<PAGE> 1
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) January 27, 1998
MELLON RESIDENTIAL FUNDING
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-24453 23-2889067
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(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) ID Number)
One Mellon Center, Room 410, Pittsburgh, Pennsylvania 15258
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (412) 236-6559
--------------
N/A
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(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
Filing of Pooling and Servicing Agreement.
Mellon Residential Funding Corporation (the "Depositor") registered
issuances of up to $2,000,000,000 principal amount of Mortgage Pass-Through
Certificates on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act of 1933, as amended (the "Act"), by a Registration Statement on
Form S-3 (Registration File No. 333-24453) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, approximately $526,494,100
principal amount of Mortgage Pass-Through Certificates, Series 1998-1 (the
"Certificates") were issued on January 27, 1998.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement, dated as of January 1, 1998 (the "Pooling and Servicing Agreement"),
among the Depositor, Mellon Mortgage Company, as seller (in such capacity, the
"Seller") and master servicer (in such capacity, the "Master Servicer"), and
Bankers Trust Company of California, N.A., as trustee (the "Trustee").
This Current Report on Form 8-K is being filed to file a copy of the
Pooling and Servicing Agreement.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Pooling and Servicing Agreement, dated as of January 1, 1998, among
Mellon Residential Funding Corporation, as Depositor, Mellon
Mortgage Company, as Seller and Master Servicer, and Bankers Trust
Company, N.A., as Trustee.
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<PAGE> 4
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.
MELLON RESIDENTIAL FUNDING
By: /s/ Stephen Cobain
-----------------------
Name: Stephen Cobain
Title: President
Dated: January 29, 1998
<PAGE> 5
EXHIBIT INDEX
Exhibit Page
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4.1 Pooling and Servicing Agreement, dated as of January 1,
1998, among Mellon Residential Funding Corporation, as
Depositor, Mellon Mortgage Company, as Seller and Master
Servicer, and Bankers Trust Company of California, N.A., as
Trustee.
<PAGE> 1
Exhibit 4.1
EXECUTION COPY
MELLON RESIDENTIAL FUNDING CORPORATION,
Depositor
MELLON MORTGAGE COMPANY,
Seller and Master Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1998
----------------------------------
MORTGAGE PASS-THROUGH CERTIFICATES, Series 1998-1
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................................................5
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES................30
SECTION 2.01. Conveyance of Mortgage Loans...........................30
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans............32
SECTION 2.03. Representations, Warranties and Covenants of the
Seller and Master Servicer.............................34
SECTION 2.04. Representations and Warranties of the Depositor as
to the Mortgage Loans..................................36
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions..........................................36
SECTION 2.06. Execution and Delivery of Certificates.................36
SECTION 2.07. REMIC Matters..........................................37
ARTICLE III
ADMINISTRATION AND SERVICING................................................37
SECTION 3.01. Master Servicer to Service Mortgage Loans..............37
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers..............................................38
SECTION 3.03. Rights of the Depositor and the Trustee in Respect
of the Master Servicer.................................38
SECTION 3.04. Trustee to Act as Master Servicer......................39
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account..........................39
SECTION 3.06. Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.................................41
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans...........................42
SECTION 3.08. Permitted Withdrawals from the Certificate Account
and Distribution Account...............................42
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.............................44
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.............................................45
SECTION 3.11. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans...................46
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files........48
SECTION 3.13. Documents Records and Funds in Possession of
Master Servicer to be Held for the Trustee.............49
SECTION 3.14. Servicing Compensation.................................50
SECTION 3.15. Access to Certain Documentation........................50
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SECTION 3.16. Annual Statement as to Compliance......................50
SECTION 3.17. Annual Independent Public Accountants' Servicing
Statement; Financial Statements........................50
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds.........51
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER...........................51
SECTION 4.01. Advances...............................................51
SECTION 4.02. Priorities of Distribution.............................52
SECTION 4.03. Allocation of Realized Losses..........................55
SECTION 4.04. Monthly Statements to Certificateholders...............56
SECTION 4.05. Determination of Pass-Through Rates for COFI
Certificates...........................................57
SECTION 4.06. Determination of Pass-Through Rates for LIBOR
Certificates...........................................59
ARTICLE V
THE CERTIFICATES............................................................61
SECTION 5.01. The Certificates.......................................61
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates...............................61
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates......65
SECTION 5.04. Persons Deemed Owners..................................66
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses..............................................66
SECTION 5.06. Maintenance of Office or Agency........................66
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER.......................................66
SECTION 6.01. Respective Liabilities of the Depositor and the
Master Servicer........................................66
SECTION 6.02. Merger or Consolidation of the Depositor or the
Master Servicer........................................66
SECTION 6.03. Limitation on Liability of the Depositor, the
Seller, the Master Servicer and Others.................67
SECTION 6.04. Limitation on Resignation of Master Servicer...........66
ARTICLE VII
DEFAULT.....................................................................68
SECTION 7.01. Events of Default......................................68
SECTION 7.02. Trustee to Act; Appointment of Successor...............70
SECTION 7.03. Notification to Certificateholders.....................71
ARTICLE VIII
CONCERNING THE TRUSTEE......................................................71
SECTION 8.01. Duties of Trustee......................................71
