X or Class R
Certificates will not result in the assets of the Trust being deemed to be
"plan assets," will not cause the Trust to be subject to the fiduciary
requirements and prohibited transaction provisions of ERISA and the Code, and
will not subject the Depositor, Sellers, Registrar, Master Servicer,
Certificate Insurer or the Trustee to any obligation or liability in addition
to those expressly undertaken under this Agreement. Notwithstanding anything
else to the contrary herein, any purported transfer of a Certificate to or on
behalf of any Plan without the delivery to the Trustee and the Certificate
Insurer of an opinion of counsel as described above shall be null and void
and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
an affiliate of any Seller unless the Trustee and the Certificate Insurer
shall have been furnished with an opinion of counsel, at the expense
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of such Seller acceptable to the Certificate Insurer and the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. To the extent any payment to an Owner
of a Class A Certificate constitutes an Insured Payment, such payment will
not be made to any Seller, the Depositor or the Master Servicer or any
Sub-Servicer.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Distribution Date, the Trustee will withdraw amounts from the
Distribution Account and make the distributions with respect to the
Certificates in accordance with the terms of the Certificates and this
Agreement. Such distributions shall be made (i) by check mailed on each
Distribution Date or (ii) if requested by any Owner of (A) a Class A-1 or
Class A-2 Certificate having an original principal balance of not less than
$1,000,000 or (B) a Class X Certificate or Class R Certificate having a
Percentage Interest of not less than 10% in writing not later than five
Business Days prior to the applicable Record Date (which request does not
have to be repeated unless it has been withdrawn), to such Owner by wire
transfer to an account within the United States designated no later than five
Business Days prior to the related Record Date, made on each Distribution
Date, in each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Distribution
Account or from Insured Payments shall be made by and on behalf of the
Trustee, and no amounts so withdrawn from the Distribution Account for
payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) Whenever the Trustee has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Distribution Date, cause to be deposited with such
Paying Agents in immediately available funds an aggregate sum sufficient to
pay the amounts then becoming due (to the extent funds are then available for
such purpose in the Distribution Account for the Class to which such amounts
are due), such sum to be held in trust for the benefit of the Owners entitled
thereto.
(c) The Trustee may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which the sums were held by
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect
to such money.
(d) Each Paying Agent, including the Trustee on behalf of the Trust,
shall comply with all requirements of the Code and applicable state and local
law with respect to the withholding from any distributions made by it to any
Owner of any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due
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with respect to any Class A Certificate and remaining unclaimed by the Owner
of such Class A Certificate for the period then specified in the escheat laws
of the State of New York after such amount has become due and payable shall
be discharged from such trust and be paid to the Owners of the Class R
Certificates; and the Owner of such Class A Certificate shall thereafter, as
an unsecured general creditor, look only to the Owners of the Class R
Certificates for payment thereof (but only to the extent of the amounts so
paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent before being
required to make any Such payment, may, at the expense of the Trust, cause to
be published once, in the eastern edition of The Wall Street Journal, notice
that such money remains unclaimed and that, after a date specified therein,
which shall be not fewer than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be paid to the Owners of
the Class R Certificates. The Trustee shall, at the direction of the Owners
of a majority of the Percentage Interest in the Class R Certificates also
adopt and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable
but not claimed is determinable from the records of the Registrar, the
Trustee or any Paying Agent, at the last address of record for each such
Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of
the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such
other action upon such request from the Depositor or the Certificate Insurer,
to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the
Owners and the Certificate Insurer represented thereby, in
such Trust Estate against the claims of all Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositor to take any action pursuant to this
Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and at the written
direction of the Master Servicer or the Certificate Insurer shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or in
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights
of the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by
the Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer or, if there are no longer any
Class A Certificates then outstanding, by such majority of the Percentage
Interests represented by the Class X Certificates and the Class R
Certificates; provided, further, however, that if there is a dispute with
respect to payments under the Certificate Insurance Policy the Trustee's sole
responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or
with the Trustee's fiduciary duties hereunder, or adversely affect its rights
and immunities hereunder.
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(d) Subject to and conditioned upon payment of any interest or
principal with respect to the Class A Certificates by or on behalf of the
Certificate Insurer, the Trustee shall assign to the Certificate Insurer all
rights to the payment of interest or principal on the Class A Certificates
which are then due for payment to the extent of all payments made by the
Certificate Insurer and the Certificate Insurer may exercise any option,
vote, right, power or the like with respect to Class A Certificates to the
extent it has made a payment pursuant to the Certificate Insurance Policy.
The Trustee agrees that the Certificate Insurer shall be subrogated to all of
the rights to payment of the Owners of the Class A Certificates or in
relation thereto to the extent that any payment of principal or interest was
made to such Owners with payments made under the Certificate Insurance Policy
by the Certificate Insurer.
(e) The Trustee shall surrender the Certificate Insurance Policy to the
Certificate Insurer for cancellation upon expiration of the term of the
Certificate Insurance Policy.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on, or make any deduction from the
distributions payable in respect of the Certificates (other than
amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Owner by reason of
the payment of any taxes levied or assessed upon any of the Trust
Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(v) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien,
charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
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Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance
Policy, or for the appointment of a receiver or trustee, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of
such Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by the Class A Certificates then
Outstanding or, if there are no Class A Certificates then
Outstanding, by such percentage of the Percentage
Interests represented by the Class X Certificates and
the Class R Certificates, shall have made written
request to the Trustee to institute such proceeding in
its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute such proceeding;
(5) as long as any Class A Certificates are Outstanding,
the Certificate Insurer consented in writing thereto
(unless the Certificate Insurer is the party against
whom the proceeding is directed); and
(6) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by
the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or, if there
are no Class A Certificates then Outstanding, by such
majority of the Percentage Interests represented by the
Class X Certificates and the Class R Certificates;
it being understood and intended that no one or more Owners shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right
under this Agreement, except in the manner herein provided and for the equal
and ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing
less than a majority of the applicable Class of Certificates and each
conforming to paragraphs (1)-(6) of this Section 6.07, the Certificate
Insurer in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provision of this Agreement (unless the
Certificate Insurer is the party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect
to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of
such Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. Except as otherwise provided herein, the
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assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect
to any event described in Section 8.20(a) or (b) shall impair any such right
or remedy or constitute a waiver of any such event or an acquiescence
therein. Every right and remedy given by this Article VI or by law to the
Trustee, the Certificate Insurer or the Owners may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee, the
Certificate Insurer or the Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class X Certificates and the Class R Certificates then
Outstanding, may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited
to, those powers set forth in Section 6.03 and Section 8.20 hereof, provided
that:
(i) such direction shall not be in conflict with any
rule of law or with this Agreement;
(ii) the Trustee shall have been provided with
indemnity satisfactory to it; and
(iii) the Trustee may take any other action deemed
proper by the Trustee, as the case may be, which
is not inconsistent with such direction; provided,
however, that the Trustee need not take any action
which it determines might involve it in liability
or may be unjustly prejudicial to the Owners not
so directing.
Section 6.12 Indemnification.
The Depositor hereby indemnifies and holds the Trustee, the Master
Servicer, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Master Servicer, the Certificate Insurer and any Owner may
sustain in any way related to the negligent or willful failure of the
Depositor to perform its duties in compliance with the terms of this
Agreement. The Depositor shall immediately notify the Trustee, the
Certificate Insurer and each Owner if such a claim is made that may result in
such claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses, and the Depositor
shall assume (with the consent of the Trustee) the defense of any such claim
and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment decree which may
be entered against the Master Servicer, the Sellers, the Trustee, the Master
Servicer, the Certificate Insurer and/or any Owner in respect of such claim.
In addition to the foregoing, each Seller hereby indemnifies and holds the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
and other costs, fees and expenses that the Trustee, the Certificate Insurer
and any Owner may sustain in any way related to the breach by such Seller of
its representations and warranties set forth in Section 3.04(a) hereof with
respect to a Mortgage Loan if such Mortgage Loan qualifies as a "high cost
mortgage" pursuant to Section 226.32 of the Truth-in-Lending Act, as amended.
The provisions of this Section 6.12 shall survive the termination of this
Agreement and the resignation or removal of the Trustee hereunder and the
payment of the outstanding Certificates.
Section 6.13 Access to Owners of Certificates' Names and Addresses.
(a) If any Owner (for purposes
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of this Section 6.13, an "Applicant") applies in writing to the Trustee, and
such application states that the Applicant desires to communicate with other
Owners with respect to their rights under this Agreement or under the
Certificates and is accompanied by a copy of the communication which such
Applicant proposes to transmit, then the Trustee shall, at the expense of
such Applicant, within ten (10) Business Days after the receipt of such
application, furnish or cause to be furnished to such Applicant a list of the
names and addresses of the Owners of record as of the most recent Record Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason
of the disclosure of any information as to the names and addresses of the
owners hereunder, regardless of the source from which such information was
derived.
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable
by the Trustee pursuant to this Agreement or the Certificate Insurance
Policy, including (a) all payments due on the Mortgage Loans in accordance
with the respective terms and conditions of such Mortgage Loans and required
to be paid over to the Trustee by the Master Servicer or by any Sub-Servicer
and (b) Insured Payments. The Trustee shall hold all such money and property
received by it, other than pursuant to or as contemplated by Section 6.02(c)
hereof, as part of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Distribution
Account, which is to be held by the Trustee on behalf of the Owners of the
Certificates, the Trustee and the Certificate Insurer, as their interests may
appear.
(b) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Policy
Payments Account, which is to be held by the Trustee on behalf of the Owners
of the Class A Certificates, the Trustee and the Certificate Insurer, as
their interests may appear. The Trustee shall have exclusive control over,
and sole right of withdrawal from, such account. The Trustee shall deposit
any amount paid under the Certificate Insurance Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to Owners of
Class A Certificates of Insured Payments and such amount may not be applied
to satisfy any costs, expenses or liabilities of the Master Servicer, the
Trustee or the Trust. Amounts paid under the Certificate Insurance Policy
shall be transferred to the Distribution Account in accordance with the next
succeeding paragraph and disbursed by the Trustee to Owners of Class A
Certificates in accordance with Section 7.03. It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks
or wire transfers used to pay the other funds available to be distributed to
such Owners. However, the amount of any payment of principal of or interest
on the Class A Certificates to be paid from funds transferred from the Policy
Payments Account shall be noted as provided in the second succeeding
paragraph and in the statement to be furnished to Owners of the Class A
Certificates and to the Certificate Insurer pursuant to Section 7.09. Funds
held in the Policy Payments Account shall not be invested.
On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of any funds received by
the Trustee as a result of any claim under the Certificate Insurance Policy,
to the extent required to make any Insured Payment on such Distribution Date,
shall be withdrawn from the Policy Payments Account and deposited in the
Distribution Account and applied by the Trustee, together with the other
funds to be withdrawn from the Distribution Account pursuant to Section 7.03
directly to the payment in full of any such Insured Payment. Funds received
by the Trustee as a result of any claim under the Certificate Insurance
Policy shall be deposited by the Trustee in the Policy Payments Account and
used solely for payment
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to Owners of the Class A Certificates and may not be applied to satisfy any
costs, expenses or liabilities of the Master Servicer, the Trustee or the
Trust. Any funds remaining in the Policy Payments Account on the first
Business Day following a Distribution Date shall be remitted to the
Certificate Insurer, pursuant to the instructions of the Certificate Insurer,
by the end of such Business Day.
The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which the Trustee has
received written notice, seeking the avoidance as a preferential transfer
under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any Guaranteed Distribution made with respect to the
Class A Certificates. Each Owner of the Class A Certificates, by its
purchase of Class A Certificates, the Master Servicer and the Trustee hereby
agree that the Certificate Insurer (so long as no Certificate Insurer Default
has occurred and is continuing) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of
any appeal of any order relating to such Preference Claim and (ii) the
posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Master Servicer, the Trustee
and each Owner of the Class A Certificates in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding with respect to any court order issued in connection
with any such Preference Claim.
(c) On the Monthly Remittance Date the Trustee shall determine (subject
to the terms of Section 10.03(j) hereof, based solely on information provided
to it by the Master Servicer) with respect to the related Distribution Date,
the amount that is on deposit in the Distribution Account as of such
Distribution Date for the Fixed Rate Group (disregarding the amount of any
Insured Payments as well as any amounts that cannot be distributed to the
Owners of the Class A Certificates, if any, by the Trustee as a result of a
proceeding under the United States Bankruptcy Code), which amount will be
equal to the sum of (x) the amount on deposit therein with respect to such
Fixed Rate Group excluding the amount of any Total Monthly Excess Cashflow
from the Fixed Rate Group included in such amount plus (y) any amount of
Total Monthly Excess Cashflow from the Adjustable Rate Group to be applied on
such Distribution Date to the Fixed Rate Certificates. The amount described
in clause (x) of the preceding sentence with respect to each Distribution
Date is the "Fixed Rate Group Available Funds"; the sum of the amounts
described in clauses (x) and (y) of the preceding sentence with respect to
each Distribution Date is the "Fixed Rate Group Total Available Funds."
(d) On the Monthly Remittance Date the Trustee shall determine (subject
to the terms of Section 10.03(j) hereof, based solely on information provided
to it by the Master Servicer) with respect to the related Distribution Date,
the amount that is on deposit in the Distribution Account as of such
Distribution Date for the Adjustable Rate Group (disregarding the amount of
any Insured Payments as well as any amounts that cannot be distributed to the
Owners of the Class A Certificates, if any, by the Trustee as a result of a
proceeding under the United States Bankruptcy Code), which amount will be
equal to the sum of (x) the amount on deposit therein with respect to such
Adjustable Rate Group excluding the amount of any Total Monthly Excess
Cashflow from the Adjustable Rate Group included in such amount plus (y) any
amount of Total Monthly Excess Cashflow from the Fixed Rate Group to be
applied on such Distribution Date to the Adjustable Rate Certificates. The
amount described in clause (x) of the preceding sentence with respect to each
Distribution Date is the "Adjustable Rate Group Available Funds"; the sum of
the amounts described in clauses (x) and (y) of the preceding sentence with
respect to each Distribution Date is the "Adjustable Rate Group Total
Available Funds." Collectively, the Fixed Rate Group Total Available Funds
and the Adjustable Rate Group Total Available Funds is the "Total Available
Funds."
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Section 7.03 Flow of Funds.
(a) With respect to the Fixed Rate Group, the Trustee shall deposit to
the Distribution Account, without duplication, upon receipt, any Insured
Payments relating to such Group, the proceeds of any liquidation of the
assets of the Trust insofar as such assets relate to the Fixed Rate Group and
all remittances made to the Trustee pursuant to Section 8.08(d)(ii) insofar
as such assets relate to the Fixed Rate Group, to the extent remitted by the
Master Servicer.
(b) With respect to the Adjustable Rate Group, the Trustee shall
deposit to the Distribution Account without duplication, upon receipt, any
Insured Payments relating to such Group, the proceeds of any liquidation of
the assets of the Trust insofar as such assets relate to the Adjustable Rate
Group and all remittances made to the Trustee pursuant to Section 8.08(d)(ii)
insofar as such assets relate to the Adjustable Rate Group, to the extent
remitted by the Master Servicer.
(c) With respect to the Distribution Account, on each Distribution
Date, the Trustee shall make the following allocations, disbursements and
transfers for each Mortgage Loan Group from amounts deposited therein
pursuant to subsections (a) and (b), respectively, in the following order of
priority, and each such allocation, transfer and disbursement shall be
treated as having occurred only after all preceding allocations, transfers
and disbursements have occurred:
(i) first, on each Distribution Date, the Trustee shall
allocate an amount equal to the sum of (x) the Total
Monthly Excess Spread with respect to such Mortgage
Loan Group and Distribution Date plus (y) any
Subordination Reduction Amount with respect to such
Mortgage Loan Group and Distribution Date (such sum
being the "Total Monthly Excess Cashflow" with respect
to such Mortgage Loan Group and Distribution Date) with
respect to such Mortgage Loan Group in the following
order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Mortgage Loan Group shall be
allocated to the payment of the related Class A
Distribution Amount pursuant to clauses (iii)(A)
or (iii)(D), as applicable, below on such
Distribution Date with respect to the related
Mortgage Loan Group in an amount equal to the
amount, if any, by which (x) the related Class A
Distribution Amount (calculated for this purpose
only by reference to clause (b) of the definition
of the Fixed Rate Group Principal Distribution
Amount or Adjustable Rate Group Principal
Distribution Amount, as the case may be, but
without any amount calculated under subclause (J)
of clause (b) of said definition and without any
Subordination Increase Amount with respect to the
related Mortgage Loan Group) for such Distribution
Date exceeds (y) the Available Funds with respect
to such Mortgage Loan Group for such Distribution
Date (the amount of such difference being the
"Fixed Rate Group Available Funds Shortfall" with
respect to the Fixed Rate Group, and the
"Adjustable Rate Group Available Funds Shortfall"
with respect to the Adjustable Rate Group);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocation described in clause
(A) above shall be allocated against any Available
Funds Shortfall with respect to the other Mortgage
Loan Group;
(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A) and (B) above shall be disbursed to
the Certificate Insurer in respect of amounts owed
on account of any Reimbursement Amount with
respect to the related Mortgage Loan Group;
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A), (B) and (C) above
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shall be disbursed to the Certificate Insurer in respect
of any Reimbursement Amount with respect to the other
Mortgage Loan Group;
(E) fifth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A), (B), (C) and (D) above shall be
allocated to the payment of the related Class A
Distribution Amount pursuant to clauses (iii)(A)
and (iii)(D), as applicable, below on such
Distribution Date in an amount equal to the
amount, if any, calculated under subclause (J) of
clause (b) of the definition of the Fixed Rate
Group Principal Distribution Amount or Adjustable
Rate Group Principal Distribution Amount, as the
case may be, related to such Mortgage Loan Group,
that was excluded from the calculation of the
Available Funds Shortfall related to such Mortgage
Loan Group, pursuant to clause (i)(A) above; and
(F) sixth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A), (B), (C), (D) and (E) above shall be
allocated to the payment of the Class A
Distribution Amount with respect to the other
Mortgage Loan Group pursuant to clauses (iii)(A)
and (iii)(D), as applicable, below on such
Distribution Date in an amount equal to the
amount, if any, calculated under subclause (J) of
clause (b) of the definition of the Fixed Rate
Group Principal Distribution Amount or Adjustable
Rate Group Principal Distribution Amount, as the
case may be, with respect to such other Mortgage
Loan Group that was excluded from the calculation
of the related Available Funds Shortfall for such
other Mortgage Loan Group pursuant to clause
(i)(A) above.
(ii) second, on each Distribution Date, the Trustee shall
apply the amount, if any, of the Total Monthly Excess
Cashflow with respect to a Mortgage Loan Group on a
Distribution Date remaining after the allocations
described in clause (i) above (the "Net Monthly Excess
Cashflow") for such Mortgage Loan Group and
Distribution Date in the following order of priority:
(A) first, such Net Monthly Excess Cashflow shall be
used to reduce to zero, through the allocation of
a Subordination Increase Amount to the payment of
the related Class A Distribution Amount pursuant
to clause (iii) below, any Subordination
Deficiency Amount with respect to the related
Mortgage Loan Group as of such Distribution Date;
(B) second, any Net Monthly Excess Cashflow remaining
after the application described in clause (A)
above shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to
the payment of the related Class A Distribution
Amount pursuant to clause (iii) below, the
Subordination Deficiency Amount, if any, with
respect to the other Mortgage Loan Group; and
(C) third, any Net Monthly Excess Cashflow remaining
after the application described in clauses (A) and
(B) above shall be paid to the Master Servicer to
the extent of any unreimbursed P&I Advances and
unreimbursed Servicing Advances.
(iii) third, following the making by the Trustee of all
allocations, transfers and disbursements described
above under this subsection (c), from amounts
(including any related Insured Payment) then on
deposit in the Distribution Account with respect
to the related Mortgage Loan Group, the Trustee
shall distribute:
(A) to the Owners of the Class A Certificates of the
related Mortgage Loan Group, the Fixed Rate Group
Current Interest or the Adjustable Rate Group
Current Interest, as applicable, on a pro rata
basis without any priority among such Class A
Certificates, until the applicable Class A
Certificate Termination Date;
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(B) to the Certificate Insurer, on each Distribution
Date for the related Mortgage Loan Group,
beginning with the Distribution Date which occurs
in August 1997, the prorated Premium determined by
the relative Certificate Principal Balance of the
related Classes of Class A Certificates for such
Distribution Date;
(C) to the Trustee, the Trustee Fees with respect to
such Mortgage Loan Group then due;
(D) to the Owners of the related Class of Class A
Certificates, (i) the Fixed Rate Group Principal
Distribution Amount shall be distributed to the
Owners of the Class A-1 Certificates until the
Class A-1 Certificate Termination Date, and (ii)
the Adjustable Rate Group Principal Distribution
Amount shall be distributed to the Owners of the
Class A-2 Certificates until the Class A-2
Certificate Termination Date;
(E) to the Adjustable Rate Certificates, the Basis
Risk Carryover Amount outstanding on such
Distribution Date;
(F) to the Owners of the related Class of Class A
Certificates, any Net Prepayment Interest
Shortfalls or the interest portion of reductions
due to the Relief Act incurred by such Class of
Certificates which remain outstanding on such
Distribution Date, on a pro rata basis among such
Classes of Certificates;
(G) to the Depositor and the Master Servicer to the
extent of costs, expenses and liabilities incurred
pursuant to Section 8.05 below;
(H) to the Owners of the Class X Certificates, the
Class X-1 Distribution Amount and Class X-2
Distribution Amount; and
(I) to the Owners of the Class R Certificates, any
amounts remaining in the Distribution Account.
(d) Notwithstanding Section 7.03(c) above, on any
Distribution Date during the continuance of any Certificate
Insurer Default resulting from the failure by the Certificate
Insurer to make a payment required under the Certificate
Insurance Policy in accordance with its terms, any amounts
otherwise payable to the Certificate Insurer as Premium or
Reimbursement Amounts shall be retained in the Distribution
Account as Total Available Funds; provided, however, that such
amounts payable with respect to Reimbursement Amounts may be paid
to the Certificate Insurer after the amounts in Sections
7.03(c)(i)(E) and (F) have been paid.
(e) Notwithstanding clause (c)(iii) above, the aggregate amounts
distributed on all Distribution Dates to the Owners of the Class A
Certificates on account of principal pursuant to clause (c)(iii)(D) shall not
exceed the original Certificate Principal Balance of the related Certificates.
(f) Reserved
(g) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which
is made with moneys received pursuant to the terms of a Certificate Insurance
Policy shall not be considered payment of such Certificates from the Trust
and shall not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the meaning of
Section 7.03. The Depositor, the Master Servicer and the Trustee acknowledge,
and each Owner by its acceptance of a Certificate agrees, that without the
need for any further action on the part of' the Certificate Insurer, the
Depositor, the Master Servicer, the Trustee or the Registrar (a) to the
extent the Certificate Insurer makes payments, directly or indirectly, on
account of principal of or interest on any Class A Certificates to the Owners
of such Certificates, the Certificate Insurer will be fully subrogated to the
rights, of such Owners and (b) the Certificate Insurer shall be paid such
principal and interest only from the sources and in the manner provided
herein for the payment of such principal and interest. The Trustee or Paying
Agent shall (i) receive as attorney-in-fact
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of each Owner of Class A Certificates any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Owners of the related
Class A Certificates as set forth in Section 7.03(c)(iii).