SECTION 8.02. Certain Matters Affecting the Trustee..................72
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SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans .................................................73
SECTION 8.04. Trustee May Own Certificates...........................73
SECTION 8.05. Trustee's Fees and Expenses............................73
SECTION 8.06. Eligibility Requirements for Trustee...................74
SECTION 8.07. Resignation and Removal of Trustee.....................74
SECTION 8.08. Successor Trustee......................................75
SECTION 8.09. Merger or Consolidation of Trustee.....................75
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee..........75
SECTION 8.11. Tax Matters............................................77
SECTION 8.12. Periodic Filings.......................................78
ARTICLE IX
TERMINATION.................................................................79
SECTION 9.01. Termination upon Liquidation or Purchase of all
Mortgage Loans.........................................79
SECTION 9.02. Final Distribution on the Certificates.................79
SECTION 9.03. Additional Termination Requirements....................80
ARTICLE X
MISCELLANEOUS PROVISIONS....................................................81
SECTION 10.01. Amendment..............................................81
SECTION 10.02. Recordation of Agreement; Counterparts.................82
SECTION 10.03. Governing Law..........................................82
SECTION 10.04. Intention of Parties...................................82
SECTION 10.05. Notices................................................83
SECTION 10.06. Severability of Provisions.............................84
SECTION 10.07. Assignment.............................................84
SECTION 10.08. Limitation on Rights of Certificateholders.............84
SECTION 10.09. Inspection and Audit...................................85
SECTION 10.10. Certificates Nonassessable and Fully Paid..............85
Exhibit A: Form of Senior Certificate
(excluding Notional Amount Certificates)................A-1
Exhibit B: Form of Subordinated Certificate........................B-1
Exhibit C: Form of Class A-R Certificate...........................C-1
Exhibit D: Form of Notional Amount Certificate.....................D-1
Exhibit E: Form of Reverse of Certificates.........................E-1
Exhibit F: [Reserved]..............................................F-1
Exhibit G: Form of Initial Certificates............................G-1
Exhibit H: Form of Final Certification of Trustee..................H-1
Exhibit I: Transfer Affidavit......................................I-1
Exhibit J-1: Form of Transferor Certificate (Private Certificates)...J-1
Exhibit J-2: Form of Transferor Certificate (Class A-R)..............J-2
Exhibit K: Form of Investment Letter [Non-Rule 144A]...............K-1
Exhibit L: Form of Rule 144A Letter................................L-1
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Exhibit M: Request for Release (for Trustee).......................M-1
Exhibit N: Request for Release (Mortgage Loan)
Paid in Full, Repurchased and Replaced).................N-1
Exhibit O: [Reserved]..............................................O-1
SCHEDULES
Schedule I: Mortgage Loan Schedule.............................. I-1
Schedule II: Representations and Warranties of the
Seller/Master Servicer............................. II-1
Schedule III: Representations and Warranties as to
the Mortgage Loans................................. III-1
Schedule IV: [Reserved] ......................................... IV-1
Schedule V: Form of Monthly Master Servicer Report.............. V-1
iv
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THIS POOLING AND SERVICING AGREEMENT, dated as of January 1, 1998,
among MELLON RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), MELLON MORTGAGE COMPANY, a Colorado corporation, as
seller (in such capacity, the "Seller") and as master servicer (in such
capacity, the "Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
a national banking association organized under the laws of the United States, as
trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of a single REMIC. The Certificates will represent the
entire beneficial ownership interest in the Trust Fund. The Regular Certificates
will represent the "regular interests" in the Trust Fund and the Residual
Certificates will represent the single "residual interest" in the Trust Fund.
The "latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Latest Possible Maturity Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in a different amount and, in addition, one
Residual Certificate representing the Tax Matters Person Certificate may be
issued in a different amount):
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<TABLE>
<CAPTION>
===============================================================================
Integral
Initial Class Multiples
Certificate Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
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<S> <C> <C> <C> <C>
Class A-1 $294,377,000 6.500% $25,000 $1,000
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Class A-2 $77,052,000 6.500% $1,000 $1,000
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Class A-3 $24,911,000 6.500% $1,000 $1,000
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Class A-4 $45,952,000 6.500% $25,000 $1,000
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Class A-5 $70,826,000 6.500% $25,000 $1,000
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Class X (1) (2) $25,000(3) $1,000(3)
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Class A-R $100.00 6.500% $100 N/A
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Class B-1 $7,996,000 6.500% $25,000 $1,000
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Class B-2 $2,665,000 6.500% $25,000 $1,000
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Class B-3 $2,665,000 6.500% $25,000 $1,000
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Class B-4 $3,465,000 6.500% $100,000 $1,000
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Class B-5 $1,599,000 6.500% $100,000 $1,000
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Class B-6 $1,601,892 6.500% $100,000 $1,000
===============================================================================
</TABLE>
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(1) The Class X Certificates will be Component Certificates and Notional
Amount Certificates, will have no principal balance and will bear interest
on their Component Notional Balances.
(2) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the weighted average of the Pass-Through Rates on
the Class X-1 Component and the Class X-2 Component for such Distribution
Date. The Pass-Through Rate of the Class X Certificates for the first
Distribution Date is 0.91915% per annum.
(3) Minimum Denomination is based on the Notional Amount of such Class.
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Set forth below are designations of Classes of Certificates to the categories
used herein:
Accretion Directed
Certificates............... None.
Accrual Certificates....... None.
Book-Entry Certificates.... All Classes of Certificates other than the
Physical Certificates.
Component Certificates..... Class X Certificates..
Components................. For purposes of calculating distributions, the
Component Certificates will be comprised of
multiple payment components having the
designations, Initial Component Notional Balances
and Pass-Through Rates set forth below:
<TABLE>
<CAPTION>
Initial
Component
Notional
Designation Balance Pass-Through Rate
----------- ------- -----------------
<S> <C> <C>
X-1 (1) (1)
X-2 (2) (2)
</TABLE>
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(1) The Class X-1 Component is related to Loan Group One. The Component Notional
Balance for any Distribution Date will equal the aggregate of the Stated
Principal Balances of the Mortgage Loans in Loan Group One as of the Due Date in
the month prior to the month of such Distribution Date. The Initial Component
Notional Balance is $459,524,098. The Pass-Through Rate for any Distribution
Date will equal the excess of (a) the average of the Adjusted Net Mortgage Rates
for the Mortgage Loans in Loan Group One over (b) 6.50% per annum, the
Pass-Through Rate for the first Distribution Date is 0.953% per annum.
(2) The Class X-2 Component is related to Loan Group Two. The Component Notional
Balance for any Distribution Date will equal the aggregate of the Stated
Principal Balances of the Mortgage Loans in Loan Group Two as of the Due Date in
the month prior to the month of such Distribution Date. The Initial Component
Notional Balance is $73,585,894. The Pass-Through Rate for any Distribution Date
will equal the excess of (a) the average of the Adjusted Net Mortgage Rates for
the Mortgage Loans in Loan Group Two over (b) 6.50% per annum, the Pass-Through
Rate for the first Distribution Date is 0.709% per annum.
Delay Certificates......... All interest-bearing Classes of Certificates
other than the Non-Delay Certificates, if any.
ERISA-Restricted
Certificates............... Residual Certificates and Subordinated
Certificates.
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Floating Rate Certificates. None.
Inverse Floating Rate
Certificates............... None.
COFI Certificates.......... None.
LIBOR Certificates......... None.
Non-Delay Certificates..... None.
Notional Amount
Certificates............... Class X Certificates.
Offered Certificates....... All Classes of Certificates other than the
Private and Residual Certificates.
Physical Certificates...... The Private and Residual Certificates.
Planned Principal Classes.. None.
Primary Planned Principal
Classes.................... None.
Principal Only
Certificates............... None.
Private Certificates....... Class B-4, Class B-5 and Class B-6 Certificates.
Rating Agencies............ S&P and Duff & Phelps.
Regular Certificates....... All Classes of Certificates, other than the
Residual Certificates.
Residual Certificates...... Class A-R Certificates.
Scheduled Principal
Classes.................... None.
Secondary Planned Principal
Class...................... None.
Senior Certificates. ...... Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-R and Class X Certificates.
Subordinated Certificates.. Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates.
Support Classes............ None.
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Targeted Principal
Classes.................... None.
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts. Defined terms
and provisions herein relating to statistical rating agencies not designated
above as Rating Agencies shall be of no force or effect.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accretion Directed Certificates: As specified in the Preliminary
Statement.
Accrual Amount: With respect to any Class of Accrual Certificates
and any Distribution Date prior to the Accrual Termination Date, the amount
allocable to interest on each such Class of Accrual Certificates with respect to
such Distribution Date pursuant to Section 4.02(a)(1)(ii).
Accrual Certificates: As specified in the Preliminary Statement.
Accrual Termination Date: Not applicable.
Adjusted Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the Master Servicing Fee
Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at any
time, the per annum rate equal to the Mortgage Rate less the related Expense
Rate.
Advance: As to a Loan Group, the payment required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section 4.01,
the amount of any such payment being equal to the aggregate of payments of
principal and interest (net of the Master Servicing Fee and net of any net
income in the case of any REO Property) on the Mortgage Loans in such Loan Group
that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all amendments
or supplements hereto.
Amount Available for Senior Principal: As to any Distribution Date
and (a) Loan Group One, the sum of (i) Available Funds for such Distribution
Date and Loan Group and (ii) Remaining Available Funds for Loan Group Two for
such Distribution Date, reduced by the aggregate amount distributable (or
allocable to the Accrual Amount, if applicable) on such Distribution Date in
respect of
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interest on the related Senior Certificates pursuant to Section 4.02(a)(1)(i) or
(b) Loan Group Two, the sum of (i) Available Funds for such Distribution Date
and Loan Group and (ii) Remaining Available Funds for Loan Group One, for such
Distribution Date, reduced by the aggregate amount distributable on such
Distribution Date in respect of interest on the related Senior Certificates
pursuant to Section 4.02(a)(2)(i).
Amount Held for Future Distribution: As to any Distribution Date and
Mortgage Loans in a Loan Group, the aggregate amount held in the Certificate
Account at the close of business on the related Determination Date on account of
(i) Principal Prepayments and Liquidation Proceeds received in the month of such
Distribution Date relating to such Loan Group and (ii) all Scheduled Payments
due after the related Due Date relating to such Loan Group.
Applicable Credit Support Percentage: As defined in Section 4.02(e).
Appraised Value: With respect to any Mortgage Loan, the Appraised
Value of the related Mortgaged Property shall be: (i) with respect to a Mortgage
Loan other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan ,the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.
Assumed Balance: With respect to any Distribution Date, Class of
Subordinated Certificates and Loan Group, each such Class' pro rata interest
(based on their respective Class Certificate Balances) in such Loan Group equal
to the product of the Subordinated Percentage for such Loan Group as of such
Distribution Date and the aggregate of the Stated Principal Balance of each
Mortgage Loan in such Loan Group as of the Due Date occurring in the month of
such Distribution Date.
Assumed Interest Amount: With respect to any Distribution Date and
Class of Subordinated Certificates, one month's interest accrued during the
related Interest Accrual Period at the Pass-Through Rate for such Class on the
applicable Assumed Balance.