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class X Certificates and the Class R Certificates
to receive distributions in respect of the Class X Certificates and the Class
R Certificates, and all ownership interests of the Owners of the Class X
Certificates and the Class R Certificates in and to such distributions, shall
be subject and subordinate to the preferential rights of the holders of the
Class A Certificates to receive distributions thereon and the ownership
interests of such Owners in such distributions, as described herein. In
accordance with the foregoing, the ownership interests of the Owners of the
Class X Certificates and the Class R Certificates in amounts deposited in the
Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the Class X Certificates and the Class R
Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Owners of the Class
X Certificates and the Class R Certificates shall not be required to refund
any amount properly distributed on the Class X Certificates and the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Calculation of LIBOR.
On each LIBOR Determination Date, the Trustee will determine the London
interbank offered rate for one-month United States dollar deposits ("LIBOR")
for the applicable Accrual Period for the Adjustable Rate Certificates by
reference to the quotations, as set forth on the Telerate Screen Page 3750
offered by the principal London office of each of the designated Reference
Banks for making one-month United States dollar deposits in leading banks in
the London interbank market, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. In lieu of relying on the quotations for those Reference
Banks that appear at such time on such Telerate Screen Page, the Trustee may
request each of the Reference Banks to provide such offered quotations at
such time. LIBOR will be established by the Trustee on each LIBOR
Determination Date as follows:
(a) If on any LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if necessary
to the nearest whole multiple of 1/32%).
(b) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Accrual
Period shall be whichever is the higher of (i) LIBOR as determined on the
previous LIBOR Determination Date or (ii) the Reserve Interest Rate. The
"Reserve Interest Rate" shall be the rate per annum which the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if necessary
to the nearest whole multiple of 1/32%) of the one-month United States dollar
lending rates that New York City banks selected by the Trustee are quoting,
on the relevant LIBOR Determination Date, to the principal London offices of
at least two of the Reference Banks to which such quotations are, in the
opinion of the Trustee, being so made, or (ii) in the event that the Trustee
can determine no such arithmetic mean, the lowest one-month United States
dollar lending rate which New York City banks selected by the Trustee are
quoting on such LIBOR Determination Date to leading European Banks.
(c) If on any LIBOR Determination Date the Trustee is required but is
unable to determine the Reserve Interest Rate in the manner provided in
paragraph (b) above, LIBOR for the next Accrual Period shall be LIBOR as
determined on the preceding LIBOR Determination Date, or, in the case of the
first LIBOR Determination Date, LIBOR shall be a rate equal to 5.6875% per
annum.
The establishment of LIBOR on each LIBOR Determination Date by the
Trustee and its calculation of the rate of interest for the applicable
classes for the related Accrual Period shall (in the absence of manifest
error) be final and binding.
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Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
the Distribution Account held by the Trustee for the benefit of the Owners
shall be invested and reinvested by the Trustee in the name of the Trustee
for the benefit of the Owners and the Certificate Insurer, as directed in
writing by the Master Servicer, in one or more Permitted Investments bearing
interest or sold at a discount. If the Master Servicer shall have failed to
give investment directions to the Trustee then the Trustee shall invest in
money market funds described in Section 7.07(i) to be redeemable without
penalty no later than the Business Day immediately preceding the next
Distribution Date. The bank serving as Trustee or any affiliate thereof may
be the obligor on any investment which otherwise qualifies as an Permitted
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Distribution Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. No investments
will be liquidated prior to maturity unless the proceeds thereof are needed
for disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Permitted Investment included therein
(except to the extent that the bank serving as Trustee is the obligor
thereon).
(d) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt, and
any loss resulting from such investments shall be cleared to such Account, as
appropriate, subject to the provisions of Section 8.08(b) requiring that the
Master Servicer contribute funds in an amount equal to such loss on such
Accounts and permitting the Master Servicer to retain all income or gain with
respect to investments of funds on such Accounts.
Section 7.06 Reserved.
Section 7.07 Permitted Investments.
The following are Permitted Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, obligations
backed by the full faith and credit of the United States, Federal Housing
Administration debentures, FHLMC senior debt obligations, and FNMA senior
debt obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) Federal Housing Administration debentures which have been rated by
each Rating Agency in one of its two highest long-term unsecured rating
categories;
(c) Consolidated senior debt obligations of any Federal Home Loan Banks
which have been rated by each Rating Agency in one of its two highest
long-term unsecured rating categories;
(d) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1
or better by Standard & Poor's and P-1 or better by Moody's;
(e) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB or better by
Standard & Poor's) which has combined capital, surplus and undivided profits
of at least $50,000,000 which deposits are insured by the FDIC and held up to
the limits insured by the FDIC;
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(f) Investment agreements approved by the Certificate
Insurer provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and guaranteed senior debt obligation rated Aa2 or
better by Moody's and AA or better by Standard & Poor's, or is the lead bank
of a parent bank holding company with an uninsured, unsecured and
unguaranteed senior debt obligation meeting such rating requirements, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
3. The agreement is not subordinated to any other obligations of such
insurance company or bank, and
4. The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel (which opinion shall not
be at the expense of the Trustee) that such agreement is an enforceable
obligation of such insurance company or bank;
(g) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured
and unguaranteed short-term or long-term obligation rated P-1 or Aa2,
respectively, or better by Moody's and A-1+ or AA, respectively, or better by
Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien
by the Trustee or an independent third party acting solely
as agent for the Trustee, and such third party is (a) a
Federal Reserve Bank, (b) a bank which is a member of the
FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate
Insurer, and the Trustee shall have received written
confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the
Trustee, and
c. A perfected first security interest under the
Uniform Commercial Code, or book entry procedures prescribed
at 31 CFR 306.1 et seq. or 31 CFR 350.0 et seq., in such
securities is created for the benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days
or less and the Trustee will value the collateral securities
no less frequently than weekly and will liquidate the
collateral securities if any deficiency in the required
collateral percentage is not restored within two business
days of such valuation, and
e. The fair market value of the collateral securities
in relation to the amount of the repurchase obligation,
including principal and interest, is equal to at least 106%.
(h) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's
and Moody's; and
(i) Investments in no load money market funds rated AAAm or AAAm-G by
Standard & Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either the right
to receive (a) only interest with respect
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to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument and the
interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations and provided, further, that all instruments
described hereunder shall mature at par on or prior to the next succeeding
Distribution Date and that no instrument described hereunder may be purchased
at a price greater than par.
Notwithstanding anything to the contrary in this Section 7.07, no
investment, obligation or security shall be a Permitted Investment unless it
is a "permitted investment" that is a "cash flow investment" within the
meaning of Section 860G(a)(6) of the Code earning a passive return in the
nature of interest.
Section 7.08 Accounting and Directions by Trustee.
On the third Business Day prior to each Distribution Date occurring on
or prior to the later to occur of the Class A-1 Certificate Termination Date
and the Class A-2 Certificate Termination Date, the Trustee shall determine,
no later than 12:00 noon New York time on such date, whether an Insured
Payment will be required to be made by the Certificate Insurer on the
following Distribution Date. If the Trustee determines that an Insured
Payment will be required to be made by the Certificate Insurer on the
following Distribution Date then no later than 12:00 noon on the third
Business Day immediately preceding the related Distribution Date the Trustee
shall furnish the Certificate Insurer and the Depositor with a completed
Notice in the form set forth as Exhibit A to the applicable Certificate
Insurance Policy. The Notice shall specify the amount of Insured Payment and
shall constitute a claim for an Insured Payment pursuant to such Certificate
Insurance Policy.
Section 7.09 Reports by Trustee to Owners and Certificate
Insurer.
(a) On each Distribution Date the Trustee shall report in writing to
the Depositor, the Master Servicer, each Owner, the Certificate Insurer, the
Underwriter, Standard & Poor's and Moody's:
(i) the amount of the related distribution to Owners
of each Class of Certificates allocable to principal,
separately identifying the aggregate amount of any
Prepayments included therein, any principal portion of any
Carry Forward Amount included in such distribution and any
remaining principal portion of any Carry Forward Amount
after giving effect to such distribution;
(ii) the amount of such distribution to Owners of such
Class of Certificates allocable to interest, any
Compensating Interest, any interest portion of any Carry
Forward Amount included in such distribution, any remaining
interest portion of any Carry Forward Amount after giving
effect to such distribution, any amount paid on account of
any outstanding Basis Risk Carryover Amount and any
remaining Basis Risk Carryover Amount after giving effect to
such distribution;
(iii) the Certificate Principal Balance of each
Class of Class A Certificates after giving effect to the
distribution of principal on such Distribution Date;
(iv) the aggregate Loan Balance of the Mortgage Loans
in each Mortgage Loan Group for the following Distribution
Date;
(v) the related amount of the Servicing Fees, Premium
and Trustee Fee to or retained by the Master Servicer or
paid to the Certificate Insurer or the Trustee;
(vi) the Pass-Through Rate for each such Class of Class
A Certificates with respect to the current Accrual Period;
(vii) the amount of P&I Advances and Servicing
Advances, stated separately, included in the distribution on
such Distribution Date and the aggregate amount of P&I
Advances and Servicing Advances, stated separately,
outstanding as of the close of business of such Distribution
Date;
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(viii) the number and aggregate Loan Balances of the
Mortgage Loans (a) Delinquent one payment, (b) Delinquent
two payments, (c) Delinquent three or more payments, (d) as
to which foreclosure proceedings have been commenced and (e)
with respect to which the related Mortgagor has filed for
protection under applicable bankruptcy laws, with respect to
whom bankruptcy proceedings are pending or with respect to
whom bankruptcy protection is in force (it being understood
that for purposes of calculating the information described
in clauses (a), (b), and (c) above, a Mortgage Loan is
Delinquent one payment if payment on such Mortgage Loan is
one calendar month past due on a contractual basis, a
Mortgage Loan is Delinquent two payments if payment on such
Mortgage Loan is two calendar months past due on a
contractual basis and a Mortgage Loan is Delinquent three
payments if payment on such Mortgage Loan is three calendar
months past due on a contractual basis);
(ix) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the loan
number and 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;
(x) the total number and principal balance of any REO
Properties as of the close of business on the Determination
Date preceding such Distribution Date;
(xi) the amount of any Guaranteed Distribution for such
Distribution Date and the respective portions thereof
allocable to principal and interest;
(xii) the aggregate Loan Balance of all Mortgage Loans
and the aggregate Loan Balance of the Mortgage Loans in each
Mortgage Loan Group after giving effect to any payment of
principal on such Distribution Date;
(xiii) the Subordinated Amount and Subordination
Deficit for each Mortgage Loan Group, if any, remaining
after giving effect to all distributions and transfers on
such Distribution Date;
(xiv) the information furnished by the Master Servicer
as such information is required by Section 6049(d)(7)(C) of
the Code and the regulations promulgated thereunder to
assist the Owners of the Class A Certificates in computing
their market discount;
(xv) the total of any Substitution Adjustments or Loan
Purchase Price amounts included in such distribution with
respect to each Mortgage Loan Group;
(xvi) the weighted average Mortgage Rate of the
Mortgage Loans with respect to each Mortgage Loan Group;
(xvii) the largest Loan Balance outstanding;
(xviii) the amount of any Insured Payment made to
Owners of each Class of the Class A Certificates on such
Distribution Date and the amount of any Reimbursement Amount
paid to the Certificate Insurer on such Distribution Date
and the total amount of Insured Payments made after giving
effect to any such Insured Payment; and
(xix) such other information as the Certificate
Insurer may reasonably request with respect to delinquent
Mortgage Loans and which the Master Servicer has provided to
the Trustee.
The Master Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii) and in clause (b) below no later than 12:00
p.m., New York time, on the second Business Day following the Determination
Date in a format previously specified by the Trustee, but in no event less
than four Business Days prior to the Distribution Date, to enable the Trustee
to perform its reporting obligations under this Section, and such obligations
of the Trustee under this Section are conditioned upon such information being
received and the information provided shall be based solely upon information
contained in the monthly servicing report provided by the Master
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Servicer to the Trustee pursuant to Section 8.08(d)(ii) hereof.
(b) The Master Servicer shall furnish to the Trustee and to the
Certificate Insurer, during the term of this Agreement, such periodic,
special, or other reports or information not specifically provided for
herein, as may be necessary, reasonable, or appropriate with respect to the
Trustee or the Certificate Insurer, as the case may be, or otherwise with
respect to the purposes of this Agreement, all such reports or information to
be provided by and in accordance with such applicable instructions and
directions as the Trustee or the Certificate Insurer may reasonably require.
Section 7.10 Reports by Trustee.
(a) The Trustee shall, at the request of the Depositor, any Seller or
the Certificate Insurer, transmit promptly to the Depositor, the Sellers and
the Certificate Insurer copies of all accountings of receipts in respect of
the Mortgage Loans furnished to it by the Master Servicer and shall notify
the Depositor, the Sellers and the Certificate Insurer if any Monthly
Remittance Amount has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the
statements set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments.
The Certificate Insurer shall pay any Guaranteed Distribution, if
avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law provided the notices and conditions specified in
the Certificate Insurance Policy are provided and fulfilled.
The Trustee shall promptly notify the Certificate Insurer of either of
the following as to which it has received written notice: (i) the
commencement of any proceeding by or against the Depositor or a Seller
commenced under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") and (ii) the making of any Preference Claim with
respect to any payment of principal of, or interest on, the Class A
Certificates. Each Owner, by its purchase of the Class A Certificates, and
the Trustee hereby agree that, so long as a Certificate Insurer Default shall
not have occurred and be continuing, the Certificate Insurer may at any time
during the continuation of an Insolvency Proceeding direct all matters
relating to such Insolvency Proceeding, including, without limitation, (i)
all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim at the expense of but
subject to reimbursement as provided in the Insurance Agreement and (iii) the
posting of any surety, supersedeas or performance bond pending any such
appeal. In addition, and without limitation of the foregoing, as set forth
in Section 11.22, the Certificate Insurer shall be subrogated to, and each
Owner and the Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the Trustee and each Owner in the conduct of
any Insolvency Proceeding, including, without limitation, all rights of any
party to an adversary proceeding with respect to any court order issued in
connection with any such Insolvency Proceeding.
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Master Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the
benefit
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of the Owners and the Certificate Insurer (as determined by the Master
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the respective Mortgage Loans and, to the extent consistent
with such terms, in the same manner in which it services and administers
similar mortgage loans for its own portfolio, giving due consideration to
customary and usual standards of practice of prudent mortgage lenders and
loan servicers administering similar mortgage loans but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master
Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership of any Certificate by the Master
Servicer or any Master Servicer Affiliate;
(iii) the Master Servicer's obligation to make P&I
Advances or Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right
to receive compensation for its services hereunder
or with respect to any particular transaction.
The standards set forth in the immediately preceding sentence shall be
referred to herein as the "Servicing Standard".
Subject to Section 8.03 hereof, the Master Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to
all or certain of the Mortgage Loans through a Sub-Servicer as it may from
time to time designate, but not such designation of a Sub-Servicer shall
serve to release to Master Servicer from any of its obligations under this
Agreement. Such Sub-Servicer shall have all the rights and powers of the
Master Servicer with respect to such Mortgage Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Master Servicer shall direct the Trustee in
writing to execute and deliver (i) 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, and (ii) to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any
Mortgaged Property in the name of the Trustee; provided, however, that to the
extent any instrument described in clause (i) preceding would be delivered by
the Master Servicer outside of its usual procedures for mortgage loans held
in its own portfolio, the Master Servicer shall, prior to executing and
delivering such instrument, obtain the prior written consent of the
Certificate Insurer, and provided further, however, that Section 8.14(a)
shall constitute an authorization from the Trustee to the Master Servicer to
execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Mortgage Loan paid in full (or with respect to
which payment in full has been escrowed). The Trustee shall, at the written
direction of the Master Servicer, execute any documentation furnished to it
by the Master Servicer for recordation by the Master Servicer in the
appropriate jurisdictions as shall by necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, the Trustee shall execute any
authorizations and other documents as the Master Servicer or such
Sub-Servicer shall reasonably request that are furnished to the Trustee to
enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
The Master Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert
jurisdiction over the Trust.
Servicing Advances incurred by the Master Servicer or any Sub-Servicer
in connection with the servicing of the Mortgage Loans (including any
penalties in connection with the payment of any taxes and assessments or
other charges) on any Mortgaged Property shall be recoverable by the Master
Servicer or such Sub-Servicer to the extent described in Section 8.09(b)
hereof.
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Section 8.02 Collection of Certain Mortgage Loan Payments.
The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures for all Mortgage Loans that are consistent
with the Servicing Standard. The Master Servicer may waive, modify or vary
terms of a Mortgage Loan provided that no such action will (A) decrease the
Mortgage Rate on the Mortgage Loan, (B) defer or forgive the payment of
principal or interest for a period greater than 90 days, or 180 days if the
Master Servicer provides written notice to the Certificate Insurer to which
the Certificate Insuruer does not object within two Business Days (except
with respect to liquidation of the Mortgage Loan), (C) extend the final
maturity date of the Mortgage Loan or (D) constitute a "significant
modification" of the Mortgage Loan within the meaning of Treasury Regulation
Section 1.860G-2(b) (or similar successor provision), provided, however, that
no such modification shall be permitted to the extent that it would result in
the occurrence of a Prohibited Transaction.
Section 8.03 Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers.
The Master Servicer, with the consent of the Certificate Insurer, may
enter into Sub-Servicing Agreements for any servicing and administration of
Mortgage Loans with one or more institutions that are in compliance with the
laws of each state necessary to enable each of them to perform its
obligations under such Sub-Servicing Agreements and each of which (x) has
been designated an approved seller-servicer by FHLMC or FNMA for mortgage
loans and has equity of at least $1,500,000 or (y) is a Master Servicer
Affiliate. The Master Servicer shall give notice to the Trustee, the
Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer. For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the
Mortgage Loans in accordance with this Agreement and any such Sub-Servicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. Each Sub-Servicing Agreement shall provide that a successor
Master Servicer shall have the option to terminate such agreement without
payment of any termination fees if the original Master Servicer is terminated
or resigns.
Section 8.04 Successor Sub-Servicers.
The Master Servicer or the Certificate Insurer shall be entitled to
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. Upon termination, the Master
Servicing may itself directly service the related Mortgage Loans or, with the
consent of the Certificate Insurer, enter into a Sub-Servicing Agreement with
a successor Sub-Servicer which qualifies under Section 8.03.
Section 8.05 Liability of Master Servicer;
Indemnification.
(a) The Master Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Sub-Servicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Sub-Servicer and the Master Servicer shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in such Sub-Servicing Agreement shall be deemed to limit or modify
this Agreement.
(b) The Master Servicer (except the Trustee if it is required to
succeed the Master Servicer hereunder) indemnifies and holds the Trustee, the
Depositor, the Certificate Insurer and each Owner harmless against any and
all claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Depositor, the Certificate Insurer and any Owner may sustain in
any way related to the failure of the Master Servicer to perform its duties
and service the Mortgage Loans in compliance with the terms of this
Agreement. The Master Servicer shall immediately notify the Trustee, the
Depositor, the Certificate Insurer and each Owner if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses, and the
Master Servicer
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shall assume (with the consent of the Trustee and the Certificate Insurer)
the defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against the Master Servicer, the
Trustee, the Depositor, the Certificate Insurer and/or Owner in respect of
such claim. The provisions of this Section 8.05 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
(c) Neither the Depositor, the Master Servicer, nor any of the
directors, officers, employees or agents of the Depositor or the Master
Servicer shall be under any liability to the Trust or the Owners for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Depositor or Master Servicer or any
such Person against any breach of warranties or representations made herein,
or against any specific liability imposed on the Master Servicer for a breach
of the Servicing Standard, or against any liability which would otherwise be
imposed by reason of its respective willful misfeasance, bad faith, fraud or
negligence in the performance of its duties or by reasons of negligent
disregard of its respective obligations or duties hereunder.
The Depositor, the Master Servicer, and any director, officer, employee
or agent of the Depositor or the Master Servicer, may rely in good faith on
any document of any kind which, prima facie, is properly executed and
submitted by any appropriate Person with respect to any matters arising
hereunder. Pursuant to Section 7.03(c)(iii)(G), the Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer shall be indemnified and held harmless by the Trust against
any loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss,
liability or expense incurred in connection with any legal action incurred by
reason of its respective misfeasance, bad faith, fraud or negligence, a
breach of a representation or warranty hereunder or (in the case of the
Master Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. Neither the Depositor nor the Master
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action unless such action is related to its respective duties under
this Agreement and in its opinion does not expose it to any expense or
liability; provided, however, that the Depositor or the Master Servicer may
in its discretion undertake any action related to its obligations hereunder
which it may deem necessary or desirable with respect to this Agreement and
the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder.
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Trustee and
the Owners shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Trustee pursuant to Section 8.20, it is understood and
agreed that the Master Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Master Servicer and a
Sub-Servicer shall be assumed simultaneously by the Trustee without act or
deed on the part of the Trustee; provided, however, that the successor Master
Servicer may terminate the Sub-Servicer as provided in Section 8.03.
The terminated Master Servicer shall, upon the reasonable request of the
Trustee, but at the expense of the Master Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 8.08 Collection Account.
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(a) The Master Servicer shall establish and maintain the Collection
Account to be held in trust for the benefit of the Trustee, the Owners and
the Certificate Insurer as an Eligible Account. The Collection Account shall
be entitled "Texas Commerce Bank National Association, as Trustee under the
Pooling and Servicing Agreement dated as of June 1, 1997." The Master
Servicer shall notify the Trustee (who will in turn notify the Owners) and
the Certificate Insurer if there is a change in the name, account number or
institution holding the Collection Account.
Subject to subsection (c) below, the Master Servicer shall deposit all
receipts pursuant to subsection (c) below and related to the Mortgage Loans
to the Collection Account on a daily basis (but no later than the first
Business Day after receipt).
(b) All funds in the Collection Account shall be held (i) uninvested or
(ii) invested in Permitted Investments. Any investments of funds in the
Collection Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Monthly Remittance Date. The Collection Account shall
be held in trust in the name of the Trustee for the benefit of the Owners.
Any investment earnings on funds held in the Collection Account shall be for
the account of the Master Servicer and may only be withdrawn from the
Collection Account by the Master Servicer immediately following the
remittance of the Monthly Remittance Amount (and the Total Monthly Excess
Spread included therein) by the Master Servicer. Prior to each Monthly
Remittance Date, the Master Servicer shall deposit into the Collection
Account the net amount of any investment losses on such funds during the
related Prepayment Period. Any references herein to amounts on deposit in
the Collection Account shall refer to amounts net of such investment earnings.