Available Funds: As to any Distribution Date and the Mortgage Loans
in a Loan Group, the sum of (a) the aggregate amount held in the Certificate
Account at the close of business on the related Determination Date in respect of
such Mortgage Loans net of the related Amount Held for Future Distribution and
net of amounts permitted to be withdrawn from the Certificate Account pursuant
to clauses (i)-(viii), inclusive, of Section 3.08(a) in respect of such Mortgage
Loans and amounts permitted to be withdrawn from the Distribution Account
pursuant to clauses (i)-(iii) inclusive of Section 3.08(b) in respect of such
Mortgage Loans, (b) the amount of the related Advance and (c) in connection with
Defective Mortgage Loans, as applicable, the aggregate of the Purchase Prices
and Substitution Adjustment Amounts deposited on the related Distribution
Account Deposit Date.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Bankruptcy Coverage Termination Date: The point in time at which the
Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that a Bankruptcy Loss
shall not be deemed a Bankruptcy Loss
6
<PAGE> 12
hereunder so long as the Master Servicer has notified the Trustee in writing
that the Master Servicer is diligently pursuing any remedies that may exist in
connection with the related Mortgage Loan and either (A) the related Mortgage
Loan is not in default with regard to payments due thereunder or (B) delinquent
payments of principal and interest under the related Mortgage Loan and any
related escrow payments in respect of such Mortgage Loan are being advanced on a
current basis by the Master Servicer, in either case without giving effect to
any Debt Service Reduction or Deficient Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date, the
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to
the Certificates since the Cut-off Date and (ii) any permissible reductions in
the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will not result in a
downgrading of the then current ratings assigned to the Classes of Certificates
rated by it.
Blanket Mortgage: The mortgage or mortgages encumbering the
Cooperative Property.
Book-Entry Certificates: As specified in the Preliminary Statement.
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
State of Colorado or the city in which the Corporate Trust Office of the Trustee
is located are authorized or obligated by law or executive order to be closed.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account or Accounts
created and maintained by the Master Servicer pursuant to Section 3.05 with a
depository institution in the name of the Master Servicer for the benefit of the
Trustee on behalf of Certificateholders and designated "Mellon Mortgage Company"
in trust for the registered holders of Mellon Residential Funding Corporation,
Mortgage Pass-Through Certificates Series 1998-1."
Certificate Balance: With respect to any Certificate at any date,
the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof (A)
minus the sum of (i) all distributions of principal previously made with respect
thereto and (ii) all Realized Losses allocated thereto and, in the case of any
Subordinated Certificates, all other reductions in Certificate Balance
previously allocated thereto pursuant to Section 4.03 and (B) in the case of any
Class of Accrual Certificates, increased by the Accrual Amount added to the
Class Certificate Balance of such Class prior to such date.
Certificate Group: Certificate Group One or Certificate Group Two,
as applicable.
Certificate Group One: Class A-1, Class A-2, Class A-3, Class A-4,
and Class A-R Certificates, Class X-1 Component and the Subordinated
Certificates.
Certificate Group Two: Class A-5 Certificates and Class X-2
Component.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate.
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<PAGE> 13
Certificate Register: The register maintained pursuant to Section
5.02 hereof.
Certificateholder or Holder: The person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent pursuant to this Agreement, any Certificate registered in
the name of the Depositor or any affiliate of the Depositor shall be deemed not
to be Outstanding and the Percentage Interest evidenced thereby shall not be
taken into account in determining whether the requisite amount of Percentage
Interests necessary to effect such consent has been obtained; provided, however,
that if any such Person (including the Depositor) owns 100% of the Percentage
Interests evidenced by a Class of Certificates, such Certificates shall be
deemed to be Outstanding for purposes of any provision hereof that requires the
consent of the Holders of Certificates of a particular Class as a condition to
the taking of any action hereunder. The Trustee is entitled to rely conclusively
on a certification of the Depositor or any affiliate of the Depositor in
determining which Certificates are registered in the name of an affiliate of the
Depositor.
Class: All Certificates bearing the same class designation as set
forth in the Preliminary Statement.
Class Certificate Balance: With respect to any Class and as to any
date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class or
interest bearing Component, the amount by which the amount described in clause
(i) of the definition of Class Optimal Interest Distribution Amount for such
Class exceeds the amount of interest actually distributed on such Class on such
Distribution Date pursuant to such clause (i).
Class Optimal Interest Distribution Amount: With respect to any
Distribution Date and interest bearing Class or, with respect to any interest
bearing Component, any Component thereof, the sum of (i) one month's interest
accrued during the related Interest Accrual Period at the Pass-Through Rate for
such Class on the related Class Certificate Balance, Component Notional Balance
or Notional Amount, as applicable, subject to reduction as provided in Section
4.02(d) and (ii) any Class Unpaid Interest Amounts for such Class or Component.
Class PO Deferred Amount: Not applicable.
Class Subordination Percentage: With respect to any Distribution
Date and each Class of Subordinated Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class of Certificates
immediately prior to such Distribution Date divided by (b) the aggregate of the
Class Certificate Balances immediately prior to such Distribution Date of all
Classes of Certificates.
Class Unpaid Interest Amounts: As to any Distribution Date and Class
of interest bearing Certificates or Component, the amount by which the aggregate
Class Interest Shortfalls for such Class or Component on prior Distribution
Dates exceeds the amount distributed on such Class or Component on prior
Distribution Dates pursuant to clause (ii) of the definition of Class Optimal
Interest Distribution Amount.
Closing Date: January 27, 1998.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
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<PAGE> 14
COFI: The Monthly Weighted Average Cost of Funds Index for the
Eleventh District Savings Institutions published by the Federal Home Loan Bank
of San Francisco.
COFI Certificates: As specified in the Preliminary Statement.
Component: As specified in the Preliminary Statement.
Component Notional Balance: With respect to any Component and any
Distribution Date, as specified in the Preliminary Statement.
Component Certificates: As specified in the Preliminary Statement.
Coop Shares: Shares issued by a Cooperative Corporation.
Cooperative Corporation: The entity that holds title to the real
property and improvements constituting the Cooperative Property and which
governs the Cooperative Property, which Cooperative Corporation must qualify as
a Cooperative Housing Corporation under Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Coop Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the Cooperative Corporation, including the allocation of individual dwelling
units to the holders of the Coop Shares of the Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
with respect to this Agreement shall be administered, which office at the date
of the execution of this Agreement is located at 3 Park Plaza, 16th Floor,
Irvine, California 92614, Attn: Mellon Residential Funding Corporation Series
1998-1, facsimile no. (714) 253-7577, and which is the address to which notices
to and correspondence with the Trustee should be directed.
Corresponding Classes of Certificates: Not applicable.
Cut-off Date: January 1, 1998.
Cut-off Date Pool Principal Balance: $533,109,992.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
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<PAGE> 15
Defective Mortgage Loan: Any Mortgage Loan which is required to be
repurchased pursuant to Section 2.02 or 2.03.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then-outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any Scheduled Payment
that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03(c) hereof.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate" or
the "Initial Notional Amount of this Certificate" or, if neither of the
foregoing, the Percentage Interest appearing on the face thereof.
Depositor: Mellon Residential Funding Corporation, Delaware
corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 18th day of
each month or if such day is not a Business Day the next preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and designated "Bankers Trust Company
of California, N.A. in trust for registered holders of Mellon Residential
Funding Corporation,. Mortgage Pass-Through Certificates, Series 1998-1." Funds
in the Distribution Account shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:30 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in February 1998.
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<PAGE> 16
Due Date: With respect to any Distribution Date, the first day of
the month in which the related Distribution Date occurs.
Duff & Phelps: Duff & Phelps Credit Rating Company, or any successor
thereto. If Duff & Phelps is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b) the address for notices to Duff &
Phelps shall be Duff & Phelps Credit Rating Company, 17 State Street, 12th
Floor, New York, New York 10004, Attention: MBS Monitoring, or such other
address as Duff & Phelps may hereafter furnish to the Depositor and the Master
Servicer.
Eligible Account: Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, accounts
maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.06(a) hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Loss: The amount of any (i) Fraud Loss realized after the
Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized after
the Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized
after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan, net of any amounts previously reimbursed to the Master
Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3.08(a)(iii), exceeds (i) the unpaid principal balance of
such Liquidated Mortgage Loan as of the Due Date in the month in which such
Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced (and not reimbursed) to Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
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<PAGE> 17
Expense Rate: As to each Mortgage Loan, the related Master Servicing
Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
Fiscal Year: The calendar year or such other 12 month period as the
Master Servicer shall designate by notice to the Trustee.
Fitch: Fitch IBCA, Inc., or any successor thereto. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to Fitch shall be Fitch IBCA, Inc., One
State Street Plaza, New York, New York 10004, Attention: Residential Mortgage
Surveillance Group, or such other address as Fitch may hereafter furnish to the
Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
Fraud Loss Coverage Amount: As of the Closing Date, $5,331,100
subject to reduction from time to time, by the amount of Fraud Losses allocated
to the Certificates. In addition, on each anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount will be reduced as follows: (a) on the first, second,
third and fourth anniversaries of the Cut-off Date, to an amount equal to the
lesser of (i) 1% of the then current Pool Stated Principal Balance and (ii) the
excess of the Fraud Loss Coverage Amount as of the preceding anniversary of the
Cut-off Date over the cumulative amount of Fraud Losses allocated to the
Certificates since such preceding anniversary; and (b) on the fifth anniversary
of the Cut-off Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at which the
Fraud Loss Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on Mortgage Loans as to which a loss
is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a loss
by reason of the denial of coverage under any related Primary Insurance Policy
because of such fraud, dishonesty or misrepresentation.
Index: With respect to any Interest Accrual Period for the COFI
Certificates, the then-applicable index used by the Trustee pursuant to Section
4.05 to determine the applicable Pass-Through Rate for such Interest Accrual
Period for the COFI Certificates.
Indirect Participant: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
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<PAGE> 18
Initial Bankruptcy Coverage Amount: $173,345.
Initial Component Balance: As specified in the Preliminary
Statement.
Initial LIBOR Rate: None.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect, including any replacement policy or policies for any Insurance
Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: With respect to each Class of Delay
Certificates, corresponding Subsidiary REMIC Regular Interest and any
Distribution Date, the calendar month prior to the month of such Distribution
Date. With respect to any Non-Delay Certificates, corresponding Subsidiary REMIC
Regular Interest and any Distribution Date, the one month period commencing on
the 25th day of the month preceding the month in which such Distribution Date
occurs and ending on the 24th day of the month in which such Distribution Date
occurs.
Interest Determination Date: With respect to (a) any Interest
Accrual Period for any LIBOR Certificates and (b) any Interest Accrual Period
for the COFI Certificates for which the applicable Index is LIBOR, the second
Business Day prior to the first day of such Interest Accrual Period.