(c) The Master Servicer shall deposit to the Collection Account on the
Business Day after receipt all principal and interest due on the Mortgage
Loans and received after the Cut-Off Date including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the Mortgage
Loans received by the Master Servicer and any income from REO Properties, but
net of (i) the Servicing Fee with respect to each Mortgage Loan and other
servicing compensation to the Master Servicer as permitted by Section 8.15
hereof, including any Servicing Fees and other servicing compensation, for
prior months not paid in full including, without limitation, any such
insufficiency which relates to Compensating Interest, (ii) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (I)
the Loan Balance of the related Mortgage Loan immediately prior to
liquidation, plus (II) accrued and unpaid interest on such Mortgage Loan (net
of the Servicing Fee) to the date of such liquidation, (iii) reimbursements
for P&I Advances not otherwise reimbursed from Liquidation Proceeds and (iv)
reimbursements for amounts deposited in the Collection Account representing
payments of principal and/or interest on a Note by a Mortgagor which are
subsequently returned by a depository institution as unpaid.
(d)(i) The Master Servicer may make withdrawals for its own account
from the amounts on deposit in the Collection Account, with respect to each
Mortgage Loan Group, for the following purposes:
(A) to withdraw investment earnings on amounts on deposit
in the Collection Account;
(B) Reserved;
(C) to withdraw amounts that have been deposited to the
Collection Account in error;
(D) to reimburse itself for any P&I Advance or Servicing
Advance that it has determined to be a Nonrecoverable
Advance; and
(E) to clear and terminate the Collection Account following
the termination of the Trust pursuant to Article IX.
(ii) The Master Servicer shall (a) remit to the Trustee for deposit in
the Distribution Account by wire transfer, or otherwise make funds available
in immediately available funds, without duplication, the Monthly Remittance
Amount allocable to a Due Period not later than the related Monthly
Remittance Date and Loan Purchase Prices and Substitution Adjustments two
Business Days following the related purchase or substitution,
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and (b) no later than by 12:00 p.m., New York time on the second Business Day
after the Determination Date immediately preceding the related Distribution
Date, but in no event less than four Business Days prior to the related
Distribution Date, deliver to the Trustee and the Certificate Insurer a
monthly servicing report via electronic medium, with respect to each Mortgage
Loan Group, containing the following information: (i) principal and interest
collected, Liquidated Loans, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning the servicing
of the Mortgage Loans and (ii) the information described in Section 7.09(a)
and (b). In addition, the Master Servicer shall inform the Trustee and the
Certificate Insurer on each Monthly Remittance Date, with respect to each
Mortgage Loan Group, of the amounts of any Loan Purchase Prices or
Substitution Adjustments so remitted during the related Due Period.
(e) The Master Servicer hereby acknowledges and agrees that it shall
service and administer the Mortgage Loans and any REO Property, and shall
maintain the Collection Account for the benefit of or take actions on behalf
of the Owners and for the benefit of the Certificate Insurer, and all
references in this Agreement to the benefit of or actions on behalf of the
Owners shall be deemed to include the Certificate Insurer.
Section 8.09 P&I Advances and Servicing Advances.
(a) Subject to the third paragraph of this subsection (a), the Master
Servicer will be obligated on each Monthly Remittance Date to remit to the
Trustee from its own funds for deposit into the Distribution Account an
amount equal to scheduled interest and principal (other than a Balloon
Payment) on the Mortgage Loans due and payable during the related Due Period
but uncollected as of the related Determination Date (net of the Servicing
Fee) (such amount a "P&I Advance"). P&I Advances include, but are not
limited to, any amount advanced due to the invocation by a Mortgagor of the
relief provisions of the Relief Act.
The Master Servicer shall be permitted to reimburse itself for any P&I
Advances paid from the Master Servicer's own funds from collections on any
Mortgage Loan in the related Mortgage Loan Group deposited to the Collection
Account subsequent to the related Determination Date, and shall deposit into
the Collection Account with respect thereto (i) collections from the
Mortgagor whose Delinquency gave rise to the shortfall which resulted in such
P&I Advance and (ii) Net Liquidation Proceeds recovered on account of the
related Mortgage Loan to the extent of the amount of P&I Advances related
thereto. If not recovered from the related Mortgagor or the related Net
Liquidation Proceeds nor withdrawn by the Master Servicer from collections on
any Mortgage Loan in the related Mortgage Loan Group deposited to the
Collection Account as contemplated by the preceding sentence, the Master
Servicer shall recover P&I Advances pursuant to Section 8.08(d)(i)(D) or from
Net Monthly Excess Cash flow pursuant to Section 7.03(b)(iii).
Notwithstanding anything herein to the contrary, if the Master Servicer
reasonably determines that any P&I Advance previously made with respect to a
Mortgage Loan is a Nonrecoverable Advance, then the Master Servicer is
authorized and entitled to withdraw any such advance from any sums in the
Collection Account whether or not the sums so withdrawn relate to that
specific Mortgage Loan or relate to a Mortgage Loan in the related Mortgage
Loan Group.
Notwithstanding the foregoing, the Master Servicer shall not be
obligated to make a P&I Advance as to any Mortgage Loan if the Master
Servicer determines that such P&I Advance, if made, would be a Nonrecoverable
Advance. The Master Servicer shall give written notice of such determination
to the Trustee and the Certificate Insurer; and the Trustee shall promptly
furnish a copy of such notice to the Owners; provided, that the Master
Servicer shall be entitled to recover any unreimbursed P&I Advances from the
aforesaid Liquidation Proceeds prior to the payment of the Liquidation
Proceeds to any other party to this Agreement.
(b) Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, (each such
expenditure, a "Servicing Advance") including, but not limited to, the cost
of (i) Preservation Expenses, (ii) any enforcement or judicial proceedings,
including foreclosures and attorneys' fees associated with the foregoing,
(iii) the management and liquidation of REO Property and (iv) advances
required by Section 8.13(a), but the Master Servicer shall not be obligated
to make any such Servicing Advance if the Master Servicer determines that
such Servicing Advance, if made, would be a Nonrecoverable Advance. The
Master Servicer may recover Servicing Advances (x) from the Mortgagors to the
extent permitted by the Mortgage
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Loans or, if not recovered from the Mortgagor on whose behalf such Servicing
Advance was made, from Liquidation Proceeds realized upon the liquidation of
the related Mortgage Loan, (y) as provided in Section 7.03(c)(ii)(C) and (z)
if the Master Servicer reasonably determines that any Servicing Advance
previously made with respect to a Mortgage Loan is a Nonrecoverable Advance,
then the Master Servicer is authorized and entitled to withdraw any such
advance from any sums in the Collection Account whether or not the sums so
withdrawn relate to that specific Mortgage Loan or relate to a Mortgage Loan
in the related Mortgage Loan Group. The Master Servicer shall be entitled to
recover the Servicing Advances from the aforesaid Liquidation Proceeds prior
to the payment of the Liquidation Proceeds to any other party to this
Agreement. Except as provided in the previous sentence, in no case may the
Master Servicer recover Servicing Advances from the principal and interest
payments on any Mortgage Loan or from any amounts relating to any other
Mortgage Loan except as provided in Section 7.03(c)(ii)(C).
Section 8.10 Compensating Interest: Repurchase of Mortgage Loans.
(a) If a Prepayment of a Mortgage Loan occurs during any Prepayment
Period which gives rise to a Prepayment Interest Shortfall, any difference
between the interest collected from the Mortgagor and the full month's
interest at the Mortgage Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Master Servicer (but not in
excess of one-half of the Servicing Fee for the related Due Period on such
Mortgage Loan) to the Collection Account on the related Monthly Remittance
Date and shall be included in the Monthly Remittance to be made available to
the Trustee on such Monthly Remittance Date.
(b) The Master Servicer, and in the absence of the exercise thereof by
the Master Servicer, the Certificate Insurer, has the right and the option,
but not the obligation, to purchase for its own account any Mortgage Loan
which becomes Delinquent, in whole or in part, as to three consecutive
monthly installments or any Mortgage Loan as to which enforcement proceedings
have been brought by the Master Servicer pursuant to Section 8.13; provided,
however, that the Master Servicer or the Certificate Insurer, as the case may
be, may not purchase any such Mortgage Loan unless the Master Servicer or the
Certificate Insurer, as the case may be, at its own expense, has delivered to
the Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Master Servicer or the Certificate Insurer, as the case may
be, and the Trustee to the effect that such a purchase would not constitute a
Prohibited Transaction for the Trust or otherwise subject the Trust to tax
and would not jeopardize the status of the Master REMIC or Subsidiary REMIC
as a REMIC. Any such Mortgage Loan so purchased shall be purchased by the
Master Servicer or the Certificate Insurer as the case may be on a Monthly
Remittance Date at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the Collection Account and the
Master Servicer shall provide the Certificate Insurer and the Trustee with a
Liquidation Report in the form of Exhibit L hereto with respect to each such
Mortgage Loan.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Collection Account and remitted to the
Trustee as part of the Monthly Remittance Amount remitted by the Master
Servicer to the Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Master Servicer on behalf of the Trustee, as mortgagee, shall
use its reasonable efforts in accordance with the Servicing Standard to cause
the related Mortgagor to maintain for each Mortgage Loan (other than any
Mortgage Loan as to which the related Mortgaged Property has become an REO
Property), and if the Mortgagor does not so maintain, shall itself maintain
(subject to the provisions of this Agreement concerning Nonrecoverable
Advances) to the extent the Trustee as mortgagee has an insurable interest
(A) fire and hazard insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of (i) 100% of
the then "full replacement cost" of the improvements and equipment (excluding
foundations, footings and excavation costs), without deduction for physical
depreciation, and (ii) the outstanding principal balance of the related
Mortgage Loan or such other amount as is necessary to prevent any reduction
in such policy by reason of the application of co-insurance and to prevent
the Trustee thereunder from being deemed to be a co-insurer, and (B) such
other insurance as provided in the related Mortgage Loan. The Master Servicer
shall maintain
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fire and hazard insurance from a Qualified Insurer with extended coverage on
each REO Property in an amount which is at least equal to the lesser of (i)
100% of the then "full replacement cost" of the improvements which are a part
of such property or (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property plus accrued interest at
the Mortgage Rate and related Servicing Advances. The Master Servicer shall
maintain, from a Qualified Insurer, with respect to each REO Property such
other insurance as provided in the related Mortgage Loan. Any amounts
collected by the Master Servicer under any such policies (other than amounts
to be applied to the restoration and repair of the related Mortgaged Property
or amounts to be released to the Mortgagor in accordance with the terms of
the related Mortgage) shall be deposited into the Collection Account pursuant
to Section 8.08(c), subject to withdrawal pursuant to Section 8.08(d). Any
cost incurred by the Master Servicer in maintaining any such insurance shall
not, for the purpose of calculating distributions to Owners, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit. It is understood and agreed that
no earthquake or other additional insurance other than flood insurance is to
be required of any Mortgagor or to be maintained by the Master Servicer other
than pursuant to the terms of the related Mortgage, Note or other Mortgage
Loan documents and 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 in a federally designated special flood
hazard area, the Master Servicer will use its reasonable efforts in
accordance with the Servicing Standard to cause the related Mortgagor to
maintain or will itself obtain (subject to the provisions of this Agreement
concerning Nonrecoverable Advances) flood insurance in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the unpaid
principal balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance required by the terms of the related Mortgage and as is
available for the related property under the national flood insurance program
(assuming that the area in which such property is located is participating in
such program). If an REO Property is located in a federally designated
special flood hazard area, the Master Servicer will obtain flood insurance in
respect thereof providing substantially the same coverage as described in the
preceding sentences. If at any time during the term of this Agreement a
recovery under a flood or fire and hazard insurance policy in respect of an
REO Property is not available but would have been available if such insurance
were maintained thereon in accordance with the standards applied to Mortgaged
Properties described herein, the Master Servicer shall either (i) immediately
deposit into the Collection Account from its own funds the amount that would
have been recovered or (ii) apply to the restoration and repair of the
property from its own funds the amount that would have been recovered, if
such application would be consistent with the servicing standard set forth in
Section 8.01; provided, however, that the Master Servicer shall not be
responsible for any shortfall in insurance proceeds resulting from an
insurer's refusal or inability to pay a claim. Costs of the Master Servicer
of maintaining insurance policies pursuant to this Section 8.11 shall be paid
by the Master Servicer as a Servicing Advance and shall be reimbursable to
the Master Servicer.
The Master Servicer agrees to prepare and present, on behalf of itself,
the Trustee and the Owners, claims under each related insurance policy
maintained pursuant to this Section 8.11 in a timely fashion in accordance
with the terms of such policy and to take such reasonable steps as are
necessary to receive payment or to permit recovery thereunder.
The Master Servicer shall require that all insurance policies required
hereunder shall name the Trustee or the Master Servicer, on behalf of the
Trustee as the mortgagee, as loss payee and that all such insurance policies
require that 30 days' notice be given to the Master Servicer before
termination to the extent required by the related Mortgage, Note, or other
Mortgage Loan documents.
(b) (I) If the Master Servicer obtains and maintains a blanket
insurance policy with a Qualified Insurer at its own expense insuring against
fire and hazard losses or other required insurance on all of the Mortgage
Loans, it shall conclusively be deemed to have satisfied its obligations
concerning the maintenance of such insurance coverage set forth in Section
8.11(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
(i) there shall not have been maintained on one or more of the related
Mortgaged Properties a policy otherwise complying with the provisions of
Section 8.11(a), and (ii) there shall have been one or more losses which
would have been covered by such a policy had it been maintained, immediately
deposit into the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as Master Servicer hereunder, the Master
Servicer agrees to prepare and present, on behalf of itself, the Trustee and
Owners, claims
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under any such blanket policy which it maintains in a timely fashion in
accordance with the terms of such policy and to take such reasonable steps as
are necessary to receive payment or permit recovery thereunder.
(II) If the Master Servicer causes any Mortgaged Property or REO
Property to be covered by a master force placed insurance policy, which
policy is issued by a Qualified Insurer and provides no less coverage in
scope and amount for such Mortgaged Property or REO Mortgaged Property than
the insurance required to be maintained pursuant to Section 8.11(a), the
Master Servicer shall conclusively be deemed to have satisfied its
obligations to maintain insurance pursuant to Section 8.11(a). Such policy
may contain a deductible clause, in which case the Master Servicer shall, in
the event that (i) there shall not have been maintained on the related
Mortgaged Property or REO Property a policy otherwise complying with the
provisions of Section 8.11(a), and (ii) there shall have been one or more
losses which would have been covered by such a policy had it been maintained,
immediately deposit into the Collection Account from its own funds the amount
not otherwise payable under such policy because of such deductible.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause
contained in the related Mortgage or Note; provided, however, that the Master
Servicer shall not exercise any such right if the "due-on-sale" clause, in
the reasonable belief of the Master Servicer, is not enforceable under
applicable law. An opinion of counsel at the expense of the Master Servicer
delivered to the Trustee, the Depositor and the Certificate Insurer to the
foregoing effect shall conclusively establish the reasonableness of such
belief. In such event, the Master Servicer shall make reasonable efforts to
enter into an assumption and modification agreement with the person to whom
such property has been or is about to be conveyed, pursuant to which such
person becomes liable under the Note and, unless prohibited by applicable law
or the Mortgage Documents, the Mortgagor remains liable thereon. If the
foregoing is not permitted under applicable law, the Master Servicer is
authorized 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
Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Master Servicer outside of its
usual procedures for mortgage loans held in its own portfolio the Master
Servicer shall, prior to executing and delivering such agreement, obtain the
prior written consent of the Certificate Insurer. The Mortgage Loan, as
assumed, shall conform in all respects to the requirements, representations
and warranties of this Agreement. The Master Servicer shall notify the
Trustee that any such assumption or substitution agreement has been completed
by forwarding to the Trustee the original copy of such assumption or
substitution agreement (indicating the File to which it relates) which copy
shall be added by the Trustee to the related File and which shall, for all
purposes, be considered a part of such File to the same extent as all other
documents and instruments constituting a part thereof. The Master Servicer
shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Mortgage Loan shall
not be changed but shall remain as in effect immediately prior to the
assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required
monthly payments of principal or interest be deferred or forgiven. Any fee
collected by the Master Servicer or the Sub-Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement
shall be retained by or paid to the Master Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans; Inspection.
(a) The Master Servicer shall, consistent with the Servicing Standard,
foreclose upon or otherwise comparably effect the ownership in the name of
the Trustee on behalf of the Trust of Mortgaged Properties relating
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to defaulted Mortgage Loans as to which no satisfactory arrangements can be
made for collection of Delinquent payments and which the Master Servicer has
not purchased pursuant to Section 8.10(b). Subject to Section 8.09, in
connection with such foreclosure or other conversion, the Master Servicer
shall exercise such of the rights and powers vested in it hereunder, and use
the same degree of care and skill in their exercise or use, as prudent
mortgage lenders would exercise or use under the circumstances in the conduct
of their own affairs and consistent with the Servicing Standard, including,
but not limited to, advancing funds for the payment of taxes, amounts due
with respect to Senior Liens, and insurance premiums. Any amounts so
advanced shall constitute "Servicing Advances" within the meaning of Section
8.09(b) hereof. The Master Servicer shall sell any REO Property within the
later of (a) two years after the acquisition of the Mortgaged Property by the
Trust, (b) the extended time period granted by the Internal Revenue Service,
or (c) the extended time period deemed to be granted pursuant to the
provisions of Section 1.856-6(g) of the Treasury Regulations following the
failure of the Internal Revenue Service to respond to an extension request
letter, at such price as the Master Servicer deems necessary to comply with
this covenant. Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Owners solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fall to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
or result in the receipt by the Trust of any income from "non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code or any "net
income from foreclosure property" which is subject to taxation under the
REMIC Provisions. 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 Owners, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Owners for the period prior to the
sale of such REO Property. The Master Servicer shall take into account the
existence of any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on or under
a Mortgaged Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Mortgaged Property. The Master
Servicer shall not take any such action with respect to any Mortgaged
Property known by the Master Servicer to contain such wastes or substances or
to be within one mile of the site of such wastes or substances, without the
prior written consent of the Certificate Insurer.
(b) The Master Servicer shall determine, with respect to each defaulted
Mortgage Loan and in accordance with the Servicing Standard, when it has
recovered, whether through trustee's sale, foreclosure sale or otherwise, all
amounts it expects to recover from or on account of such defaulted Mortgage
Loan (exclusive of any possibility of a deficiency judgment), whereupon such
Mortgage Loan shall become a "Liquidated Loan". After a Mortgage Loan has
become a Liquidated Loan, the Master Servicer shall promptly prepare and
forward to the Depositor, the Trustee and the Certificate Insurer a report
detailing the Liquidation Proceeds received from the Liquidated Loan,
expenses incurred with respect thereto, and any loss incurred in connection
therewith, such report in the form attached hereto as Exhibit L.
(c) The Master Servicer shall not acquire any personal property
pursuant to this Section 8.13 unless either: (i) such personal property is
incident to real property (within the meaning of Section 856(e)(1) of the
Code) so acquired by the Master Servicer; or (ii) the Master Servicer shall
have obtained an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee (which opinion shall be
at the expense of the Trust) addressed to the Certificate Insurer, the
Trustee and the Master Servicer, to the effect that the holding of such
personal property as part of the Trust will not cause the imposition of taxes
on a Prohibited Transaction or cause either the Master REMIC or the
Subsidiary REMIC to fail to qualify as a REMIC under the REMIC provisions.
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Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, 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 shall
deliver to the Trustee a completed "Request for Release of Documents." Upon
receipt of such Request for Release of Documents, the Trustee shall promptly
release the related File, in trust to (i) the Master Servicer, or (ii) such
other party identified in the related Request for Release. Upon any such
payment in full, or the receipt of such notification that such funds have
been placed in escrow, the Master Servicer shall direct the Trustee in
writing to execute an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Mortgaged Property relating to such Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor
of payment in full, it being understood and agreed that no expense incurred
in connection with such instrument of satisfaction or assignment, as the case
may be, shall be chargeable to the Collection Account. In lieu of executing
any such satisfaction or assignment, as the case may be, the Master Servicer
may prepare and submit to the Trustee a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by the
Master Servicer; in such event, the Trustee shall execute and acknowledge
such satisfaction or assignment, as the case may be, and deliver the same
with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon written request of the
Master Servicer and delivery to the Trustee of a Request for Release signed
by an Authorized Officer of the Master Servicer, release the related File to
the Master Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Master Servicer.
Such receipt shall obligate the Master Servicer to return the File to the
Trustee when the need therefor by the Master Servicer no longer exists unless
the Mortgage Loan shall be liquidated, in which case, upon receipt of a
Request for Release evidencing such liquidation, the receipt shall be
released by the Trustee to the Master Servicer.
(c) The Master Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii)
alterations, (iii) removal, demolition or division of properties subject to
Mortgages and (iv) second mortgage subordination agreements. No application
for approval shall be considered by the Master Servicer unless: (x) the
provisions of the related Note and Mortgage have been compiled with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not
exceed the maximum Loan-to-Value Ratio and debt-to-income ratio established
in accordance with the underwriting standards of the Mortgage Loans; and (z)
the lien priority of the related Mortgage is not affected. Upon receipt by
the Trustee of an Officer's Certificate executed on behalf of the Master
Servicer setting forth the action proposed to be taken in respect of a
particular Mortgage Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Master Servicer the consent or partial release so
requested by the Master Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate
delivered by the Master Servicer pursuant to this paragraph. The Master
Servicer shall notify the Certificate Insurer and the Rating Agencies if an
application is approved under clause (y) above without approval in writing by
the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan. The Master Servicer shall be entitled to retain additional
servicing compensation in the form of prepayment charges, release fees, bad
check charges, assumption fees, modification or extension fees, late payment
charges, prepayment penalties, or any other service-related fees, Net
Liquidation Proceeds not required to be deposited in the Collection Account
pursuant to Section 8.08(c)(iii) and similar items, to the extent collected
from Mortgagors.
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Section 8.16 Annual Statement as to Compliance.
The Master Servicer, at its own expense, will deliver to the Trustee,
the Depositor, the Certificate Insurer and the Rating Agencies, not later
than 90 days following the end of the fiscal year of the Master Servicer
which as of the Startup Day ends on the last day of December, commencing in
1998, an Officer's Certificate stating, as to each signer thereof, that (i) a
review of the activities of the Master Servicer during such preceding fiscal
year and of performance under this Agreement has been made under such
officers' supervision, (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment
of all such obligations, specifying each such default known to such officers
and the nature and status thereof including the steps being taken by the
Master Servicer to remedy such default, and (iii) the Master Servicer's
short-term commercial paper rating.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
(a) Not later than 90 days following the end of each fiscal year of the
Master Servicer, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer which includes an assertion that the Master Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in either the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America or the
Audit Program for Mortgages serviced by FHLMC, with respect to the servicing
of residential mortgage loans during the most recently completed fiscal year
and (ii) on the basis of an examination conducted by such firm in accordance
with standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
In rendering its report such firm may rely, as to matters relating to the
direct servicing of residential mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Sub-Servicers. Immediately upon receipt of such report, the Master Servicer
shall furnish a copy of such report to the Trustee, the Certificate Insurer
and each Rating Agency. Copies of such statement shall be provided by the
Trustee to any Owner upon request at the Master Servicer's expense, provided
that such statement is delivered by the Master Servicer to the Trustee.
(b) [Reserved.]