Interest Rate: Not applicable.
Latest Possible Maturity Date: The Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan having the
latest scheduled maturity date as of the Cut-off Date.
LIBOR: The London interbank offered rate for one-month United States
dollar deposits calculated in the manner described in Section 4.06.
LIBOR Certificates: As specified in the Preliminary Statement.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Master Servicer has determined (in accordance with this Agreement) that it has
received all amounts it expects to receive in connection with the liquidation of
such Mortgage Loan, including the final disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release
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<PAGE> 19
of a Mortgaged Property and any other proceeds received in connection with an
REO Property, less the sum of related unreimbursed Master Servicing Fees,
Servicing Advances and Advances.
Loan Group: Loan Group One or Loan Group Two, as applicable.
Loan Group Balance: As to any date of determination the aggregate of
the Stated Principal Balances of the Outstanding Mortgage Loans in such Loan
Group as of such date.
Loan Group One: All Mortgage Loans with original terms to stated
maturity of 20 to 30 years.
Loan Group Two: All Mortgage Loans with original terms to stated
maturity of 10 to 15 years.
Loan-to-Value Ratio: With respect to any Mortgage Loan and as to any
date of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Maintenance: With respect to any Cooperative Unit, the rent paid by
the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority in Interest: As to any Class of Regular Certificates, the
Holders of Certificates of such Class evidencing, in the aggregate, at least 51%
of the Percentage Interests evidenced by all Certificates of such Class.
Master REMIC: Not applicable.
Master Servicer: Mellon Mortgage Company, a Colorado corporation,
and its successors and assigns, in its capacity as master servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, 12:30
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
Master Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount payable out of each full payment of interest received on such
Mortgage Loan and equal to one-twelfth of the Master Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due
Date in the month of such Distribution Date (prior to giving effect to any
Scheduled Payments due on such Mortgage Loan on such Due Date), subject to
reduction as provided in Section 3.14.
Master Servicing Fee Rate: With respect to each Mortgage Loan, 0.25%
per annum.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.04.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
If Moody's is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Moody's shall be Moody's
Investors Service, Inc., 99 Church Street, New York, New York
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<PAGE> 20
10007, Attention: Residential Pass-Through Monitoring, or such other address as
Moody's may hereafter furnish to the Depositor or the Master Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the
Mortgaged Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is
either (a) a detached single family dwelling (b) a dwelling in a de
minimis PUD, (c) a condominium unit or PUD (other than a de minimis
PUD), (d) a two- to four-unit residential property or (e) a
Cooperative Unit;
(xi) the Mortgage Rate;
(xii) the purpose for the Mortgage Loan; and
(xiii) the type of documentation program pursuant to which the
Mortgage Loan was originated.
Such schedule shall also set forth the total of the amounts
described under (iv) and (v) above for all of the Mortgage Loans.
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<PAGE> 21
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to the provisions hereof as from time to time are held
as a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage
Loan, which, with respect to a Cooperative Loan, is the related Coop Shares and
Proprietary Lease.
Mortgagor: The obligor(s) on a Mortgage Note.
MR Interest: Not applicable.
National Cost of Funds Index: The National Monthly Median Cost of
Funds Ratio to SAIF-Insured Institutions published by the Office of Thrift
Supervision.
Net Prepayment Interest Shortfalls: As to any Distribution Date and
Loan Group, the amount by which the aggregate of Prepayment Interest Shortfalls
experienced by the Mortgage Loans in such Loan Group during the related
Prepayment Period exceeds an amount equal to the sum of (a) the Master Servicing
Fee with respect to the Mortgage Loans in such Loan Group for such Distribution
Date and (b) the excess of the Master Servicing Fee with respect to the Mortgage
Loans of the other Loan Group for such Distribution Date over Prepayment
Interest Shortfalls experienced by the Mortgage Loans in such other Loan Group
during such Prepayment Period, in each case before reduction of such Master
Servicing Fees in respect of such Prepayment Interest Shortfalls.
Non-Delay Certificates: As specified in the Preliminary Statement.
Non-Discount Mortgage Loan: Not applicable.
Non-PO Formula Principal Amount: Not applicable.
Non-PO Percentage: Not applicable.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not be ultimately recoverable by the Master Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.
Notional Amount: With respect to any Distribution Date and the Class
X Certificates, the aggregate of the Component Notional Balances for such
Distribution Date.
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<PAGE> 22
Notional Amount Certificates: As specified in the Preliminary
Statement.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate (i) signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master Servicer, or (ii), if provided for in
this Agreement, signed by a Servicing Officer, as the case may be, and delivered
to the Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Master Servicer, including, in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect to
the interpretation or application of the REMIC Provisions, such counsel must (i)
in fact be independent of the Depositor and the Master Servicer, (ii) not have
any direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the-Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Optional Termination: The termination of the trust created hereunder
in connection with the purchase of the Mortgage Loans pursuant to Section
9.01(a) hereof.
Original Applicable Credit Support Percentage: With respect to each
of the following Classes of Subordinated Certificates, the corresponding
percentage described below, as of the Closing Date:
Class B-1 3.75%
Class B-2 2.25%
Class B-3 1.75%
Class B-4 1.25%
Class B-5 0.60%
Class B-6 0.30%
Original Mortgage Loan: The mortgage loan refinanced in connection
with the origination of a Refinancing Mortgage Loan.