(c) The Depositor shall, on behalf of the Trust, prepare, sign and file
with the Securities and Exchange Commission any and all reports, statements
and information respecting the Trust which the Depositor determines are
required to be filed with the Securities and Exchange Commission pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
each such report, statement and information to be filed on or prior to the
required filing date for such report, statement or information. The
Depositor shall file with the Securities and Exchange Commission, within
twenty-five days of the Startup Day, a Current Report on Form 8-K together
with this Agreement.
Section 8.18 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Master Servicer shall provide to the Trustee, the Certificate
Insurer and the supervisory agents and examiners of each of the foregoing
(which, in the case of supervisory agents and examiners, may be required by
applicable state and federal regulations) access to the documentation
regarding the Mortgage Loans, 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.
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Section 8.19 Merger or Consolidation of the Master Servicer;
Assignment.
Subject to the following paragraph, the Master Servicer will keep in
full effect its existence, rights and good standing as a federally chartered
savings bank under the laws of the United States of America and will not
jeopardize its ability to do business in each jurisdiction in which one or
more of the Mortgaged Properties are located or to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage
Loans and to perform its respective duties under this Agreement.
The Master Servicer may be merged or consolidated with or into any
Person, or transfer all or substantially all of its assets to any Person, in
which case any Person resulting from any merger or consolidation to which it
shall be a party, or any Person succeeding to its business, shall be the
successor of the Master Servicer and shall be deemed to have assumed all of
the liabilities of the Master Servicer hereunder, if each of the Rating
Agencies has confirmed in writing that such merger, consolidation or transfer
and succession shall not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by such Rating Agency
to any Class of Certificates.
Section 8.20 Removal of Master Servicer; Resignation of Master
Servicer.
(a) The Certificate Insurer (or the Owners, with the consent of the
Certificate Insurer pursuant to Section 6.11 hereof) may direct the Trustee
to remove the Master Servicer upon the occurrence of any of the following
events:
(i) The Master Servicer shall (I) apply for or consent
to the appointment of a receiver, trustee, liquidator or custodian
or similar entity with respect to itself or its property, (II)
admit in writing its inability to pay its debts generally as they
become due, (III) make a general assignment for the benefit of
creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of the
United States of America or file a voluntary petition or answer
seeking reorganization, an arrangement with creditors or an order
for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a petition
filed against it in any bankruptcy, reorganization or insolvency
proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing; or
(ii) If without the application, approval or consent of
the Master Servicer, a proceeding shall be instituted in any court
of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect
of the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts,
the appointment of a trustee, receiver, liquidator or custodian or
similar entity with respect to the Master Servicer or of all or any
substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Master Servicer in good faith,
the same shall (A) result in the entry of an order for relief or
any such adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of ninety (90) consecutive
days; or
(iii) The Master Servicer shall fail to perform in
any material respect any one or more of its obligations hereunder
and shall continue in default thereof for a period of thirty (30)
days (except that there shall be no grace period for a failure by
the Master Servicer to remit the Monthly Remittance Amount to the
Trustee as provided in Section 8.08(d)(ii)(a)) after the earlier of
(a) actual knowledge of an officer of the Master Servicer or (b)
receipt of notice from the Trustee or the Certificate Insurer of
said failure; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners
or
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the Certificate Insurer for a period of sixty (60) days after the
earlier of the Master Servicer's discovery or receipt of notice
thereof; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the
Certificate Insurer; or
(v) There shall have occurred, and the Certificate
Insurer shall have notified the Master Servicer and the Trustee of,
an event of default by the Master Servicer under the Insurance
Agreement, provided (except in the case of a default by the Master
Servicer under Section 5.01(f) of the Insurance Agreement) that no
Certificate Insurer Default exists; or
(vi) The merger, consolidation or other combination of
the Master Servicer with or into any other entity, unless such
merger, consolidation or other combination is in accordance with
Section 8.19.
(b) The Certificate Insurer may instruct the Trustee to remove the
Master Servicer upon (a) the failure by the Master Servicer to make any
required Servicing Advance when due or (b) the failure of the Master Servicer
to make any required P&I Advance or to pay any Compensating Interest when due
which failure remains unremedied until 12:00 p.m. (noon) New York time on the
next succeeding Business Day.
(c) If any event described in subsection (b) above occurs and is
continuing, the Certificate Insurer may terminate the Master Servicer in
accordance with this Section and the Trustee shall act as successor Master
Servicer.
The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Master Servicer's
servicing activities that comes to the attention of the Certificate Insurer
from time to time.
(d) If any event described in sections (a) and (b) above occurs and is
continuing, the Certificate Insurer shall notify the Owners of the Class R
Certificates in writing if the Certificate Insurer intends to terminate the
Master Servicer in its capacity as Master Servicer under this Agreement.
(e) The Master Servicer may assign its rights and delegate its duties
and obligations under this Agreement in connection with the sale or transfer
of a substantial portion of its mortgage servicing or asset management
portfolio, provided that: (i) the purchaser or transferee accepting such
assignment and delegation (A) shall be satisfactory to the Trustee and the
Certificate Insurer, (B) shall be (I) an established mortgage finance
institution, bank or mortgage servicing institution, organized and doing
business under the laws of any state of the United States or the District of
Columbia, authorized under such laws to perform the duties of a servicer of
mortgage loans or (II) a Person resulting from a merger, consolidation or
succession that is permitted under Section 8.19, and (C) shall execute and
deliver to the Trustee and the Certificate Insurer an agreement, in form and
substance reasonably satisfactory to the Trustee and the Certificate Insurer,
which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Master Servicer under this Agreement from and after the date
of such agreement; (ii) as evidenced by a letter from each Rating Agency
delivered to the Trustee and the Certificate Insurer, each Rating Agency's
rating or ratings of the Certificates in effect immediately prior to such
assignment and delegation will not be qualified, downgraded or withdrawn as a
result of such assignment and delegation; (iii) the Master Servicer shall not
be released from its obligations under this Agreement that arose prior to the
effective date of such assignment and delegation under this Section 8.20(e);
and (iv) the rate at which the Servicing Fee (or any component thereof) is
calculated shall not exceed the rate in effect prior to such assignment and
delegation. Upon acceptance of such assignment and delegation, the purchaser
or transferee shall be the successor Master Servicer hereunder. 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 or are in material conflict by reason of
applicable law with any other activities carried on by it, the other
activities of the Master Servicer so causing such a conflict being of a type
and nature carried on by the Master Servicer at the date of this Agreement.
Any such determination permitting the resignation of the Master Servicer
shall be evidenced by an opinion of counsel to such effect which shall be
delivered to the Trustee and the Certificate Insurer at no expense to the
Trustee or to the Certificate Insurer.
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(f) No removal or resignation of the Master Servicer shall become
effective until the Trustee or a Successor Master Servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with
this Section.
(g) Upon removal or resignation of the Master Servicer, the Master
Servicer at its own expense also shall promptly deliver or cause to be
delivered to a successor servicer or the Trustee all the books and records
(including, without limitation, records kept in electronic form) that the
Master Servicer has maintained for the Mortgage Loans, including all tax
bills, assessment notices, insurance premium notices and all other documents
as well as all original documents then in the Master Servicer's possession.
(h) Any collections then being held by the Master Servicer prior to its
removal and any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the successor Master Servicer.
(i) Upon removal or resignation of the Master Servicer, the Trustee (x)
may solicit bids for a successor servicer as described below, and (y) pending
the appointment of a successor servicer as a result of soliciting such bids,
shall serve as Master Servicer. The Trustee shall, if it is unable to obtain
a qualifying bid and is prevented by law from acting as Master Servicer,
appoint, or petition a court of competent jurisdiction to appoint, any
housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved seller-servicer by FNMA or FHLMC for
first and second mortgage loans and having equity of not less than $1,500,000
(or such lower level as may be acceptable to the Certificate Insurer), as
determined in accordance with generally accepted accounting principles and
acceptable to the Certificate Insurer and the Owners of the Class R
Certificates (provided that if the Certificate Insurer and such Owners cannot
agree within a reasonable period of time as to the acceptability of such
successor Master Servicer, the decision of the Certificate Insurer shall
control) 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. The compensation of any successor Master Servicer
(including, without limitation, the Trustee) so appointed shall be the
aggregate Servicing Fee, together with the other servicing compensation in
the form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. The Trustee shall be obligated to serve as successor
Master Servicer whether or not the fee described in the preceding sentence is
paid by the Sellers, but shall in any event be entitled to receive, and to
enforce payment of, such fee from the Sellers.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that
the successor Master Servicer shall be entitled to the full amount of the
aggregate Servicing Fees as servicing compensation, together with the other
servicing compensation in the form of assumption fees, late payment charges
or otherwise as provided in Sections 8.08 and 8.15. Within thirty days after
any such public announcement, the Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid as
to the price they will pay to obtain servicing. The Trustee shall deduct
from any sum received by the Trustee from the successor Master Servicer in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder. After such deductions, the remainder
of such sum less any amounts due the Trustee or the Trust from the Master
Servicer shall be paid by the Trustee to the removed Master Servicer at the
time of such sale, transfer and assignment to the successor Master Servicer.
(k) The Trustee and such successor Master Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession, including the notification to all Mortgagors of the
transfer of servicing. The Master Servicer agrees to cooperate with the
Trustee and any successor Master Servicer in effecting the termination of the
Master Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Trustee or such successor Master Servicer, as
applicable, all documents and records reasonably requested by it to enable it
to assume the Master Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Master Servicer, as applicable, all
amounts which then have been or should have been deposited in the Collection
Account by the Master Servicer or which are thereafter received with respect
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to the Mortgage Loans. Neither the Trustee nor any other successor Master
Servicer shall be held liable by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by (i)
the failure of the Master Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Master Servicer. Subject
to subsection (j), if the Master Servicer resigns or is replaced hereunder,
the Master Servicer (other than the Trustee) agrees to reimburse the Trust,
the Owners and the Certificate Insurer for the costs and expenses associated
with the transfer of servicing to the replacement Master Servicer.
(l) Any successor Master Servicer (other than the Trustee), upon
assuming the duties of Master Servicer hereunder, shall immediately make all
required P&I Advances and deposit them to the Collection Account which the
Master Servicer has theretofore failed to remit with respect to the Mortgage
Loans; provided, however, that if the Trustee is acting as successor Master
Servicer, the Trustee shall only be required to make P&I Advances (including
the P&I Advances described in this clause (I)) if, in the Trustee's
reasonable good faith judgment, such P&I Advances will ultimately be
recoverable from the Mortgage Loans.
(m) The Trustee shall give notice to the Certificate Insurer, to the
Mortgagors, to Moody's and to Standard & Poor's of the transfer of the
servicing to the successor Master Servicer.
(n) The Trustee shall give notice to the Certificate Insurer, the
Owners, the Trustee, the Sellers, Moody's and Standard & Poor's of the
occurrence of any event described in paragraphs (a) or (b) above of which the
Trustee is aware.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) Upon reasonable notice, the Trustee, the Certificate Insurer or any
agents thereof may inspect the Master Servicer's servicing operations and
discuss the servicing operations of the Master Servicer during the Master
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Master
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Master Servicer;
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that
would meet the requirements of FNMA or FHLMC if it were the purchaser of the
Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from FNMA or FHLMC. The Master Servicer shall also maintain a
fidelity bond in the form and amount that would meet the requirements from
FNMA or FHLMC, unless the Master Servicer has obtained a waiver of such
requirements from FNMA or FHLMC. The Master Servicer shall be deemed to have
complied with this provision if a Master Servicer Affiliate has such errors
and omissions policy and fidelity bond coverage and, by the terms of such
insurance policy and fidelity bond, the coverage afforded thereunder extends
to the Master Servicer. Any such errors and omissions policy or fidelity
bond shall by its terms not be cancelable without thirty days' prior written
notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions
and a fidelity bond which would meet such requirements. Upon the request of
the Trustee or the Certificate Insurer, the Master Servicer shall cause to be
delivered to such requesting Person a certified true copy of such fidelity
bond or errors and omission policy.
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance
Policy,
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of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the latest to occur of (a) the final payment
or other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate, (b) the disposition of all Property
acquired in respect of any Mortgage Loan remaining in the Trust Estate, (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups
included within the Trust is effected as described below and (d) the final
payment to the Certificate Insurer of all amounts then owing to it. To
effect a termination of this Agreement pursuant to clause (c) above, the
Owners of a majority in Percentage Interest represented by the Class A
Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the Trust to adopt a plan of complete liquidation, which plan shall
be described by such Owners with specificity, for each of the Mortgage Loan
Groups and each of the Master REMIC and the Subsidiary REMIC, as contemplated
by Section 860F(a)(4) of the Code and (ii) provide to the Trustee an opinion
of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee (the cost of which opinion shall be an
expense of the Trust and which opinion shall be at no expense to the Trustee)
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee either shall sell the Mortgage Loans and distribute the
proceeds of the liquidation of the Trust Estate, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 90th day after the date of adoption of the plan
of liquidation and such liquidation qualifies as a Qualified Liquidation. In
no event, however, will the Trust created by this Agreement continue beyond
the earlier of (i) the expiration of twenty-one (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 Saint James, living on the
date hereof and (ii) the Latest Possible Maturity Date. The Trustee shall
give written notice of termination of this Agreement to each Owner in the
manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R Certificates
and Master Servicer.
(a) On any Monthly Remittance Date on or after the Optional Termination
Date, the Class R Optionholder may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Mortgage Loans and
all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate on terms agreed upon between the Certificate Insurer and the
Class R Optionholder at a price no less than 100% of the aggregate Loan
Balances of the Mortgage Loans as of the day of purchase minus amounts
remitted from the Collection Account to the Distribution Account representing
collections of principal on the Mortgage Loans during the current Due Period,
plus one month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus all accrued and unpaid Servicing Fees plus the
aggregate amount of any unreimbursed Trust Estate expenses, P&I Advances and
Servicing Advances and any P&I Advances which the Master Servicer has
theretofore failed to remit. In connection with such purchase, the Master
Servicer shall remit to the Trustee all amounts then on deposit in the
Collection Account for deposit to the Distribution Account, which deposit
shall be deemed to have occurred immediately preceding such purchase. The
Master Servicer shall indemnify the Certificate Insurer for any claims under
the Certificate Insurance Policy for the exercise of such option.
(b) In addition to the foregoing, following the Optional Termination
Date, on or after the first Monthly Remittance Date on which the aggregate of
the Loan Balances of the Mortgage Loans is less than 5% of the Original
Aggregate Loan Balance, the Master Servicer may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage
Loans and all property theretofore acquired in respect of any Mortgage Loan
by foreclosure, deed in lieu of foreclosure, or otherwise then remaining in
the Trust Estate at terms agreed upon between the Certificate Insurer and the
Master Servicer, at a price no less than 100% of the aggregate Loan Balances
of the Mortgage Loans as of the day of purchase minus amounts remitted from
the Collection Account to the Distribution Account representing collections
of principal on the Mortgage Loans during the Current Due Period, plus one
month's interest on such amount computed at the Adjusted Pass-Through Rate,
plus all accrued and unpaid Servicing Fees plus the aggregate amount of any
unreimbursed Trust Estate expenses, P&I Advances and Servicing Advances and
the interest component of any P&I Advances which Master Servicer has
theretofore failed to remit.
(c) In connection with any such purchase, such Class R Optionholder or
the Master Servicer, as
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applicable, shall adopt, and shall set forth with specificity, and the
Trustee shall adopt, as to the Trust, a plan of complete liquidation for all
of the Mortgage Loan Groups as contemplated by Section 860F(a)(4) of the Code
and shall provide to the Trustee an opinion of counsel experienced in federal
income tax matters (at such purchaser's expense) acceptable to the Trustee to
the effect that such purchase and liquidation constitutes, as to the Trust
and each of the Master REMIC and the Subsidiary REMIC, a Qualified
Liquidation. In addition, such Class R Optionholder, the Master Servicer or
the Certificate Insurer, as applicable, shall provide to the Trustee an
opinion of counsel (at such purchaser's expense) acceptable to the Trustee to
the effect that such purchase and liquidation does not constitute a
preference payment pursuant to the United States Bankruptcy Code.
(d) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or
the Master Servicer, as the case may be, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
Section 9.03 Reserved
Section 9.04 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal
can be taken, to the effect that the Trust does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), within 30 calendar days following such Final Determination
(i) the Certificate Insurer or the Owners of a majority in Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer shall direct the Trustee on behalf of the
Trust to adopt a plan of complete liquidation, which shall be described by
such Certificate Insurer or Owners with specificity, as contemplated by
Section 860F(a)(4) of the Code and liquidate the Trust in a Qualified
Liquidation within 89 days thereafter or (ii) the Master Servicer or the
Certificate Insurer may notify the Trustee of the Master Servicer's or the
Certificate Insurer's, as applicable, determination to purchase from the
Trust all (but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate at a price equal to the sum of
(w) the greater of (I) 100% of the aggregate Loan Balances of the Mortgage
Loans as of the day of purchase minus amounts remitted from the Collection
Account representing corrections of principal on the Mortgage Loans during
the current Due Period, and (II) the fair market value of such Mortgage Loans
(disregarding accrued interest), (x) one month's interest on such amount
computed at the Adjusted Pass-Through Rate, (y) the aggregate amount of any
unreimbursed P&I Advances and Servicing Advances and the interest portion of
any P&I Advances which the Master Servicer has theretofore failed to remit
and (z) any Reimbursement Amounts due and owing to the Certificate Insurer.
Upon receipt of such direction or notice, the Trustee shall notify the
Owners of the Class R Certificates of such election to liquidate or such
determination to purchase, as the case may be (the "Termination Notice").
The Owners of a majority of the Percentage Interests of the Class R
Certificates then Outstanding may, within 60 days from the date of receipt of
the Termination Notice (the "Purchase Option Period"), at their option,
purchase from the Trust all (but not fewer than all) Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate at a purchase price equal to the
aggregate Loan Balances of all Mortgage Loans as of the date of such
purchase, plus (a) one month's interest on such amount at the Adjusted
Pass-Through Rate, (b) the aggregate amount of any unreimbursed P&I Advances
and Servicing Advances and (c) the interest portion of any P&I Advances which
the Master Servicer has theretofore failed to remit. If, during the Purchase
Option Period, the Owners of the Class R Certificates have not exercised the
option described in the immediately preceding paragraph, then upon the
expiration of the Purchase Option Period (i) in the event that neither the
Master Servicer nor the Certificate Insurer has elected to purchase the
Mortgage Loans, the Trustee at the written direction of the Master Servicer
shall sell the Mortgage Loans and distribute the proceeds of the liquidation
of the Trust Estate, each in accordance with the plan of complete
liquidation, such that, if so directed, the liquidation of the Trust Estate,
the distribution of the proceeds of the liquidation and the termination of
this Agreement occur no later than the close of the 60th day, or such later
day as the Certificate Insurer or the Owners of the Class A Certificates with
the consent of the Certificate Insurer shall permit or direct in writing,
after
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the expiration of the Purchase Option Period and (ii) in the event that the
Master Servicer or the Certificate Insurer, as applicable, has given the
Trustee notice of the Master Servicer's or the Certificate Insurer's
determination to purchase the Trust Estate, which notice shall set forth with
specificity a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code) the Trustee shall adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and the Master
Servicer or the Certificate Insurer shall, within 60 days, purchase all (but
not fewer than all) Mortgage Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure or otherwise then remaining in the
Trust Estate for the price calculated as described in clause (a)(ii) above.
In connection with such Purchase, the Master Servicer shall remit to the
Trustee all amounts then on deposit in the Collection Account for deposit to
the Distribution Account, which deposit shall be deemed to have occurred
immediately preceding such purchase, and shall provide to the Trustee, at the
Master Servicer's or Certificate Insurer's expense, as applicable, an opinion
of counsel experienced in federal income tax matters that such purchase shall
constitute a Qualified Liquidation.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an opinion of
counsel experienced in federal income tax matters (at such Owner's expense)
acceptable to the Certificate Insurer selected by such Owners of the Class R
Certificates, which opinion shall be reasonably satisfactory in form and
substance to the Certificate Insurer, to the effect that the effect of the
Final Determination is to increase substantially the probability that the
gross income of the Trust will be subject to federal taxation, purchase from
the Trust all (but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate at a purchase price equal to the
greater of (i) the aggregate Loan Balances of all Mortgage Loans as of the
date of such purchase, plus (a) one month's interest on such amount computed
at the Adjusted Pass-Through Rate, (b) the aggregate amount of unreimbursed
P&I Advances and (c) any P&I Advances which the Master Servicer has
theretofore failed to remit and any Reimbursement Amounts due the Certificate
Insurer and (ii) the fair market value of the assets of the Trust on such
Date. In connection with such purchase, the Master Servicer shall remit to
the Trustee all amounts then on deposit in the Collection Account for deposit
to the Distribution Account, which deposit shall be deemed to have occurred
immediately preceding such purchase. The foregoing opinion shall be deemed
satisfactory unless the Certificate Insurer gives the Owners of a majority of
the Percentage Interests of the Class R Certificates notice that such opinion
is not satisfactory within thirty days after receipt of such opinion. In
connection with any such purchase, such Owners shall direct the Trustee to
adopt and shall set forth with specificity, a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and shall provide to the
Trustee at such Owners' expense, an opinion of counsel experienced in federal
income tax matters to the effect that such purchase pursuant to such plan
constitutes a Qualified Liquidation.
Section 9.05 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the
Distribution Account; provided, however, that any amounts representing
unreimbursed P&I Advances and Servicing Advances theretofore funded by the
Master Servicer from the Master Servicer's own funds shall be paid by the
Trustee to the Master Servicer from the proceeds of the Trust Estate.
Section 9.06 Trustee Tax Reporting.
The Trustee shall attach a statement specifying the first day of
the 90-day liquidation period in connection with any termination in a
Qualified Liquidation to the final federal income tax return of each of the
Master REMIC and the Subsidiary REMIC.
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Trustee and (B) the banking institution that is the Trustee shall serve as
the Trustee at all times under this Agreement unless the Trustee resigns or
is removed, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished
pursuant to and conforming to the requirements of this Agreement; but in the
case of any such certificates or opinions which by any provision hereof are
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Master Servicer hereunder,
the Trustee is hereby empowered to perform the duties of the Master Servicer
it being expressly understood, however, that the foregoing describes a power
and not an obligation of the Trustee, and that all parties hereto agree that,
prior to any termination of the Master Servicer, the Master Servicer and,
thereafter, the Trustee or any other successor servicer shall perform such
duties. Specifically, and not in limitation of the foregoing, the Trustee
shall upon termination or resignation of the Master Servicer, and pending the
appointment of any other Person as successor Master Servicer, have the power
and duty during its performance as successor Master Servicer:
(i) to collect payments on each Note;
(ii) to foreclose on defaulted Mortgage Loans;
(iii)to enforce due-on-sale clauses and to enter
into assumption and substitution agreements
as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any
error of judgment made in good faith by an
Authorized Officer of the Trustee, unless it shall
be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by
it in good faith in accordance with any
direction given pursuant to Section 6.11.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or
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otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it. None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges
of, the Master Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken. The Trustee may not act under this
subparagraph (g) without the prior written consent of the Certificate
Insurer, unless a Certificate Insurer Default exists.
(h) Upon the direction of the Certificate Insurer, the Trustee hereby
agrees to oppose any attempt to treat the Mortgage Loans as the property of
the estate of either Seller, the Master Servicer or the Depositor.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the
Owners entitled hereto on any Distribution Date amounts
available for distribution in accordance with the terms
hereof (provided, however, that any such failure which
is due to circumstances beyond the control of the
Trustee shall not be a cause for removal hereunder); or
(2) the Trustee shall breach or fail in the
performance of any covenant or agreement of the Trustee
in this Agreement, or if any representation or warranty
of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto
or in connection herewith shall prove to be incorrect
in any material respect as of the time when the same
shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified
mail, to the Trustee by the Seller, the Certificate
Insurer, or by the Owners of at least 25 % of the
aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates then
Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests
represented by each of the Class X Certificates and the
Class R Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction for the
appointment of a conservator or 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 Trustee, and such decree
or order shall have remained in force undischarged or
unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the
Trustee is appointed in any insolvency, readjustment of
debt, marshalling of assets and
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liabilities or similar proceedings of or relating to
the Trustee or relating to all or substantially all of
its property; or
(5) the Trustee shall become insolvent (however
insolvency is evidenced), generally fail to pay its
debts as they come due, file or consent to the filing
of a petition to take advantage of any applicable
insolvency or reorganization statute, make an
assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the
foregoing.
The Depositor shall give to the Certificate Insurer, Moody's and
Standard & Poor's notice of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the
prior written consent (which shall not be unreasonably withheld) of the
Certificate Insurer, the Depositor and the Owners of a majority of the
Percentage Interests represented by the Class A Certificates or if there are
no Class A Certificates then outstanding by such majority of the Percentage
Interests represented by each of the Class X Certificates and the Class R
Certificates, may, whether or not the Trustee resigns pursuant to Section
10.09(b) hereof, concurrently with the giving of notice to the Trustee, and
without delaying the 30 days required for notice therein, appoint a successor
Trustee pursuant to the terms of Section 10.09 hereof.
(c) To the extent of any costs incurred in removing the Trustee which
are not recovered from the former Trustee, such costs will be payable
pursuant to Section 10.07 hereof.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting based upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or
other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Depositor, the Sellers, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned
herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction
of any of the Owners pursuant to this Agreement, unless Such Owners shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order,
bond, note or other paper or document, but the Trustee in its discretion may
make such further inquiry or investigation into such facts or matters as it
may see fit;
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys or custodians;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of
the Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(j) pursuant to the terms of this Agreement, the Master Servicer is
required to furnish to the Trustee from time to time certain information and
to make various calculations which are relevant to the performance of the
Trustee's duties under this Agreement. The Trustee shall be entitled to rely
in good faith on any such information and calculations in the performance of
its duties hereunder, (i) unless and until an Authorized Officer of the
Trustee has actual knowledge, or is advised by any Owner of a Certificate
(either in writing or orally with prompt written or telecopied confirmation),
that such information or calculations is or are incorrect, or (ii) unless
there is a manifest error in any such information: and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Mortgage Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for
the use or application of any funds paid to the Depositor, the Sellers or the
Master Servicer in respect of the Mortgage Loans or deposited into or
withdrawn from the Collection Account by the Depositor, the Master Servicer
or the Sellers, and shall have no responsibility for filing any financing or
continuation statement in any public office at any time or otherwise to
perfect or maintain the perfection of any security interest or lien or to
prepare or file any Securities and Exchange Commission filings for the Trust
or to record this Agreement. The Trustee shall not be required to take
notice or be deemed to have notice or knowledge of any default unless an
Authorized Officer of the Trustee shall have received written notice thereof
or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default
has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder shall be segregated from
other trust funds. The Trustee shall be under no liability for interest on
any money received by it hereunder except as otherwise agreed with the
Sellers and except to the extent of income or other gain on investments which
are deposits in or certificates of deposit of the Trustee in its commercial
capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
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The Trustee shall receive compensation for fees and
reimbursement for expenses. The Trustee shall have no lien on
the Trust Estate for the payment of such fees and expenses. The
Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee pursuant to
Section 7.03(c)(iii)(C) and reimburse itself for expenses at the
same level of priority as the Trustee Fee. The Trustee and any
director, officer, employee or agent of the Trustee shall be
indemnified by the Trust and held harmless against any loss,
liability or expense (not including expenses, disbursements and
advances incurred or made by the Trustee, including the
compensation and the reasonable expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's
performance in accordance with the provisions of this Agreement)
incurred by the Trustee arising out of or in connection with the
acceptance or administration of its obligations and duties under
this Agreement, other than any loss, liability or expense (i)
resulting from the Master Servicer's actions or omissions in
connection with this Agreement and the Mortgage Loans, (ii) that
constitutes a specific liability of the Trustee pursuant to
Section 10.13 or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or as a result of a
breach of the Trustee's obligations under Article X hereof. The
Master Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising in
respect of such Master Servicer's acts or omissions in connection
with this Agreement and the Mortgage Loans serviced by such
Master Servicer. Such indemnity shall survive the termination or
discharge of this Agreement and the resignation or removal of the
Trustee.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
be a corporation or association organized and doing business
under the laws of the United States of America or of any State
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 the United States of
America, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's (or such
lower rating as may be acceptable to Standard & Poor's) and A2 by
Moody's (or such lower rating as may be acceptable to Moody's).
If such Trustee 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, 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. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall, upon
the request of the Depositor with the consent of the Certificate
Insurer (which consent shall not be unreasonably withheld) or of
the Certificate Insurer, resign immediately in the manner and
with the effect hereinafter specified in this Article X.
Section 10.09 Resignation and Removal: Appointment of
Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor trustee pursuant to this Article X shall become
effective until the acceptance of appointment by the successor
trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed,
may resign at any time by giving written notice of resignation to
the Depositor and by mailing notice of resignation by first-class
mail, postage prepaid, to the Certificate Insurer and the Owners
at their addresses appearing on the Register. A copy of such
notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor
shall promptly appoint a successor trustee or trustees acceptable
to the Certificate Insurer by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of each
Seller, one copy of which instrument shall be delivered to the
Trustee so resigning, one copy to the successor trustee or
trustees and one copy to the Master Servicer. If no successor
trustee shall have been appointed and have accepted appointment
within 30 days after the giving of such notice of resignation,
the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or the
Certificate Insurer or any Owner on behalf of himself and all
others similarly situated, may obtain any such court for the
appointment of a successor trustee. A copy of any such petition
shall be promptly delivered to the Master Servicer. Such court
may thereupon, after such notice, if any, as it may deem proper
and appropriate, appoint a successor trustee.
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(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written
request therefor by the Depositor or by the Certificate Insurer,
the Certificate Insurer or the Depositor with the written consent
of the Certificate Insurer may remove the Trustee and appoint a
successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust
by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(d) The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates with
the consent of the Certificate Insurer, or, if there are no Class
A Certificates then Outstanding, by such majority of the
Percentage Interests represented by each of the Class X
Certificates and the Class R Certificates, may at any time remove
the Trustee and appoint a successor trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed,
to the successor trustee so appointed, to the Depositor, to the
Master Servicer and to the Certificate Insurer, copies of the
record of the act taken by the Owners, as provided for in Section
11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement, or becomes ineligible pursuant
to Section 10.08 to serve as Trustee, the Certificate Insurer may
remove the Trustee and appoint a successor trustee by written
instrument, in triplicate, signed by the Certificate Insurer duly
authorized, one complete set of which instruments shall be
delivered to the Depositor,one complete set to the Trustee so
removed, one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of the
Trustee for any cause, the Depositor shall promptly appoint a
successor trustee acceptable to the Certificate Insurer. If
within one year after such resignation, removal or incapability
or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a
majority of the Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate
Insurer, the successor trustee so appointed shall forthwith upon
its acceptance of such appointment become the successor trustee
and supersede the successor trustee appointed by the Depositor.
If no successor trustee shall have been so appointed by the
Depositor or the Owners and shall have accepted appointment in
the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail,
postage prepaid, to the Certificate Insurer, to the Rating
Agencies and to the Owners as their names and addresses appear in
the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor
Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust
and to its predecessor Trustee an instrument accepting such
appointment hereunder and stating its eligibility to serve as
Trustee 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 vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the
Depositor or the successor Trustee, such predecessor Trustee
shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all
of the rights, powers and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver to such
successor trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any
and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and
trusts.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Successor Trustee shall mail notice
thereof by first-class mail, postage prepaid, to the Owners at
the last addresses appearing upon
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the Register.
No successor trustee shall accept its appointment unless at
the time of such acceptance such Successor shall be qualified and
eligible under this Article X.
Section 10.11 Merger, Conversion, Consolidation or
Succession to Business of the Trustee.
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or
filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation or
association shall be otherwise qualified and eligible under this
Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by
merger, conversion or consolidation to such Trustee may adopt
such execution and deliver the Certificates so executed with the
same effect as if such successor Trustee had itself executed such
Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the
Internal Revenue Service's Form 1099 and any other statement
required by applicable Treasury regulations as determined by the
Tax Matters Person, and shall withhold, as required by applicable
law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding
tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) As required by law or upon request of the Tax Matters
Person and except as otherwise specifically set forth in
subsection (a) above, the Trustee shall prepare and timely file
all reports required to be filed by the Trust with any federal,
state or local governmental authority having jurisdiction over
the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and
Schedule Q and the form required under Section 6050K of the Code,
if applicable to REMICs. Furthermore, the Trustee shall report
to Owners, if required, with respect to the allocation of
expenses pursuant to Section 212 of the Code. The Trustee shall
collect any forms or reports from the Owners it determines to be
required under applicable federal, state and local tax laws.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and
undertaken by the Trustee herein. Neither the Trustee nor any of
the directors, officers, employees or agents of the Trustee shall
be under any liability on any Certificate or otherwise to the
Certificate Insurer, the Depositor, the Sellers, the Master
Servicer or any Owner for any action taken or for refraining from
the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors,
officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent
action, negligent failure to act or willful misconduct in the
performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on
investments of amounts in the Distribution Account (except for
any losses on obligations on which the bank serving as Trustee is
the obligor). In addition, each of the Sellers and the Master
Servicer, severally, hereby indemnifies the Trustee from, and
holds it harmless against, any and all losses, liabilities,
damages, claims or expenses (including reasonable legal fees and
expenses) of whatsoever kind arising out of or in connection with
the performance by such party of its duties hereunder other than
those resulting from the negligence or bad faith of the Trustee.
The Trustee and any director, officer, employee or agent of the
Trustee may rely and shall be protected in acting or refraining
from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters
arising hereunder.
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Section 10.14 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 Estate or
Mortgaged Property 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 and reasonably acceptable to the
Certificate Insurer to act as co-Trustee or co-Trustees, jointly
with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity
and for the benefit of the Owners, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions
of this Section 10. 14, such powers, duties, obligations, rights
and trusts as the Master Servicer and the Trustee may consider
necessary or desirable. If the Master Servicer shall not have
joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case any event indicated in
Section 8.20(a) shall have occurred and be continuing, the
Trustee subject to reasonable approval of the Certificate Insurer
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 10.08 and no notice to Owners of the appointment of any
co-Trustee or separate Trustee shall be required under Section
10.09.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be
conferred or imposed upon and exercised or performed by
the Trustee and such separate Trustee or co-Trustee
jointly (it being understood that such separate Trustee
or co-Trustee is not authorized to act separately
without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether
as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate 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 co-Trustee hereunder shall be held
personally liable by reason of any act or emission of
any other co-Trustee hereunder; and
(iii) The Master Servicer, the Certificate
Insurer and the Trustee acting jointly at that 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 Section 10.14. 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.
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 10.15 Trustee to Hold the Certificate Insurance
Policy.
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The Trustee will hold the Certificate Insurance Policy
in trust as agent for the Owners of the Class A Certificates for
the purpose of making claims thereon and distributing the
proceeds thereof. Neither the Certificate Insurance Policy nor
the amounts paid on the Certificate Insurance Policy will
constitute part of the Trust or assets of either REMIC created by
this Agreement. Each Owner of Class A Certificates by accepting
its Class A Certificates appoints the Trustee as attorney-in-fact
for the purpose of making claims on the Certificate Insurance
Policy.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the
Sellers, the Certificate Insurer or the Owners to the Trustee to
take any action under any provision of this Agreement, the
Depositor, the Sellers, the Certificate Insurer or the Owners, as
the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been compiled
with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically
required by any provision of this Agreement relating to such
particular application or request, no additional certificate need
be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (including
one furnished pursuant to specific requirements of this Agreement
relating to a particular application or request) shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or
condition and the definitions herein relating thereto:
(b) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based; and
(c) a statement as to whether, in the opinion of
each such individual, such condition or covenant has
been compiled with in all material respects.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such
certificate or opinion of an Authorized Officer of the Trustee or any opinion
of counsel may be based, insofar as it relates to factual matters upon a
certificate or opinion of, or representations by, one or more Authorized
Officers of the Depositor, the Sellers or the Master Servicer, stating that
the information with respect to such factual matters is in the possession of
the Depositor, the Sellers or the Master Servicer, unless such Authorized
Officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such
matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect
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to such matters is in the possession of the Trustee, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Any opinion of counsel may be based on the written opinion of
other counsel, in which event such opinion of counsel shall be accompanied by
a copy of such other counsel's opinion and shall include a statement to the
effect that such counsel believes that such counsel and the Trustee may
reasonably rely upon the opinion of such other counsel.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be
given or taken by the Owners may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Owners in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly
required, to the Depositor. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Owners signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee and the Trust, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by the certificate of any notary
public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a
partnership on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate
shall bind the Owner of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice,
consent, waiver or act of the Owners or other documents provided
or permitted by this Agreement to be made upon, given or
furnished to, or filed with the Trustee by any Owner, the
Certificate Insurer, the Depositor or the Sellers shall be
sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with and received by the Trustee at the
Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of
Notices.
Where this Agreement provides for notice to Owners of any
event or the mailing of any report to Owners, such notice or
report shall be sufficiently given (unless otherwise herein
expressly stated) if mailed, first-class postage prepaid, to each
Owner affected by such event or to whom such report is required
to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report
to Owners is mailed in the manner provided above, neither the
failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect
the sufficiency of such notice or report with respect to other
Owners, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly
given or provided. Notwithstanding the foregoing, if the Master
Servicer is removed or resigns or the Trust is terminated, notice
of any such events shall be made by overnight courier, registered
mail or telecopy followed by a telephone call.
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Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by
Owners shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it
shall be impractical to mail notice of any event to Owners when
such notice is required to be given pursuant to any provision of
this Agreement, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient
giving of such notice.
Where this Agreement provides for notice to any Rating
Agency that rated any Certificates, failure to give such notice
shall not affect any other rights or obligations created
hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of
Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party
hereto shall bind its successors and assigns, whether so
expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the
Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed
or implied, shall give to any Person, other than the Owners, the
Certificate Insurer and the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date,
any Distribution Date, any other date on which any distribution
to any Owner is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms
of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this
Agreement) payment or mailing need not be made on such date, but
may be made on the next succeeding Business Day with the same
force and effect as if made or mailed on the nominal date of any
such Monthly Remittance Date, such Distribution Date, or such
other date for the payment of any distribution to any Owner or
the mailing of such notice, as the case may be, and no interest
shall accrue for the period from and after any such nominal date,
provided such payment is made in full on such next succeeding
Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside
in many states and outside the United States and the desire to
establish with certainty that this Agreement will be governed by
and construed and interpreted in accordance with the law of a
state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein,
this Agreement and each Certificate shall be construed in
accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein,
without giving effect to the conflicts of law principles thereof.
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(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York
located in the City and County of New York, and any appellate
court from any thereof, in any action, suit or proceeding brought
against them or in connection with this Agreement or any of the
related documents or the transactions contemplated hereunder or
for recognition or enforcement of any judgment, and the parties
hereto hereby irrevocably and unconditionally agree that all
claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent
permitted by law, in such federal court. The parties hereto
agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of
motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or
the subject matter thereof may not be litigated in or by such
courts.
(c) Each of the Depositor, the Sellers and the Master
Servicer hereby irrevocably appoints and designates the Trustee
as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process with respect to any
action, suit or proceeding, set forth in paragraph (b) hereof.
Each of the Sellers and the Master Servicer agrees that service
of such process upon the Trustee shall constitute personal
service of such process upon it.
(d) Nothing contained in this Agreement shall limit or
affect the right of the Depositor, the Sellers, the Master
Servicer or the Certificate Insurer or any third-party
beneficiary hereunder, as the case may be, to serve process in
any other manner permitted by law or to start legal proceedings
relating to any of the Mortgage Loans against any Mortgagor in
the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate
under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest
allowed by the applicable laws of the State of New York or any
applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust
stipulates that such excess amount will be deemed to have been
paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the
Owner receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at
the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Trustee for
the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the
full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Sellers and the Master Servicer
may, at any time and from time to time, and without notice to or the consent
of the Owners but with the consent of the Certificate Insurer, amend this
Agreement, subject to the provisions of Section 11.16 and 11.17 and the
Trustee shall consent to such amendment, for the purpose of (i) curing any
ambiguity, correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof; (ii) upon receipt of an opinion
of counsel experienced in federal income tax matters (which opinion shall be
at no expense to the Trustee) to the effect that no entity-level
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tax will be imposed on the Trust or upon the transferor of a Class R
Certificate as a result of the ownership of any Class R Certificate by a
Disqualified Organization or removing the restriction on transfer set forth
in Section 5.08(a) hereof; (iii) maintaining the qualification of the REMICs
under the Code or avoiding, or minimizing the risk of, the imposition of any
tax on the Trust Fund under the Code that would be a claim against the Trust
Fund's assets, or preventing the Trust Fund from entering into any Prohibited
Transaction; or (iv) adding provisions hereto which are not inconsistent
with the provisions hereof, provided that in the case of this clause (iv) the
Person requesting such amendment delivers (A) an opinion of counsel (which
opinion shall be at the expense of the Trust) acceptable to the Trustee and
the Certificate Insurer that such amendment will not adversely affect in any
material respect the interest of the Owners and (B) such amendment will not
result in a withdrawal or reduction of the rating of the Class A Certificates
without regard to the Certificate Insurance Policy. The Depositor, the
Sellers, the Master Servicer and the Trustee may amend this Agreement, with
the consent of the Certificate Insurer and the Owners evidencing not less
than a majority of the aggregate Class Principal Balance of the Class of
Certificates affected by such amendment and 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 Owners or
the terms of the Certificate Insurance Policy; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Mortgage Loans
or distributions that are required to be made on any Certificate without the
consent of its Owner or (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of all of the Owners.
Notwithstanding the foregoing, no amendment may be made unless the Trustee
shall have received an opinion of counsel to the effect that such amendment
will not cause either the Master REMIC or the Subsidiary REMIC to be
disqualified as a REMIC, or subject the Trust to "prohibited transaction" or
"prohibited contribution" taxes.
(b) Promptly after the execution of any such amendment, the
Trustee shall furnish written notification of such amendment to
each Owner in the manner set forth in Section 11.05, and to the
Rating Agencies.
(c) The Trustee shall provide the Certificate Insurer and
the Rating Agencies with copies of any amendments to this
Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of
Duties.
The Trustee is hereby appointed Paying Agent. The Trustee
may, subject to the eligibility requirements for the Trustee set
forth in Section 10.08 hereof, appoint one or more other Paying
Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall
signify its acceptance of the duties and obligations imposed upon
it by this Agreement by written instrument of acceptance
deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute
and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of
Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting as
Paying Agent on each Distribution Date among such Owners in the
proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust for the
benefit of the Owners entitled thereto until such sums shall be
paid to such Owners or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time
resign and be discharged of the duties and obligations created by
this Agreement by giving at least sixty (60) days' written notice
to the Trustee. Any such Paying Agent may be removed at any time
by an instrument filed with such Paying Agent and signed by the
Trustee.
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In the event of the resignation or removal of any Paying
Agent other than the Trustee, such Paying Agent shall pay over,
assign and deliver any moneys held by it as Paying Agent to its
successor, or if there be no successor, to the Trustee.
Upon the appointment, removal or notice of resignation of
any Paying Agent, the Trustee shall notify the Certificate
Insurer and the Owners by mailing notice thereof at their
addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that each of the Master REMIC
and the Subsidiary REMIC constitute, and that the affairs of the
Trust shall be conducted so as to qualify each as a REMIC in
accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee or such other person designated pursuant
to Section 11.18 hereof shall act as agent for the Trust and as
"tax matters person" (as defined in the REMIC Provisions) for the
Trust and in such capacity it shall (i) prepare or cause to be
prepared and filed, in a timely manner, annual tax returns and
any other tax return required to be filed by the Trust
established hereunder using a calendar year as the taxable year
for the Trust established hereunder; (ii) in the first such tax
return, make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions and related provisions of
applicable state law, on behalf of the Trust, for each of the
Master REMIC and the Subsidiary REMIC to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and related
provisions of applicable state law forwarded, to the Owners all
information, reports or tax returns required with respect to the
Trust as, when and in the form required to be provided to the
Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the
REMIC Provisions and any other applicable federal, state or local
laws, including without limitation information reports relating
to "original issue discount" as defined in the Code based upon
the prepayment assumption and calculated by using the "issue
price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or
omit to take any action that would cause the termination of the
REMIC status of the Trust, except as provided under this
Agreement; (v) represent the Trust in any administrative or
judicial proceedings relating to an examination or audit by any
governmental taxing authority, request an administrative
adjustment as to a taxable year of the Trust, enter into
settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any tax item of the Trust,
and otherwise act on behalf of the Trust or any REMIC therein in
relation to any tax matter involving the Trust or any REMIC
therein; (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to
the foregoing clauses of this Section 11.16, including, without
limitation, providing all notices and other information to the
Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; and (vii) make
available information necessary for the computation of any tax
imposed (A) on transferors of residual interests to certain
Disqualified Organizations or (B) on pass-through entities, any
interest in which is held by a Disqualified Organization. The
obligations of the Trustee or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the
termination or discharge of this Agreement.
(b) The Sellers, the Depositor, the Trustee and the Master
Servicer covenant and agree for the benefit of the Owners and the
Certificate Insurer (i) to take no action or direct any other
Person to take any action which would result in the termination
of "REMIC" status for either of the Master REMIC or the
Subsidiary REMIC, (ii) not to engage in any "prohibited
transaction", as such term is defined in Section 860F(a)(2) of
the Code, subject to the exceptions set forth in Section
860F(a)(5) of the Code, and (iii) not to engage in any other
action which may result in the imposition on the Trust or either
REMIC of any other taxes under the Code.
(c) The Trustee shall, for federal income tax purposes and
for each of the Master REMIC and the Subsidiary REMIC, maintain
books on a calendar year basis and report income on an accrual
basis.
(d) Except as otherwise permitted by Section 7.05(b), no
Permitted Investment shall be sold prior to its stated maturity
(unless sold pursuant to a plan of liquidation in accordance with
Article IX hereof).