Original Subordinated Principal Balance: With respect to the Senior
Certificates in Certificate Group One on and prior to a Senior Termination Date,
$17,232,154; with respect to the Senior Certificates in Certificate Group Two on
and prior to a Senior Termination Date, $2,759,471; and with respect to either
Certificate Group after a Senior Termination Date, $19,991,625.
OTS: The Office of Thrift Supervision.
Outside Reference Date: As to any Interest Accrual Period for the
COFI Certificates, the close of business on the tenth Business Day thereof.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
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<PAGE> 23
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a Stated Principal Balance greater than zero, which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
Pass-Through Rate: For any interest bearing Class of Certificates or
Component, the per annum rate set forth or calculated in the manner described in
the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding
company, but only if Moody's is not a Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings
of each Rating Agency for such securities, or such lower ratings as
will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by either Rating Agency;
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<PAGE> 24
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent
that such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of
the issuance of such agreements, such terms and conditions as will
not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by either Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (iv) above;
(viii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States
or any state thereof which, at the time of such investment, have one
of the two highest ratings of each Rating Agency (except if the
Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of Moody's for any such securities), or such
lower rating as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by either Rating
Agency, as evidenced by a signed writing delivered by each Rating
Agency;
(ix) units of a taxable money-market portfolio having the
highest rating assigned by each Rating Agency (except if Fitch or
Duff & Phelps is a Rating Agency and has not rated the portfolio,
the highest rating assigned by Moody's) and restricted to
obligations issued or guaranteed by the United States of America or
entities whose obligations are backed by the full faith and credit
of the United States of America and repurchase agreements
collateralized by such obligations; and
(x) such other investments bearing interest or sold at a
discount acceptable to each Rating Agency as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by either Rating Agency, as evidenced by a signed
writing delivered by each Rating Agency;
provided that no such instrument shall be a Permitted Investment if such
instrument evidences the right to receive interest only payments with respect to
the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its
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connection with the conduct of a trade or business within the United States
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form 4224, and (vi) any other Person so
designated by the Depositor based upon an Opinion of Counsel that the Transfer
of an Ownership Interest in a Residual Certificate to such Person may cause the
REMIC hereunder to fail to qualify as a REMIC at any time that the Certificates
are outstanding. The terms "United States," "State" and "International
Organization" shall have the meanings set forth in section 7701 of the Code or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Physical Certificate: As specified in the Preliminary Statement.
Planned Balance: Not applicable.
Planned Principal Classes: As specified in the Preliminary
Statement.
PO Formula Principal Amount: Not applicable.
PO Percentage: Not applicable.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances as of the Due Date in the month
preceding the month of such Distribution Date of the Mortgage Loans which were
Outstanding Mortgage Loans on such Due Date.
Prepayment Interest Shortfall: As to any Distribution Date, Mortgage
Loan and Principal Prepayment received during the related Prepayment Period the
amount, if any, by which one month's interest at the related Mortgage Rate, net
of the Master Servicing Fee Rate, on such Principal Prepayment exceeds the
amount of interest paid in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the calendar month
preceding the month of such Distribution Date.
Prepayment Shift Percentage: As to any Distribution Date occurring
during the five years beginning on the first Distribution Date, 0%. Thereafter,
the Prepayment Shift Percentage for any Distribution Date occurring on or after
the fifth anniversary of the first Distribution Date will be as follows: for any
Distribution Date in the first year thereafter, 30%; for any Distribution Date
in the second year thereafter, 40%; for any Distribution Date in the third year
thereafter, 60%; for any Distribution Date in the fourth year thereafter, 80%;
and for any Distribution Date thereafter, 100%.
Primary Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Mortgage Loan.
Primary Planned Principal Classes: As specified in the Preliminary
Statement.
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Principal Only Certificates: As specified in the Preliminary
Statement.
Principal Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in accordance with
the terms of the related Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Priority Amount: As to any Distribution Date, the amount equal to
the sum of (i) the product of (A) Scheduled Principal Distribution Amounts, (B)
the Scheduled Shift Percentage and (C) the Priority Percentage, each as of such
Distribution Date and (ii) the product of (A) Unscheduled Principal Distribution
Amounts, (B) the Prepayment Shift Percentage and (C) the Priority Percentage,
each as of such Distribution Date.
Priority Percentage: As to any Distribution Date, a fraction, the
numerator of which is equal to the Class Certificate Balance of the Class A-4
Certificates on such Distribution Date, and the denominator of which is equal to
the aggregate Class Certificate Balances of all of the Certificates in
Certificate Group One on such Distribution Date.
Private Certificate: As specified in the Preliminary Statement.
Pro Rata Share: As to any Distribution Date, the Subordinated
Principal Distribution Amount and any Class of Subordinated Certificates, the
portion of the Subordinated Principal Distribution Amount allocable to such
Class, equal to the product of the Subordinated Principal Distribution Amount on
such Distribution Date and a fraction, the numerator of which is the related
Class Certificate Balance thereof and the denominator of which is the aggregate
of the Class Certificate Balances of the Subordinated Certificates.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Coop Shares.
Prospectus Supplement: The Prospectus Supplement dated January 21,
1998 relating to the Offered Certificates.
PUD: Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
purchased by the Seller pursuant to Section 2.02 or 2.03 hereof or purchased at
the option of the Master Servicer pursuant to Section 3.11, an amount equal to
the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase, and (ii) accrued interest thereon at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the purchaser
is the Master Servicer or (y) if the purchaser is the Seller and the Seller is
the Master Servicer) from the date through which interest was last paid by the
Mortgagor to the Due Date in the month in which the Purchase Price is to be
distributed to Certificateholders.