(e) None of the Depositor, the Sellers or the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than
as expressly contemplated by this Agreement.
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(f) Reserved.
(g) The Master Servicer and Tax Matters Person each
severally agree to indemnify the Trust for any tax imposed on the
Trust as a result of such party's negligence or willful
misconduct or a breach by such party of its obligations under
this Agreement.
Section 11.17 Additional Limitation on Action and
Imposition of Tax.
Any provision of this Agreement to the contrary
notwithstanding, the Trustee shall not, without having obtained
an opinion of counsel experienced in federal income tax matters
(which opinion shall be at no expense to the Trustee) acceptable
to the Certificate Insurer to the effect that such transaction
does not result in a tax imposed on the Trust or either the
Master REMIC or the Subsidiary REMIC or cause a termination of
REMIC status for either the Master REMIC or the Subsidiary REMIC,
(i) sell any assets in the Trust Estate (notwithstanding the
repurchase pursuant to a breach of representation and warranty),
(ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. If any tax,
including interest, penalties or assessments, additional amounts
or additions to tax, is imposed on the Trust, such tax shall be
charged against amounts on deposit in the Collection Account
otherwise distributable to the Owners of the Class X Certificates
on a pro rata basis unless otherwise paid pursuant to Section
11.16(g) hereof; provided, however, that taxes on "net income
from foreclosure property" shall be paid by the Master Servicer
from the income generated on the related REO Property. The
Trustee is hereby authorized to and shall retain from amounts
otherwise distributable to the Owners of the Class X Certificates
sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust unless
otherwise paid pursuant to Section 11.16(g) hereof or the proviso
to the preceding sentence (but such authorization shall not
prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Trust for all
purposes of the Code and such Tax Matters Person will perform, or
cause to be performed, such duties and take, or cause to be
taken, such actions as are required to be performed or taken by
the Tax Matters Person under the Code. The Tax Matters Person
for the Trust shall be the Trustee as long as it owns a Class R
Certificate. If the Trustee does not own a Class R Certificate,
the Tax Matters Person may be any other entity that owns a Class
R Certificate and accepts a designation hereunder as Tax Matters
Person by delivering an affidavit in the form of Exhibit H. The
Trustee shall notify any subsequent Trustee and the Master
Servicer in writing of the name and address of another person who
accepts a designation as Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder
shall be suspended and shall run to the benefit of the Owners
during any period in which the Certificate Insurer is in default
in its payment obligations under the Certificate Insurance
Policy. At such time as the Class A Certificates are no longer
Outstanding hereunder and all Reimbursement Amounts due the
Certificate Insurer have been paid in full, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Sellers, the Depositor, the Master Servicer
and the Owners agree that the Certificate Insurer shall be deemed
a third party beneficiary as if it were a party hereto with the
right to enforce the provisions hereof.
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Section 11.22 Rights of Subrogation; No Discharge.
The Certificate Insurer shall, to the extent it makes any
payment of principal of or interest on the Class A Certificates,
become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Certificate
Insurance Policy. The Trust shall not be discharged from its
obligations hereunder upon payment of principal of and interest
on the Class A Certificates by the Certificate Insurer under the
Certificate Insurance Policy.
Section 11.23 Exercise of Rights.
Each of the Depositor, the Master Servicer and the Trustee,
and, by accepting its Certificate, each Owner of a Class A
Certificate, agrees that unless a Certificate Insurer Default has
occurred and is continuing, the Certificate Insurer shall have
the right to exercise all rights of the Owners of the Class A
Certificate under this Agreement without any further consent of
such Owners.
Section 11.24 Notice to the Certificate Insurer.
All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto
or to any of the Owners of Certificates shall also be sent to the
Certificate Insurer.
Section 11.25 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed
below:
The Trustee: Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77002
Attention: Global Trust Services--Ocwen Mortgage Loan
Asset-Backed Certificates, Series 1997-1
Tel: 713-216-4181
Fax: 713-216-4880
The Depositor: Morgan Stanley ABS Capital I Inc.
1585 Broadway, 2nd Floor
New York, New York 10036
Tel: 212-761-4000
Fax: 212-761-0782
with a copy to:
Morgan Stanley & Co. Inc.
1585 Broadway
New York, New York 10036
Attention: General Counsel
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The Sellers: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 1002
West Palm Beach, Florida 33401
Attn: Secretary
Tel: 561-681-8157
Fax: 561-681-8177
and LMAC, Inc.
1675 Palm Beach Lakes Blvd., Suite 1002
West Palm Beach, Florida 33401
Attn: Secretary
Tel: 561-681-8157
Fax: 561-681-8177
The Master Servicer: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 1002
West Palm Beach, Florida 33401
Attn: Secretary
Tel: 561-681-8157
Fax: 561-681-8177
With a copy to:
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 532
West Palm Beach, Florida 33401
Attn: Law Department
Tel: 561-681-8661
Fax: 561-681-8163
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The Rating Agencies: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Tel:212-553-0376
Fax:212-208-0030
Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies
26 Broadway
New York, New York 10004
Tel:212-208-8000
Fax:212-208-0030
Owners: As set forth in the Register.
The Certificate Financial Security Assurance Inc.
Insurer: 350 Park Avenue
New York, New York 10022
Tel: 212-826-0100
Fax: 212-339-3518/3529
Section 11.26 Notice to Trustee of Amendments to Premuim
Letter.
The Master Servicer shall as soon as practicable notify the
Trustee in writing of any amendments, modifications or
supplements to the Premuim Letter dated as of June 27, 1997, among the
Certificate Insurer, the Sellers and Ocwen Financial Services, Inc.
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IN WITNESS WHEREOF, the Depositor, the Sellers, the Master
Servicer and the Trustee have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.
MORGAN STANLEY ABS CAPITAL I INC.
as Depositor
By:______________________________________
Title:___________________________________
OCWEN FEDERAL BANK FSB, as Seller
and Master Servicer
By:_______________________________________
Title:____________________________________
LMAC, INC., as Seller
By:_______________________________________
Title:____________________________________
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Trustee
By:_______________________________________
Title:____________________________________
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SCHEDULE I
REPRESENTATIONS AND WARRANTIES AS TO THE MORTGAGE LOANS
Each Seller severally represents and warrants to the Trust,
as to each Mortgage Loan sold by it hereunder, as of the date
hereinbelow specified or, if no such date is specified, then as
of the Closing Date, that:
(a) Immediately prior to the transfer and assignment to the
Depositor, the Seller had good title to and was the sole owner
and holder of the Mortgage Loan;
(b) Immediately prior to the transfer and assignment to the
Depositor, the Note and the Mortgage Loan were not subject to an
assignment or pledge, and the Seller had full right and authority
to sell and assign the Mortgage Loan.
(c) The Seller is transferring such Mortgage Loan to the
Depositor free and clear of any and all liens, pledges, charges
or security interests of any nature encumbering the Mortgage
Loans.
(d) The information set forth on the Schedule of Mortgage
Loans is true and correct in all material respects as of the
Cut-off Date or such other date as may be indicated in such
schedule.
(e) Seller has acquired, serviced, collected and otherwise
dealt with each Mortgage Loan in compliance with all applicable
federal, state and local laws and regulations and the terms of
the related Note and Mortgage.
(f) The related Note and Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles
(regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(g) The related Mortgage is a valid and enforceable first
lien on the related Mortgaged Property, which Mortgaged Property
is free and clear of all encumbrances and liens (including
mechanics liens) having priority over the first lien of the
Mortgage except for (i) liens for real estate taxes and
assessments not yet due and payable; (ii) 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 or
considered in the lender's title insurance policy delivered to
the originator of the Mortgage Loan and referred to in the
appraisal made in connection with the origination of the related
Mortgage Loan; and (iii) other matters to which like properties
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such
Mortgage.
(h) Any security agreement, chattel mortgage or equivalent
document related to such Mortgage Loan establishes and creates a
valid and enforceable lien on the property described herein.
(i) As of the Cut-Off Date, each Scheduled Payment required
to be made prior to May 1, 1997 has been paid and no Mortgage
Loan has been dishonored. No Mortgage Loan has been one or more
payments Delinquent more than one time in the twelve months
preceding the Cut-Off Date (assuming that a "rolling" one
payment Delinquency is considered to be one time Delinquent).
(j) The Seller 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 under the Mortgage Loan under the Mortgage
Loan.
(k) The Seller has not impaired, waived, altered or modified the
related Mortgage or Note in any material respect, or satisfied, canceled,
rescinded or subordinated such Mortgage or Note in whole or in part or
released all or any material portion of the Mortgaged Property from the lien
of the Mortgage, or executed any
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instrument of release, cancellation, rescission or satisfaction of the Note
or Mortgage.
(l) The Mortgage has not been satisfied as of the Cut-off
Date, cancelled or subordinated, in whole, or rescinded, and the
Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part (except for a release that does not
materially impair the security of the Mortgage Loan or a release
the effect of which is reflected in the Loan-to-Value Ratio for
the Mortgage Loan as set forth in the Schedule of Mortgage
Loans), nor to the best of the Seller's knowledge has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission.
(m) No condition exists which could give rise to any right
of rescission, set off, counterclaim or defense including,
without limitation, the defense of usury, and no such right has
been asserted.
(n) There is no proceeding pending for the total or partial
condemnation and no eminent domain proceedings pending affecting
any Mortgaged Property.
(o) Each Mortgage Loan is covered by either (i) a mortgage
title insurance policy or other generally acceptable form of
insurance policy customary in the jurisdiction where the
Mortgaged Property is located; or (ii) if generally acceptable in
the jurisdiction where the Mortgaged Property is located, an
attorney's opinion of title given by an attorney licensed to
practice law in the jurisdiction where the Mortgaged Property is
located. All of Seller's rights under such policies, opinions or
other instruments shall be deemed to be transferred and assigned
to the Trustee upon sale and assignment of the Mortgage Loans
hereunder. The title insurance policy has been issued by a title
insurer licensed to do business in the jurisdiction where the
Mortgaged Property is located, insuring the original lender, its
successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan,
subject to the exceptions contained in such policy. Seller is
the sole insured of such mortgagee title insurance policy, and
such mortgagee title insurance policy is in full force and effect
and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. Seller has not made
and has no knowledge of any claims made under such mortgagee
title insurance policy. Seller is not aware of any action by a
prior holder and Seller has not done, by act or omission,
anything which could impair the coverage or enforceability of
such mortgagee title insurance policy or the accuracy of such
attorney's opinion of title.
(p) There is no material default, breach, violation or
event of acceleration existing under the related Mortgage or the
related Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would
constitute a material default, breach, violation or event of
acceleration. The Seller has not waived any default, breach,
violation or event of acceleration.
(q) With respect to any Mortgage Loan which provides for an
adjustable interest rate, all rate adjustments made by Seller
have been performed in accordance with the terms of the related
Note or subsequent modifications, if any.
(r) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold
payments, including assessments payable in future installments or
other outstanding charges, affecting the Mortgaged Property.
(s) (i) No foreclosure proceedings are pending against the
Mortgaged Property; and (ii) to the Seller's best knowledge, no
material litigation or lawsuit relating to the Mortgage Loan is
pending; and (iii) the Mortgage Loan is not subject to any
pending bankruptcy or insolvency proceeding.
(t) The Mortgage Loan obligates the mortgagor thereunder to maintain a
hazard insurance policy ("Hazard Insurance") in an amount at least equal to
the lesser of (i) the amount necessary to fully compensate for any damage or
loss to the improvements which are part of such Mortgaged Property on a
replacement cost basis; or (ii) the principal balance of the Mortgage Loan
with a standard mortgagee clause, in either case in an amount sufficient to
avoid the application of any "co-insurance provisions," and, if it was in
place at origination of the Mortgage Loan, flood insurance, at the
mortgagor's cost and expense. If the Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency Management Agency
("FEMA") as having special flood
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hazards, a flood insurance policy is in effect which met the requirements of
FEMA at the time such policy was issued. The Mortgage obligates the
Mortgagor to maintain the Hazard Insurance and, if applicable, flood
insurance policy at the Mortgagor's cost and expense, and on 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. The Mortgaged Property is covered
by Hazard Insurance.
(u) The Note is not and has not been secured by any
collateral except the lien on the corresponding Mortgage and the
security interest of any applicable security agreement or chattel
mortgage.
(v) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is
sold or transferred without the prior written consent of the
Mortgagee thereunder. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided
thereby, including (i) in the case of a Mortgage designated as a
deed of trust, by trustee's sale or judicial foreclosure; and
(ii) otherwise by judicial foreclosure. Since the date of
origination of the Mortgage Loan, the Mortgaged Property has not
been subject to any bankruptcy proceeding or foreclosure
proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other
exemption available to the Mortgagor that would interfere with
the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. In the event the Mortgage
constitutes 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 the Mortgage, and no fees or
expenses are or will become payable by the Trust to the trustee
under the deed of trust, except in connection with a trustee's
sale after default by the related Mortgagor. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any
relief requested or allowed to the Mortgagor under the Relief
Act.
(w) Except as set forth in the appraisal which forms part
of the related File, the Mortgaged Property, normal wear and tear
excepted, is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to
affect materially and adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which
the premises were intended and the Seller has no knowledge of any
proceeding pending for the total or partial condemnation of such
Mortgaged Property.
(x) There was no fraud involved in the origination of the
Mortgage Loan by the mortgagee or, to the Seller's knowledge, by
the Mortgagor, any appraiser or any other party involved in the
origination of the Mortgage Loan.
(y) Each File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised
value identified for such Mortgaged Property on the Schedule of
Mortgage Loans. Each appraisal has been performed in accordance
with the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
(z) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) in compliance with any and all applicable "doing
business" and licensing requirements of the laws of the state
wherein the Mortgaged Property is located.
(aa) No improvements on the related Mortgaged Property
encroach on adjoining properties (and in the case of a
condominium unit, such improvements are within the project with
respect to that unit), and no improvements on adjoining
properties encroach upon the Mortgaged Property unless there
exists in the File a title policy with endorsements which insure
against losses sustained by the insured as a result of such
encroachments.
(bb) Each Mortgage Loan was either (1) originated by the
Seller or by a savings and loan association, a savings bank, a
commercial bank or similar banking institution which is
supervised and examined by a federal or state authority, or by a
mortgagee approved by the Secretary of HUD, or (2) acquired by
the Seller within one month of its origination, in substantially
all cases and in no event later than three months thereafter
except as listed on the Exceptions Exhibit, and before being
acquired by the Seller, was re-underwritten according to the
Seller's
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underwriting guidelines.
(cc) Except as otherwise set forth on the Exceptions Exhibit
attached hereto: (i) principal payments on the Mortgage Loan
commenced no more than sixty days after the proceeds of the
Mortgage Loan were disbursed, and (ii) the Note is payable on the
first day of each month.
(dd) Other than with respect to 0.09% of the fixed rate
mortgage loans, in each case by principal balance as of the
Cut-off Date, which are "balloon payment" mortgage loans, each
Mortgage Loan is fully amortizing.
(ee) The Mortgage Loan bears interest at the Mortgage Rate
and the Note does not permit negative amortization.
(ff) With respect to escrow deposits, if any, all such
payments are in the possession of, or under the control of, the
Seller and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not
been made. No escrow deposits or escrow advances or other
charges or payments due the Seller have been capitalized under
any Mortgage or the related Note.
(gg) No Mortgage Loan contains provisions pursuant to which
Scheduled Payments are: (i) paid or partially paid with funds
deposited in any separate account established by the Seller, the
Mortgagor, or anyone on behalf of the Mortgagor; (ii) paid by any
source other than the Mortgagor; or (iii) except as otherwise set
forth on [Exhibit 5] attached hereto, contains any other similar
provisions which may constitute a buydown provision. The
Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other
contingent interest feature.
(hh) To the Seller's best knowledge, the Mortgaged Property
is lawfully occupied under applicable law.
(ii) Each Mortgage Loan has been underwritten in accordance
with the underwriting guidelines of the Seller in effect at the
time the Mortgage Loan was originated or purchased by the Seller.
(jj) No law relating to servicing, collection or
notification practices and no law relating to origination
practices, has been violated in connection with any Mortgage Loan
transferred to the Trust pursuant to this Agreement, including,
without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws. The Mortgage Loan has been
serviced by the Seller and any predecessor servicer in accordance
with the terms of the Note.
(kk) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property, or (b)
facilitating the trade-in or exchange of a Mortgaged Property.
(ll) The Seller hereby covenants that it will not directly
solicit any Mortgagor hereunder to refinance the related Mortgage
Loan. For the purposes of the foregoing, the Seller shall not be
deemed to directly solicit any Mortgagor if the Seller responds
to a request from the Mortgagor regarding a refinancing.
(mm) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the mortgagee to advance additional funds
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 the Mortgage Loan and
the recording of the Mortgage have been paid, and the Mortgagor
is not entitled to any refund of any amounts paid or due to the
mortgagee pursuant to the Note or Mortgage.
(nn) There are no mechanics' or similar liens or claims that
have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien)
affecting the related Mortgaged Property that are or may be liens
prior to, or equal or coordinate with, the lien of the related
Mortgage.
(oo) As to each fixed rate Mortgage Loan, interest is
calculated on the Note on the basis of twelve 30-
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day months and a 360-day year, and, as to each adjustable rate Mortgage Loan,
interest is calculated on the Note on the basis of the number of days in the
related interest accrual period.
(pp) The Mortgaged Property consists of a parcel of real
property with a detached single family residence erected thereon,
or a two- to four-family dwelling, or an individual condominium
unit in a low-rise or high-rise condominium project, or an
individual unit in a planned unit development or a townhouse,
provided, however, that any condominium project or planned unit
development shall conform with the applicable FHLMC type II or
type III requirements regarding such dwellings, and no residence
or dwelling is a mobile home or a manufactured dwelling. No
Mortgage Loan is secured by a leasehold estate. If the
residential dwelling on the Mortgaged Property is a condominium
unit or a unit in a planned unit development (other than a de
minimis planned unit development), such condominium or planned
unit development projects meets the FHLMC's eligibility
requirements.
(qq) The representations, warranties and covenants set forth
in this Schedule I shall survive the Closing.
(rr) Each Mortgage Loan is directly secured by a Mortgage on
residential real property, and either (i) substantially all of
the proceeds of such Mortgage Loan were used to acquire or
improve or protect an interest in real property that, at the
origination date, was the only security for the Mortgage Loan (in
case of a Mortgage Loan that has not been modified in a manner
that constituted a deemed exchange under Section 1001 of the Code
at a time when the Mortgage Loan was not in default or default
with respect thereto was reasonably foreseeable) or (ii) the fair
market value of such real property was at least equal to 80% of
the principal amount of the Mortgage Loan (a) at origination (or,
if the Mortgage Loan has been modified in a manner that
constituted a deemed exchange under Section 1001 of the Code at a
time when the Mortgage Loan was not in default or default with
respect thereto was reasonably foreseeable, at the date of the
last such modification, or (b) at the Startup Day; provided that
for purposes of this clause (ii) the fair market value of the
real property interest must first be reduced by (A) the amount of
any lien on the real property interest that is senior to the
Mortgage Loan (unless such senior lien also secures a Mortgage
Loan, in which event the computation described in clauses (a) and
(b) of this clause (ii) will be made on an aggregate basis) and
(B) a proportionate amount of any lien that is in parity with the
Mortgage Loan (unless such other lien secures a Mortgage Loan
that is cross-collateralized with such Mortgage Loan, in which
event the computation described in clauses (a) and (b) of this
clause (ii) will be made on an aggregate basis).
98
<PAGE>
EXCEPTIONS EXHIBITS
<TABLE>
<CAPTION>
Mortgage Loan No. Exception
----------------- ---------
<S> <C>
6012835 Principal Payments Commenced 68 days from Disbursement of Proceeds
6040596 Principal Payments Commenced 62 days from Disbursement of Proceeds
6044242 The Mortgage Loan contains Buy-down provisions
6044598 Principal Payments Commenced 65 days from Disbursement of Proceeds
6045827 The Mortgage Loan contains Buy-down provisions
6045942 Principal Payments Commenced 63 days from Disbursement of Proceeds
6045983 Principal Payments Commenced 61 days from Disbursement of Proceeds
6046049 Principal Payments Commenced 61 days from Disbursement of Proceeds
6047013 Principal Payments Commenced 70 days from Disbursement of Proceeds
6047377 Principal Payments Commenced 64 days from Disbursement of Proceeds
6047484 Principal Payments Commenced 63 days from Disbursement of Proceeds
6047534 Principal Payments Commenced 63 days from Disbursement of Proceeds
6048284 The Mortgage Loan contains Buy-down provisions
6049209 Principal Payments Commenced 65 days from Disbursement of Proceeds
6049266 Principal Payments Commenced 62 days from Disbursement of Proceeds
6049290 Principal Payments Commenced 65 days from Disbursement of Proceeds
6049308 Principal Payments Commenced 65 days from Disbursement of Proceeds
6049316 Principal Payments Commenced 65 days from Disbursement of Proceeds
6049332 Principal Payments Commenced 61 days from Disbursement of Proceeds
6049407 Principal Payments Commenced 61 days from Disbursement of Proceeds
6050454 The Mortgage Loan contains Buy-down provisions
6128060 Settlement Date five months from Origination
17126343 Monthly Payments due on the 12th of the Month
17127846 Monthly Payments due on the 3rd of the Month
17128349 Principal Payments Commenced 63 days from Disbursement of Proceeds
17128935 Principal Payments Commenced 63 days from Disbursement of Proceeds
17129115 Monthly Payments due on the 15th of the Month
17129206 Principal Payments Commenced 62 days from Disbursement of Proceeds
17129420 Principal Payments Commenced 63 days from Disbursement of Proceeds
17130568 Principal Payments Commenced 62 days from Disbursement of Proceeds
17132010 Principal Payments Commenced 62 days from Disbursement of Proceeds
17132028 Monthly Payments due on the 18th of the Month
17132911 Monthly Payments due on the 10th of the Month
17134669 Monthly Payments due on the 9th of the Month
17135013 Monthly Payments due on the 18th of the Month
17136334 Principal Payments Commenced 61 days from Disbursement of Proceeds
17142324 Monthly Payments due on the 26th of the Month
17142696 Monthly Payments due on the 4th of the Month
17143579 Principal Payments Commenced 64 days from Disbursement of Proceeds
17143777 Monthly Payments due on the 11th of the Month
17143785 Monthly Payments due on the 8th of the Month
17144221 Monthly Payments due on the 18th of the Month
17144577 Monthly Payments due on the 28th of the Month
17147562 Principal Payments Commenced 61 days from Disbursement of Proceeds
17152455 Principal Payments Commenced 64 days from Disbursement of Proceeds
17153057 Principal Payments Commenced 61 days from Disbursement of Proceeds
17153438 Principal Payments Commenced 61 days from Disbursement of Proceeds
</TABLE>
99
<PAGE>
SCHEDULE I-A
SCHEDULE OF FIXED RATE GROUP MORTGAGE LOANS
100
<PAGE>
SCHEDULE I-B
SCHEDULE OF ADJUSTABLE RATE GROUP MORTGAGE LOANS
101
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
OCWEN MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 1997-1
CLASS A-[ ]
Representing Certain Interests in a Pool of [Fixed] [Adjustable] Rate Group
Mortgage Loans formed by Morgan Stanley ABS Capital I Inc.
and Serviced by
OCWEN FEDERAL BANK FSB
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by,
Morgan Stanley ABS Capital I Inc., Ocwen Federal Bank FSB, LMAC, Inc. or
Texas Commerce Bank National Association. This Certificate represents a
fractional ownership interest in the [Fixed] [Adjustable]Rate Group
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the
Depositor or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.
No: A-[ ]-[ ] __________________
CUSIP
$
____________________ ___________________ ________________
Original Certificate Date Final Scheduled
Principal Balance Distribution Date
_________________________________________
Registered Owner
Trustee Authentication
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee
By:________________________
Name:______________________
Title:_____________________
Date of Authentication__________________________
A-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in the [Fixed][Adjustable]
Rate Group (other than any principal and interest payments received
thereon prior to the Cut-Off Date) listed in Schedule I-[A][B] to the
Pooling and Servicing Agreement which the Sellers have caused to be
delivered to the Depositor and the Depositor has caused to be delivered
to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Mortgage Loan documents and the Sellers' and
Depositor's interest in any Mortgaged Property which secured a Mortgage
Loan in the [Fixed] [Adjustable]Rate Group but which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts as may be held by the Trustee in the
Distribution Account, together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the
Collection Account, if any (exclusive of investment earnings thereon
except as otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any Permitted
Investments held by the Master Servicer); (c) the [Fixed] [Adjustable]
Rate Group Certificate Insurance Policy; and (d) proceeds of all the
foregoing (including but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policy relating
to the Mortgage Loans in the [Fixed] [Adjustable] Rate Group, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and
every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing) to pay the Certificates as specified in the Pooling and
Servicing Agreement.
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Distribution Date for the Class
A-[ ] Certificates. Therefore, the actual outstanding principal amount of
this Certificate may, on any date subsequent to July 25, 1997 (the first
Distribution Date) be less than the original Certificate Principal Balance
set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-2
<PAGE>
THIS CLASS A-[ ] CERTIFICATE WAS ISSUED ON JUNE 27, 1997 AND IS NOT
TREATED AS HAVING BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR
FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE OF THIS CERTIFICATE IS
99.890625% OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE.
HOWEVER, IT IS POSSIBLE THAT APPLICABLE LAW AND TREASURY REGULATIONS
COULD BE INTERPRETED TO PROVIDE THAT ALL INTEREST PAYMENTS ON THIS
CERTIFICATE ARE TO BE TREATED AS PART OF THE STATED REDEMPTION PRICE AT
MATURITY OF THE CERTIFICATE (I.E., PRINCIPAL) AND WOULD NOT CONSTITUTE
QUALIFIED STATED INTEREST, THEREBY CAUSING THIS CERTIFICATE TO HAVE OID.
IN SUCH CASE, THE FOLLOWING INFORMATION WOULD BE APPLICABLE: (I) THE
AMOUNT OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS
CERTIFICATE WOULD BE APPROXIMATELY ______________%, (II) THE YIELD TO
MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING OID WOULD BE
APPROXIMATELY ___% PER ANNUM, COMPOUNDED MONTHLY, AND (III) THE TOTAL
AMOUNT OF OID ALLOCABLE TO THE INITIAL ACCRUAL PERIOD (JUNE 27, 1997 TO
JULY 25, 1997) FOR PURPOSES OF COMPUTING OID ON THIS CERTIFICATE AS A
PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE WOULD BE
APPROXIMATELY ____%. THE METHOD USED TO CALCULATE THE YIELD TO MATURITY
AND THE AMOUNT OF OID ALLOCABLE TO THE INITIAL ACCRUAL PERIOD IS THE
EXACT METHOD. THE ACTUAL ELUATE TO MATURITY AND OID ON THIS CERTIFICATE
MAY DIFFER FROM THE PROJECTED AMOUNTS. THE PREPAYMENT ASSUMPTION USED
IN CALCULATING THE YIELD TO MATURITY IS % PSA.
A-3
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Ocwen Mortgage Loan Asset-Backed Certificates, Series 1997-1,
Class A-[ ] (the "Class A-[ ]Certificates") and issued under and subject to
the terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of June 1, 1997 (the "Pooling and Servicing Agreement") by
and among Morgan Stanley ABS Capital I Inc., in its capacity as Depositor
(the "Depositor"), Ocwen Federal Bank FSB and LMAC, Inc., in their capacities
as Sellers (the "Sellers"), Ocwen Federal Bank FSB, in its capacity as the
Master Servicer (the "Master Servicer"), and Texas Commerce Bank National
Association, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the
Pooling and Servicing Agreement are Certificates designated as Ocwen Mortgage
Loan Asset Backed Certificates, Series 1997- 1, Class A-[ ] (the "Class A-[ ]
Certificates"), Class X-1 (the "Class X-1 Certificates"), Class X-2 (the
"Class X-2 Certificates" and, with the Class X-1 Certificates, the "Class X
Certificates") and Class R (Residual Interest) (the "Class R Certificates").
The Class A-1 Certificates and the Class A-2 Certificates are together
referred to as the "Class A Certificates" and the Class A Certificates, the
Class X Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing in July 1997, the Owners of the Class A-[ ] Certificates as
of the close of business on the last day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A-[ ] Distribution Amount
relating to such Certificate on such Distribution Date. Distributions will
be made in immediately available funds to Owners of Certificates having an
aggregate original Class A-[ ] Certificate Principal Balance of at least
$1,000,000 (by wire transfer or otherwise) to the account of an Owner at a
domestic bank or other entity having appropriate facilities therefor, if such
Owner has so notified the Trustee, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-[ ] Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-[ ] Certificates. The Percentage
Interest of each Class A-[ ] Certificate as of any date of determination
will be equal to the percentage obtained by dividing the original
Certificate Principal Balance of such Class A-[ ] Certificate on the
Startup Day by the aggregate Class A-[ ] Certificate Principal Balance
on the Startup Day.
The Certificate Insurer is required, subject to the terms of the Certificate
Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the
Owners. "Insured Payment" means, with respect to the related
Mortgage Loan Group and any Distribution Date, without duplication, the
excess, if any, of (i) the sum of (a) the aggregate amount of
interest accrued at the related Pass-Through Rate during the preceding
Accrual Period on the Class A Certificate Principal Balance of the
related Class A Certificates (net of any Prepayment Interest Shortfall
and the interest portion of reductions due to the Relief Act), (b)
the portion of the Carry Forward Amount related to interest with
respect to each Class of the related Class A Certificates (net of any
Prepayment Interest Shortfall and the interest portion of
reductions due to the Relief Act) and (c) the then existing
Subordination Deficit for the related Mortgage Loan Group, if any,
over (ii) Total Available Funds for the related Mortgage Loan Group (net
of the Premium for the related Mortgage Loan Group) after taking
into account the cross-collateralization provisions of the Trust.
Upon receipt of amounts under the Certificate Insurance Policy on behalf of
the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts
A-4
<PAGE>
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Master Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement
permits the Master Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment
of any Sub-Servicer shall release the Master Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, Morgan Stanley ABS Capital I Inc., Ocwen Federal Bank FSB, LMAC,
Inc., Texas Commerce Bank National Association or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Distribution Account and the Collection Account (except
as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing
Agreement, or for the appointment of a receiver or trustee, or for any
other remedy under the Pooling and Servicing Agreement except in
compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent
provided in the Pooling and Servicing Agreement with respect to such
Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent
of such Owner. The Owner of this Certificate, by its acceptance
hereof, agrees, however, that to the extent the Certificate Insurer
makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-[
] Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-[ ] Certificates with respect to such
Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-[ ] Certificates and shall
receive all future distributions of the Class A-[ ] Distribution
Amount until all such Insured Payments by the Certificate Insurer have
been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to
the Owners of all Certificates from amounts other than those available
under the Certificate Insurance Policy of all amounts held by the
Trustee and required to be paid to such Owners pursuant to the Pooling
and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect
thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation, as contemplated by Section 860F(a)(4) of
the Code, and the Trustee shall either sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
the Pooling and Servicing Agreement occur no later than the close of
the 90th day after the date of adoption of the plan of liquidation and
such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) certain Owners of the Class R Certificates and the Master Servicer
may, at their option, purchase, from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate, and
thereby effect early retirement of the Certificates, after the
Optional Termination Date and (ii) under certain circumstances
relating to the qualification of the Trust Estate as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
A-5
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the
prior written consent of the Certificate Insurer have the right to
exercise any trust or power set forth in Section 6.11 of the Pooling
and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face
hereof, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of
transfer at the office designated as the location of the Register duly
endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Registrar duly executed by, the Owner hereof
or his attorney duly authorized in writing, and thereupon one or more
new Certificates of the like Class, tenor and a like Percentage
Interest will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Depositor, the Trustee, the Sellers and the Master
Servicer at any time and from time to time, with the prior written
approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the
Pooling and Servicing Agreement, such consent of the Owners will be
required prior to amendments. Any such consent by the Owner at the
time of the giving thereof, of this Certificate shall be conclusive
and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Distribution
Date to the Owner of this certificate as more fully described in the
Pooling and Servicing Agreement.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the
Pooling and Servicing Agreement with respect to the Certificate Insurer.
A-6
<PAGE>
EXHIBIT B
FORM OF CLASS X CERTIFICATE
OCWEN MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 1997-1
INTEREST-ONLY CLASS X-[ ] CERTIFICATE
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by Morgan Stanley ABS Capital I Inc.
and Serviced by
OCWEN FEDERAL BANK FSB
This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, Morgan
Stanley ABS Capital I Inc., Ocwen Federal Bank FSB, LMAC, Inc. or Texas
Commerce Bank National Association. This certificate represents a
fractional ownership interest in the Mortgage Loans and certain other
property held by the Trust.
No.: X-[ ] -[ ]
___________________
Date
________________________________ ___________________________
Percentage Interest Final Scheduled
Distribution Date
_____________________
Registered Holder
Trustee Authentication
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By:_____________________________________
Name:___________________________________
Title:___________________________________
Date of Authentication:___________________
B-1
<PAGE>
The registered Owner named above is the registered Owner of a fractional
interest in (a) the Mortgage Loans in the [Fixed][Adjustable] Rate
Group (other than any principal and interest payments received thereon
on or prior to the Cut-Off Date) listed in Schedule 1-[A][B] to the
Pooling, and Servicing Agreement, which the Sellers have caused to be
delivered to the Depositor and the Depositor has caused to be delivered
to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Mortgage Loan documents and the Sellers' and
Depositor's interest in any Property which secured a Mortgage Loan in
the [Fixed] [Adjustable] Rate Group but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing;
(b) such amounts as may be held by the Trustee in the Distribution
Account, together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the Collection
Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Permitted Investments held
by the Master Servicer); (c) the [Fixed] [Adjustable] Rate Group
Certificate Insurance Policy and (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included
in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof is required to
send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 AND CLASS A-2 CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE
ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC
PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS AN INTEREST-ONLY CERTIFICATE. THE HOLDER OF
THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF
PRINCIPAL WITH RESPECT TO THE MORTGAGE LOANS.
B-2
<PAGE>
THIS CLASS X[ ] CERTIFICATE WAS ISSUED ON JUNE 27, 1997 AND IS TREATED AS
HAVING BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR FEDERAL
INCOME TAX PURPOSES. THE ISSUE PRICE OF THIS CERTIFICATE IS ____% OF
THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE. ASSUMING THAT THIS
CERTIFICATE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON
CERTAIN ASSUMPTIONS USED IN PRICING THE CERTIFICATES, THE FOLLOWING
INFORMATION WOULD BE APPLICABLE: (i) THE AMOUNT OF OID AS A PERCENTAGE
OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE WOULD BE
APPROXIMATELY _____________%, (II) THE YIELD TO MATURITY OF THIS
CERTIFICATE FOR PURPOSES OF COMPUTING OID WOULD BE APPROXIMATELY ____%
PER ANNUM, COMPOUNDED MONTHLY, AND (III) THE TOTAL AMOUNT OF OID
ALLOCABLE TO THE INITIAL ACCRUAL PERIOD (JUNE 27, 1997 TO JULY 25, 1997)
FOR PURPOSES OF COMPUTING OID ON THIS CERTIFICATE AS A PERCENTAGE OF THE
ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE WOULD BE APPROXIMATELY
____%. THE METHOD USED TO CALCULATE THE YIELD TO MATURITY AND THE
AMOUNT OF OID ALLOCABLE TO THE INITIAL ACCRUAL PERIOD IS THE EXACT
METHOD. THE ACTUAL YIELD TO MATURITY AND OID ON THIS CERTIFICATE MAY
DIFFER FROM THE PROJECTED AMOUNTS. THE PREPAYMENT ASSUMPTION USED IN
CALCULATING THE YIELD TO MATURITY IS % PSA.
This Certificate is one of a Class of duly authorized Certificates designated
as Ocwen Mortgage Loan Asset-Backed Certificates, Series 1997-1, Class
X-[ ] (the "Class X-[ ] Certificates") and issued under and subject to
the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of June 1, 1997 (the "Pooling and Servicing
Agreement") by and among Morgan Stanley ABS Capital I Inc., in its
capacity as Depositor (the "Depositor"), Ocwen Federal Bank FSB and
LMAC, Inc., in their capacities as the Sellers (the "Sellers"), Ocwen
Federal Bank FSB in its capacity as the Master Servicer (the "Master
Servicer"), and Texas Commerce Bank National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof
assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as Ocwen Mortgage
Loan Asset Backed Certificates, Series 1997-1, Class A-1 and Class A-2
Certificates (collectively, the "Class A Certificates"), Class X-[ ]
(the "Class X-[ ] Certificates" and, with the Class X-[ ] Certificates,
the "Class X Certificates") and Class R (the "Class R Certificates").
The Class A Certificates, the Class X Certificates and the Class R
Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement
On the 25th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing in July 1997, the Owners of the Class
X-[ ] Certificates as of the close of business on the last business
day of the calendar month immediately preceding the calendar month in
which such Distribution Date occurs (the "Record Date") will be
entitled to receive the Class X-[ ] Distribution Amount relating to
such Distribution Date. Distributions will be made in immediately
available funds to such Owners, by wire transfer or otherwise, to the
account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the
Trustee at least 5 business days prior to the related Record Date, or
by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class X-[-] Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts
due on such Distribution Date to the Owners of the Class X-[ ]
Certificates. The Percentage Interest of each Class X-[ ] Certificate
as of any date of determination will be equal to the percentage
interest set forth on such Class X-[ ] Certificate.
The Trustee or any duly appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in
accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to
any Holder shall be considered as having been paid by the Trustee to
such Owner for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Master Servicer pursuant to
the Pooling
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and Servicing Agreement. The Pooling and Servicing Agreement permits the
Master Servicer to enter into Sub-Servicing Agreements with certain
institutions eligible for appointment as Sub-Servicers for the servicing and
administration of certain Mortgage Loans. No appointment of any Sub-Servicer
shall release the Master Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation
of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Morgan Stanley ABS Capital I Inc., Ocwen Federal
Bank FSB, LMAC, Inc., the Trustee or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Mortgage Loans and amounts on deposit in
the Distribution Account and the Collection Account (except as
otherwise provided in the Pooling and Servicing Agreement), all as
more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing
Agreement, or for the appointment of a receiver or trustee, or for any
other remedy under the Pooling and Servicing Agreement except in
compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent
provided in the Pooling and Servicing Agreement with respect to such
Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent
of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to
the Owners of all Certificates from amounts other than those available
under the Certificate Insurance Policy of all amounts held by the
Trustee and required to be paid to such Owners pursuant to the Pooling
and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect
thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation, as contemplated by Section 860F(a)(4) of
the Code, and the Trustee shall either sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the Pooling and Servicing Agreement
and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the
plan of liquidation and such liquidation qualifies as a Qualified
Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) certain Owners of the Class R Certificates or the Master Servicer
may, at their option, purchase from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate, and
thereby effecting early retirement of the Certificates, after the
Optional Termination Date and (ii) under certain circumstances
relating to the qualification of the Trust Estate as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then
outstanding with the prior written consent of the Certificate Insurer
have the right to exercise any trust or power set forth in Section
6.11 of the Pooling, and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the
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<PAGE>
Register duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Registrar duly executed by, the Owner hereof or
his attorney duly authorized in writing, and thereupon one or more new
Certificates of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Depositor, the Trustee, the Seller and the Master
Servicer at any time and from time to time, with the prior written
approval of the Certificate Insurer and not less than a majority of
the Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be amended
without the consent of the Owners. Any such consent by the Owner at
the time of the giving thereof, of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of
Transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class X-[ ] Certificates are issuable only as registered
Certificates in minimum percentage interests of all interests in the
Class X-[ ] Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, Class
X-[ ] Certificates are exchangeable for new Class X-[ ] Certificates
of the same percentage interest as the Class X-[ ] Certificates
exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be effected
by notice to the contrary, except as any otherwise be specifically
provided in the Pooling and Servicing Agreement with respect to the
Certificate Insurer.
No transfer of a Class X Certificate shall be made unless the Registrar and
Trustee shall have received either; (i) a representation letter from the
transferee of such Class X Certificate, acceptable to and in form and
substance satisfactory to the Registrar, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of
ERISA nor a plan or other arrangement subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan") nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer or in the case of an
insurance company purchasing such Certificates, with funds from its
general account, the transfer is covered by the Prohibited Transaction
Class Exemption 95-60 or (ii) in the event that any Class X Certificates
is purchased by a Plan, or by a person or entity acting on behalf of any
Plan or using the assets of any Plan to effect such transfer, an opinion
of counsel, acceptable to and in form and substance satisfactory to the
Depositor, the Trustee, the Certificate Insurer and the Registrar, which
opinion of counsel shall not be at the expense of the Trustee or the
Trust, to the effect that the purchase or holding of any Class X
Certificates will not result in the assets of the Trust being deemed to
be "plan assets", will not cause the Trust to be subject to the
fiduciary requirements and prohibited transaction provision of ERISA and
the Code, and will not subject the Depositor, Sellers, Registrar, Master
Servicer, Certificate Insurer or the Trustee to any obligation or
liability in addition to those expressly undertaken under this
Agreement. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate to or on behalf of any Plan without
the delivery to the Trustee and the Certificate Insurer of an opinion of
counsel as described above shall be null and void and of no effect.
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EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN TWO CLASSES OF "RESIDUAL INTERESTS" IN TWO SEPARATE "REAL ESTATE
MORTGAGE INVESTMENT CONDUITS" ("REMICS") AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE
CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS
CERTIFICATE WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE
ONLY IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.08 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH
IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R
CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN
SECTION 860E(e)(5) OF THE CODE. SUCH TERM INCLUDES THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT,
ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY
COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING
TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMER'S COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME
TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED
BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE WILL BE
REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT
ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED
ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE
RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES,
UPON AN AGENT ACTING FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT
HOLDS THIS CLASS R CERTIFICATE AND THAT HAS A DISQUALIFIED
ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL BE
SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE
AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH
DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX
RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES,
REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS,
TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER T OF THE
CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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OCWEN MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 1997-1
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by Morgan Stanley ABS Capital I Inc.
and Serviced by
OCWEN FEDERAL BANK FSB
(This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, Morgan
Stanley ABS Capital I Inc., Ocwen Federal Bank FSB or LMAC, Inc. or
Texas Commerce Bank National Association. This Certificate represents a
fractional residual ownership interest in the Trust Estate as defined
below.)
No: R-___________________________________
Date
Percentage Interest __________ % ___________________________________
Final Scheduled Distribution Date
_______________________
Registered Owner
The registered Owner named above is the registered Owner of a fractional
interest in (a) the Mortgage Loans (other than any principal and
interest payments received thereon on or prior to the Cut-Off Date)
listed in Schedule I-A and Schedule I-B to the Pooling and Servicing
Agreement which the Sellers have caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Sellers' and Depositor's interest in any Property
which secured a Mortgage Loan but which has been acquired by foreclosure
or deed in lieu of foreclosure, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Distribution Account,
together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Collection Account, if
any, exclusive of investment earnings thereon (except as otherwise
provided herein), whether in the form of cash, instruments, securities
or other properties (including any Permitted Investments held by the
Master Servicer); (c) the Certificate Insurance Policy; and (d) proceeds
of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance
policy relating to the Mortgage Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
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<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
Trustee Authentication
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee
By:_____________________________
Name:___________________________
Title:___________________________
Date of Authentication____________
This Certificate is one of a Class of duly authorized Certificates
designated as Ocwen Mortgage Loan Asset-Backed Certificates, Series 1997-1,
Class R (the "Class R Certificates") and issued under and subject to the
terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of June 1, 1997 (the "Pooling and Servicing Agreement") by
and among Morgan Stanley ABS Capital I Inc., in its capacity as Depositor
(the "Depositor"), Ocwen Federal Bank FSB and LMAC, Inc. in their capacities
as Sellers (the "Sellers"), Ocwen Federal Bank FSB in its capacity as the
Master Servicer (the "Master Servicer"), and Texas Commerce Bank National
Association, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the
Pooling and Servicing Agreement are Certificates designated as Ocwen Mortgage
Loan Asset-Backed Certificates, Series 1997-1, Class A-1 and Class A-2
Certificates (collectively, the "Class A Certificates") and Class X-1 and
Class X-2 (collectively, the "Class X Certificates"). The Class A
Certificates, the Class X Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth
in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing in July 1997, each Owner of a Class R Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date")
will be entitled to receive the Residual Net Monthly Excess Cashflow relating
to such Certificate on such Distribution Date.
Distributions will be made in immediately available funds to Owners of
Class R Certificates having an aggregate Percentage Interest of at least 10%
(by wire transfer or otherwise) to the account of an Owner at a domestic
bank, or other entity having appropriate facilities therefore if such Owner
has so notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement.
Amounts properly withheld under the Code by any Person from a
distribution to any Owner shall be considered as having been paid by the
Trustee to such Owner for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Master Servicer pursuant to
the Pooling and Servicing Agreement. The Pooling and Servicing Agreement
permits the Master Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgagee Loans. No appointment of
any Sub-Servicer shall release the Master Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or on
interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, Morgan Stanley ABS Capital I Inc., Ocwen Federal Bank FSB, LMAC,
Inc., the Trustee or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries
relating
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<PAGE>
to the Mortgage Loans and amounts on deposit in the Distribution Account
and the Collection Account, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to Institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing
Agreement, or for the appointment of a receiver or trustee, or for any
other remedy under the Pooling and Servicing Agreement except in
compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent
provided in the Pooling and Servicing Agreement with respect to such
Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent
of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to
the Owners of all Certificates from amounts other than those available
under the Certificate Insurance Policy of all amounts held by the
Trustee and required to be paid to such Owners pursuant to the Pooling
and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect
thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation, as contemplated by Section 860F(a)(4) of
the Code, and the Trustee shall either sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
the Pooling and Servicing Agreement occur no later than the close of
the 90th day after the date of adoption of the plan of liquidation and
such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) certain Owners of the Class R Certificates or the Master Servicer
may at their option purchase from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate and
thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Optional Termination Date and (ii) certain
circumstances relating to the qualification of Trust Estate as a REMIC
under the Code the Mortgage Loans may be sold, thereby affecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with
the prior written consent of the Certificate Insurer have the right to
exercise any trust or power set forth in Section 6.11 of the Pooling and
Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face
hereof, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of
transfer at the office designated as the location of the Registrar
duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee,
the Sellers and the Master Servicer at any time and from time to time, with
the prior written approval of the Certificate Insurer and not less than a
majority of the Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances provided
for in the Pooling and Servicing Agreement may be amended without the consent
of the Owners. Any such consent by the Owner at the time of
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<PAGE>
the giving thereof, of this Certificate shall be conclusive and binding upon
such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificates as more fully described
in the Pooling and Servicing Agreement.
The Class X Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class X Certificates are exchangeable for new
Class X Certificates evidencing the same Percentage Interest as the Class X
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee nor any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
No transfer of a Class R Certificate shall be made unless the Registrar and
Trustee shall have received either; (i) a representation letter from the
transferee of such Class R Certificate, acceptable to and in form and
substance satisfactory to the Registrar, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of
ERISA nor a plan or other arrangement subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan") nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer or in the case of an
insurance company purchasing such Certificates, with funds from its
general account, the transfer is covered by the Prohibited Transaction
Class Exemption 95-60 or (ii) in the event that any Class R Certificates
is purchased by a Plan, or by a person or entity acting on behalf of any
Plan or using the assets of any Plan to effect such transfer, an opinion
of counsel, acceptable to and in form and substance satisfactory to the
Depositor, the Trustee, the Certificate Insurer and the Registrar, which
opinion of counsel shall not be at the expense of the Trustee or the
Trust, to the effect that the purchase or holding of any Class R
Certificates will not result in the assets of the Trust being deemed to
be "plan assets", will not cause the Trust to be subject to the
fiduciary requirements and prohibited transaction provision of ERISA and
the Code, and will not subject the Depositor, Sellers, Registrar, Master
Servicer, Certificate Insurer or the Trustee to any obligation or
liability in addition to those expressly undertaken under this
Agreement. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate to or on behalf of any Plan without
the delivery to the Trustee and the Certificate Insurer of an opinion of
counsel as described above shall be null and void and of no effect.
C-5
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF CLASS X CERTIFICATES OR CLASS R CERTIFICATES
OCWEN MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 1997-1
This Certificate relates to ____% Percentage Interest in the Class [X-1] [X-2]
[R] Certificates (the "Certificates"). The Transferor has requested the
Trustee by written order to exchange or register the transfer of a
Certificate or Certificates.
In connection with such request and in respect of each such Certificate, the
Transferor does hereby certify that the Transferor is familiar with the
Pooling and Servicing Agreement relating to the above-captioned
Certificates and as provided in Section 5.08 of such Pooling and
Servicing Agreement, the transfer of this Certificate does not require
registration under the Securities Act of 1933, as amended (the
"Securities Act") because such Certificate is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in reliance on Rule 144A.
________________________________________________
[INSERT NAME OF TRANSFEROR]
By:______________________________________________
Date:____________________________
D-1
<PAGE>
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
Texas Commerce Bank National Association, a national banking association, in
its capacity as trustee (the "Trustee") under that certain Pooling and
Servicing Agreement dated as of June 1, 1997 (the "Pooling and Servicing
Agreement") among Morgan Stanley ABS Capital I Inc., as Depositor, Ocwen
Federal Bank FSB and LMAC, Inc., as Sellers, Ocwen Federal Bank FSB, as
Master Servicer, and the Trustee hereby acknowledges receipt (subject to
review as required by Section 3.06(a) of the Pooling and Servicing
Agreement) of the items delivered to it by the Sellers and the Depositor
with respect to the Mortgage Loans pursuant to Section 3.05(b)(i) (A)
and (B) of the Pooling and Servicing Agreement, with the exceptions set
forth on the Schedule of Mortgage Loans attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement
and shall otherwise comply with Section 3.06(b) of the Pooling and Servicing
Agreement as required thereby.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Title:____________________________
Dated: June ___, 1997
E-1
<PAGE>
___________________________________
(Transferor)
By:_________________________________
Name:__________________________________
Title:___________________________________
E-2
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Texas Commerce Bank
National Association, a national banking association, acting in its capacity
as trustee (the "Trustee") of a certain pool of mortgage loans (the "Pool")
heretofore conveyed in trust to the Trustee, pursuant to that certain Pooling
and Servicing Agreement dated as of June 1, 1997 (the "Pooling and Servicing
Agreement") among Morgan Stanley ABS Capital I Inc., as Depositor (the
"Depositor"), Ocwen Federal Bank FSB and LMAC, Inc. as Sellers, Ocwen Federal
Bank FSB as Master Servicer, and the Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Pool
within a specified period following the Startup Day and to notify the Sellers
promptly of any defects with respect to the Pool, and the Sellers are
required to remedy such defects or take certain other action, all as set
forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Trustee to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has determined that
all required documents (or certified copies of documents listed in Section
3.05(b) of the Pooling and Servicing Agreement) have been executed or
received, and that such documents relate to the Mortgage Loans identified in
(i) and (ii) of the definition of the Schedule of Mortgage Loans pursuant to
Section 3.06(a) of the Pooling and Servicing Agreement or, in the event that
such documents have not been executed and received or do not so relate to
such Mortgage Loans, other than as set forth on Schedule I hereto. The
Trustee makes no certification hereby, however, with respect to any
intervening assignments or assumption and modification agreements.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Title:_________________________________
Dated: ___________ __, 1997
F-1
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Texas Commerce Bank National Association, as Trustee
[___________________________]
[___________________________]
Attention: Corporate Trust Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of June 1, 1997 (the "Pooling and Servicing Agreement") among Morgan
Stanley ABS Capital I Inc., as Depositor (the "Depositor"), Ocwen Federal
Bank FSB and LMAC, Inc., as Sellers, Ocwen Federal Bank FSB as Master
Servicer, and Texas Commerce Bank National Association, a national banking
corporation, as Trustee (the "Trustee"), the Depositor HEREBY CERTIFIES that
all conditions precedent to the issuance of the Ocwen Mortgage Loan
Asset-Backed Certificates, Series 1997-1, Class A, Class X and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE
AND DELIVER said Certificates, and to RELEASE said Certificates to the
persons set forth on the attached Schedule, or otherwise upon their order.
Very truly yours,
MORGAN STANLEY ABS CAPITAL I INC.
By:__________________________
Title:________________________
Dated: June ___, 1997
G-1
<PAGE>
Exhibit H
EXHIBIT H
FORM OF TRANSFEROR CERTIFICATE FOR TRANSFERS OF
REMIC RESIDUAL CERTIFICATES
[Date]
Texas Commerce Bank National Association as Certificate Registrar
600 Travis, 8th Floor
Houston, Texas 77022
Re: Ocwen Mortgage Loan Asset-Backed
Certificates, Series 1997-1 (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
___________________ (the "Transferor") to _________________ (the
"Transferee") of Class R Certificates evidencing a ____% Percentage
Interest in such Class (the "Residual Certificates"). The Certificates,
including the Residual Certificates, were issued pursuant to the Pooling
and Servicing Agreement, dated as of June 1, 1997 (the "Pooling and
Servicing Agreement"), among Morgan Stanley ABS Capital I Inc., as
Depositor, Ocwen Federal Bank FSB, as Master Servicer, Ocwen Federal
Bank FSB and LMAC, Inc. as Sellers and Texas Commerce Bank National
Association as Trustee. All capitalized terms used but not otherwise
defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement. The Transferor hereby certifies,
represents and warrants to you, as Certificate Registrar, that:
1. No purpose of the Transferor relating to the transfer of the
Residual Certificates by the Transferor to the Transferee is or
will be to impede the assessment or collection of any tax.
2. The Transferor understands that the Transferee has
delivered to you a Transfer Affidavit and Agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit J.
The Transferor does not know or believe that any representation
contained therein is false.
3. The Transferor has at the time of this transfer
conducted a reasonable investigation of the financial condition
of the Transferee as contemplated by Treasury regulation Section
1.860E-1(c)(4)(i) and, as a result of that investigation, the
Transferor has determined that the Transferee has historically
paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay
its debts as they become due in the future. The Transferor
understands that the transfer of the Residual Certificates may
not be respected for United States income tax purposes (and the
Transferor may continue to be liable for United States income
taxes associated therewith) unless the Transferor has conducted
such an investigation.
Very truly yours,
________________________
(Transferor)
By:______________________
Name:____________________
Title:___________________
H-1
<PAGE>
EXHIBIT I
FORM OF NOTICE
As provided in Exhibit A to the Certificate Insurance Policy
I-1
<PAGE>
EXHIBIT J
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
FOR TRANSFERS OF REMIC RESIDUAL CERTIFICATES
STATE OF )
) ss:
COUNTY OF )
__________________________, being first duly sworn,
deposes and says that:
1. He/She is the ___________________________ of
___________________ (the prospective transferee (the
"Transferee") of Ocwen Mortgage Loan Asset-Backed Certificates,
Series 1997-1, Class R Certificates, evidencing a ____%
Percentage Interest in such Class (the "Residual Certificates")),
a ___________________ duly organized and validly existing under
the laws of _________________, on behalf of which he/she makes
this affidavit. All capitalized terms used but not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement pursuant to which the
Residual Certificates were issued (the "Pooling and Servicing
Agreement").
2. The Transferee (i) is, and as of the date of
transfer will be, a "Permitted Transferee" and will endeavor to
remain a "Permitted Transferee" for so long as it holds the
Residual Certificates, and (ii) is acquiring the Residual
Certificates for its own account or for the account of another
prospective transferee from which it has received an affidavit in
substantially the same form as this affidavit. A "Permitted
Transferee" is any Person other than a "disqualified
organization" or a possession of the United States. (For this
purpose, a "disqualified organization" means the United States,
any state or political subdivision thereof, any agency or
instrumentality of any of the foregoing (other than an
instrumentality, all of the activities of which are subject to
tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such
governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign
government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax
unless such organization is subject to the tax on unrelated
business taxable income.)
3. The Transferee is aware (i) of the tax that would
be imposed on transfers of the Residual Certificates to
"disqualified organizations" under the Code that applies to all
transfers of the Residual Certificates; (ii) that such tax would
be on the transferor or, if such transfer is through an agent
(which Person includes a broker, nominee or middleman) for a
non-Permitted Transferee, on the agent; (iii) that the Person
otherwise liable for the tax shall be relieved of liability for
the tax if the transferee furnishes to such Person an affidavit
that the transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the
affidavit is false; and (iv) that the Residual Certificates may
be a "noneconomic residual interest" within the meaning of
Treasury regulation Section 1.860E-1(c) 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 is to enable the
transferor to impede the assessment or collection of tax.
4. The Transferee is aware of the tax imposed on a
"pass-through entity" holding the Residual Certificates if at any
time during the taxable year of the pass-through entity a
non-Permitted Transferee is the record holder of an interest in
such entity. (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.)
5. The Transferee is aware that the Certificate
Registrar will not register any transfer of the Residual
Certificates by the Transferee unless the Transferee's
transferee, or such transferee's agent, delivers to the
Certificate Registrar, among other things, an affidavit and
agreement in substantially the same form as this
J-1
<PAGE>
affidavit and agreement. The Transferee expressly agrees that it will not
consummate any such transfer if it knows or believes that any representation
contained in such affidavit and agreement is false.
6. The Transferee consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Residual Certificate
will only be owned, directly or indirectly, by a Permitted Transferee.
7. The Transferee's taxpayer identification number is
_________________.
8. The Transferee has reviewed the provisions of
Section 5.08 of the Pooling and Servicing Agreement, a
description of which provisions is set forth in the Residual
Certificates (in particular, clause (a) of Section 5.08 which
authorizes the Trustee to deliver payments on the Residual
Certificates to a Person other than the Transferee and which
makes a sale to a Disqualified Organization of no force and
effect, in either case, in the event that the Transferee holds
such Residual Certificates in violation of Section 5.08); and the
Transferee expressly agrees to be bound by and to comply with
such provisions.
9. No purpose of the Transferee relating to its
purchase or any sale of the Residual Certificates is or will be
to impede the assessment or collection of any tax.
10. The Transferee hereby represents to and for the
benefit of the transferor that the Transferee intends to pay any
taxes associated with holding the Residual Certificates as they
become due, fully understanding that it may incur tax liabilities
in excess of any cash flows generated by the Residual
Certificates.
11. The Transferee will, in connection with any
transfer that it makes of the Residual Certificates, deliver to
the Certificate Registrar a representation letter substantially
in the form of Exhibit H to the Pooling and Servicing Agreement
in which it will represent and warrant, among other things, that
it is not transferring the Residual Certificates to impede the
assessment or collection of any tax and that it has at the time
of such transfer conducted a reasonable investigation of the
financial condition of the proposed transferee as contemplated by
Treasury regulation Section 1.860E-l(c)(4)(i) and has satisfied
the requirements of such provision.
12. The Transferee is a citizen or resident of the
United States, a corporation, a partnership or other entity
created or organized in, or under the laws of, the United States
or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includable in
gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or
business within the United States.
IN WITNESS WHEREOF, the Transferee has caused this
instrument to be executed on its behalf, pursuant to the
authority of its Board of Directors, by its ____________ and its
corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ___ day of _______________, 199_.
[NAME OF TRANSFEREE]
By:________________________________
[Name of Officer]
[Title of Officer]
___________________________
[Corporate Seal]
J-2
<PAGE>
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
to me that he/she executed the same as his/her free act and deed
and the free act and deed of the Transferee
Subscribed and sworn before me this ___ day of
__________________, 199_.
NOTARY PUBLIC
COUNTY OF_______________________
STATE OF________________________
My Commission expires the ______
day of __________________, 19___.
J-3
<PAGE>
EXHIBIT K
RESERVED
K-1
<PAGE>
EXHIBIT L
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
I. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date last paid
- Date of foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $_________________
Property Sale Proceeds $_________________
Insurance Proceeds $_________________
Other (itemize) $_________________
Total Proceeds $_________________
3. Liquidation Expenses
Servicing Advances $_________________
Monthly Advances $_________________
Contingency Fees $_________________
Excess Servicing Fees $_________________
Servicing Fees $_________________
Annual Expense Escrow Amount $_________________
Supplemental Fee (if any) $_________________
Additional Interest (if any) $_________________
Total Advances $_________________
4. Net Liquidation Proceeds
(Item 2 minus Item 3) $_________________
5. Principal Balance of Mortgage Loan $_________________
6. Loss, if any (Item 5 minus Item 4) $_________________
K-2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION........................................ 2
Section 1.01 Definitions........................................... 2
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST............................ 23
Section 2.01 Establishment of the Trust........................... 23
Section 2.02 Office............................................... 24
Section 2.03 Purposes and Powers.................................. 24
Section 2.04 Appointment of the Trustee; Declaration of Trust..... 24
Section 2.05 Reserved............................................. 24
Section 2.06 Ownership of the Trust............................... 24
Section 2.07 Situs of the Trust................................... 24
Section 2.08 Miscellaneous REMIC Provisions....................... 24
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY MORTGAGE LOANS............................ 26
Section 3.01 Representations and Warranties of the Depositor....... 26
Section 3.02 Representations and Warranties of the Master
Servicer.............................................. 27
Section 3.03 Representations and Warranties of the Sellers......... 29
Section 3.04 Covenants of Sellers to Take Certain Actions with
Respect to the Mortgage Loans In Certain
Situations............................................ 31
Section 3.05 Conveyance of the Mortgage Loans and Qualified
Replacement Mortgages................................. 32
Section 3.06 Acceptance by Trustee; Certain Substitutions
of Mortgage Loans; Certification by Trustee........... 34
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES......................... 36
Section 4.01 Issuance of Certificates.............................. 36
Section 4.02 Sale of Certificates.................................. 36
ARTICLE V
CERTIFICATES AND TRANSFER OF INTEREST........................... 36
Section 5.01 Terms................................................. 36
Section 5.02 Forms................................................. 37
Section 5.03 Execution, Authentication and Delivery................ 37
Section 5.04 Registration and Transfer of Certificates............. 37
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..... 39
Section 5.06 Persons Deemed Owners................................. 39
Section 5.07 Cancellation.......................................... 39
Section 5.08 Limitation on Transfer of Ownership Rights
of Subordinate Certificates........................... 39
Section 5.09 Assignment of Rights.................................. 41
ARTICLE VI
COVENANTS...................................................... 41
Section 6.01 Distributions......................................... 41
Section 6.02 Money for Distributions to be Held in Trust;
Withholding............................................41
Section 6.03 Protection of Trust Estate............................ 42
Section 6.04 Performance of Obligations............................ 43
Section 6.05 Negative Covenants.................................... 43
Section 6.06 No Other Powers....................................... 43
Section 6.07 Limitation of Suits................................... 44
Section 6.08 Unconditional Rights of Owners to Receive
Distributions......................................... 44
Section 6.09 Rights and Remedies Cumulative........................ 44
Section 6.10 Delay or Omission Not Waiver.......................... 45
Section 6.11 Control by Owners..................................... 45
i
<PAGE>
Section 6.12 Indemnification....................................... 45
Section 6.13 Access to Owners of Certificates' Names
and Addresses......................................... 45
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Section 7.02 Establishment of Accounts............................. 46
Section 7.03 Flow of Funds......................................... 48
Section 7.04 Calculation of LIBOR.................................. 51
Section 7.05 Investment of Accounts................................ 52
Section 7.06 Reserved.............................................. 52
Section 7.07 Permitted Investments................................. 52
Section 7.08 Accounting and Directions by Trustee.................. 54
Section 7.09 Reports by Trustee to Owners and Certificate
Insurer............................................... 54
Section 7.11 Preference Payments................................... 56
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS................................. 56
Section 8.01 Master Servicer and Sub-Servicers..................... 56
Section 8.02 Collection of Certain Mortgage Loan
Payments.............................................. 58
Section 8.03 Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers............................ 58
Section 8.04 Successor Sub-Servicers............................... 58
Section 8.05 Liability of Master Servicer; Indemnification......... 58
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners................................. 59
Section 8.07 Assumption or Termination of Sub-Servicing
Agreement by Trustee.................................. 59
Section 8.08 Collection Account.................................... 59
Section 8.09 P&I Advances and Servicing Advances................... 61
Section 8.10 Compensating Interest: Repurchase of
Mortgage Loans........................................ 62
Section 8.11 Maintenance of Insurance.............................. 62
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements............................... 64
Section 8.13 Realization Upon Defaulted Mortgage Loans;
Inspection............................................ 64
Section 8.14 Trustee to Cooperate; Release of Files................ 66
Section 8.15 Servicing Compensation................................ 66
Section 8.16 Annual Statement as to Compliance..................... 67
Section 8.17 Annual Independent Certified Public
Accountants' Reports.................................. 67
Section 8.18 Access to Certain Documentation and
Information Regarding the Mortgage Loans.............. 67
Section 8.19 Merger or Consolidation of the Master
Servicer; Assignment.................................. 68
Section 8.20 Removal of Master Servicer; Resignation
of Master Servicer.................................... 68
Section 8.21 Inspections by Certificate Insurer;
Errors and Omissions Insurance........................ 71
ARTICLE IX
TERMINATION OF TRUST.............................. 71
Section 9.01 Termination of Trust.................................. 71
Section 9.02 Termination Upon Option of Owners of Class R
Certificates and Master Servicer...................... 72
Section 9.03 Reserved.............................................. 73
Section 9.04 Termination Upon Loss of REMIC Status................. 73
Section 9.05 Disposition of Proceeds............................... 74
Section 9.06 Trustee Tax Reporting................................. 74
ARTICLE X
THE TRUSTEE.................................... 75
Section 10.01 Certain Duties and Responsibilities................... 75
Section 10.02 Removal of Trustee for Cause.......................... 76
Section 10.03 Certain Rights of the Trustee......................... 77
Section 10.04 Not Responsible for Recitals or Issuance
of Certificates....................................... 78
Section 10.05 May Hold Certificates................................. 78
Section 10.06 Money Held in Trust................................... 78
Section 10.07 Compensation and Reimbursement; No Lien
for Fees.............................................. 78
ii
<PAGE>
Section 10.08 Corporate Trustee Required; Eligibility............... 79
Section 10.09 Resignation and Removal: Appointment of
Successor............................................. 79
Section 10.10 Acceptance of Appointment by Successor
Trustee............................................... 80
Section 10.11 Merger, Conversion, Consolidation or Succession
to Business of the Trustee............................ 81
Section 10.12 Reporting; Withholding................................ 81
Section 10.13 Liability of the Trustee.............................. 81
Section 10.14 Appointment of Co-Trustee or Separate Trustee......... 82
ARTICLE XI
MISCELLANEOUS.................................. 83
Section 11.01 Compliance Certificates and Opinions.................. 83
Section 11.02 Form of Documents Delivered to the Trustee............ 83
Section 11.03 Acts of Owners........................................ 84
Section 11.04 Notices, etc. to Trustee.............................. 84
Section 11.05 Notices and Reports to Owners; Waiver of Notices...... 84
Section 11.06 Rules by Trustee...................................... 85
Section 11.07 Successors and Assigns................................ 85
Section 11.08 Severability.......................................... 85
Section 11.09 Benefits of Agreement................................. 85
Section 11.10 Legal Holidays........................................ 85
Section 11.11 Governing Law; Submission to Jurisdiction............. 85
Section 11.12 Counterparts.......................................... 86
Section 11.13 Usury................................................. 86
Section 11.14 Amendment............................................. 86
Section 11.15 Paying Agent; Appointment and Acceptance
of Duties............................................. 87
Section 11.16 REMIC Status.......................................... 88
Section 11.17 Additional Limitation on Action and Imposition
of Tax................................................ 89
Section 11.18 Appointment of Tax Matters Person..................... 89
Section 11.19 The Certificate Insurer............................... 89
Section 11.20 Reserved.............................................. 89
Section 11.21 Third Party Rights.................................... 89
Section 11.25 Notices............................................... 90
Section 11.26 Notice to Trustee of Amendments to Premuim
Letter................................................ 92
EXHIBIT A - Form of Class A Certificate
EXHIBIT B - Form of Class X Certificate
EXHIBIT C - Form of Class R Certificate
EXHIBIT D - Certificate to be Delivered
Upon Exchange or Registration of
Transfer of Class X Certificates
or Class R Certificates
EXHIBIT E - Form of Trustee's Receipt
EXHIBIT F - Form of Pool Certification
EXHIBIT G - Form of Delivery Order
EXHIBIT H - Form of Transferor Certificate for
Transfers of REMIC Residual Certificates
EXHIBIT I - Form of Notice
EXHIBIT J - Form of Transfer Affidavit and Agreement
for Transfers of REMIC Residual Certificates
EXHIBIT K - Reserved
EXHIBIT L - Form of Liquidation Report
SCHEDULE I - Representations and Warranties as to the
Mortgage Loan
SCHEDULE I-A - Schedule of Fixed Rate Group Mortgage Loans
SCHEDULE I-B - Schedule of Adjustable Rate Group Mortgage
Loans
iii