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Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying ability rating as the insurer it replaces had
on the Closing Date.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If any such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designated by the
Depositor, notice of which designation shall be given to the Trustee. References
herein to a given rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers. For purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be (i) Standard
& Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Mortgage Surveillance Monitoring, and (ii) Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Residential
Pass-Through Monitoring, or such other address as either such Rating Agency may
hereafter furnish to the Depositor and the Master Servicer.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the Due Date in the month in which Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation occurred,
to the extent applied as recoveries of interest at the Adjusted Net Mortgage
Rate and to principal of the Liquidated Mortgage Loan. With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan which has become the subject of a Debt Service Reduction and any
Distribution Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan which establishes the rights of such originator in the Cooperative
Property.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which such
Distribution Date occurs.
Reference Bank: As defined in Section 4.05.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificates: As specified in the Preliminary Statement.
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Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month is
less than (ii) interest accrued thereon for such month pursuant to the Mortgage
Note.
Remaining Available Funds: As to any Distribution Date and Loan
Group, Available Funds for such Loan Group remaining after making the
distributions pursuant to, with respect to Loan Group One, Section 4.02(a)(1)
and, with respect to Loan Group Two, Section 4.02(a)(2).
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Request for Release: The Request for Release signed by a Servicing
Officer and submitted by the Master Servicer to the Trustee, substantially in
the form of Exhibits M and N, as appropriate.
Required Coupon: Not applicable.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Classes: As defined in Section 4.02(e).
Scheduled Balances: Not applicable.
Scheduled Classes: As specified in the Preliminary Statement.
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Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.
Scheduled Principal Distribution Amounts: As to any Distribution
Date, an amount equal to the sum of all amounts described in clauses (i)(a) -
(i)(d) of the definition of Senior Principal Distribution Amount for Certificate
Group One. Scheduled Shift Percentage: As of any Distribution Date occurring
during the five years beginning on the first Distribution Date, 0% and for each
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, 100%.
Secondary Planned Principal Clauses: As specified in the Preliminary
Statement.
Securities Act: The Securities Act of 1933, as amended.
Seller: Mellon Mortgage Company, a Colorado corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
Senior Certificates: As specified in the Preliminary Statement.
Senior Credit Support Depletion Date: The date on which the Class
Certificate Balance of each Class of Subordinated Certificates has been reduced
to zero.
Senior Percentage: As to any Distribution Date and Certificate
Group, the percentage equivalent of a fraction the numerator of which is the
aggregate of the Class Certificate Balances of each Class of Senior Certificates
in such Certificate Group immediately prior to such Distribution Date and the
denominator of which is the Loan Group Balance of the related Loan Group as of
the Due Date occurring in the month of such Distribution Date; provided,
however, on and after a Senior Termination Date, the Senior Percentage for the
Senior Certificates of the other Certificate Group is the percentage equivalent
of a fraction the numerator of which is the aggregate of the Class Certificate
Balances of each such Class of Senior Certificates immediately prior to such
date and the denominator of which is the aggregate of the Class Certificate
Balances of all Classes of Certificates immediately prior to such date.
Senior Prepayment Percentage: For any Distribution Date and
Certificate Group during the five years beginning on the first Distribution
Date, 100%. The Senior Prepayment Percentage for any Distribution Date and
Certificate Group occurring on or after the fifth anniversary of the first
Distribution Date will, except as provided herein, be as follows: for any
Distribution Date in the first year thereafter, the related Senior Percentage
plus 70% of the related Subordinated Percentage for such Distribution Date; for
any Distribution Date in the second year thereafter, the related Senior
Percentage plus 60% of the related Subordinated Percentage for such Distribution
Date; for any Distribution Date in the third year thereafter, the related Senior
Percentage plus 40% of the related Subordinated Percentage for such Distribution
Date; for any Distribution Date in the fourth year thereafter, the related
Senior Percentage plus 20% of the related Subordinated Percentage for such
Distribution Date; and for any Distribution Date thereafter, the related Senior
Percentage for such Distribution Date (unless on any Distribution Date the
related Senior Percentage exceeds the applicable initial Senior Percentage, in
which case such Senior Prepayment Percentage for such Distribution Date will
once again equal 100%).
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Notwithstanding the foregoing, no decrease in the Senior Prepayment Percentage
for a Certificate Group will occur unless one of the Senior Step Down Conditions
is satisfied.
Senior Principal Distribution Amount: As to any Distribution Date
and Certificate Group, the sum of (i) the related Senior Percentage of (a) the
principal portion of each Scheduled Payment (without giving effect, prior to the
Bankruptcy Coverage Termination Date, to any reductions thereof caused by any
Debt Service Reductions or Deficient Valuations) due on each Mortgage Loan in
the related Loan Group on the related Due Date, (b) the Stated Principal Balance
of each Mortgage Loan in the related Loan Group that was repurchased by the
Seller or the Master Servicer pursuant to this Agreement as of such Distribution
Date, (c) the Substitution Adjustment Amount in connection with any Deleted
Mortgage Loan in the related Loan Group received with respect to such
Distribution Date, and (d) any Insurance Proceeds or Liquidation Proceeds
allocable to recoveries of principal of Mortgage Loans in the related Loan Group
that are not yet Liquidated Mortgage Loans received during the calendar month
preceding the month of such Distribution Date, (ii) with respect to each
Mortgage Loan in the related Loan Group that became a Liquidated Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
lesser of (x) the related Senior Percentage of the Stated Principal Balance of
such Mortgage Loan and (y) either (A) the related Senior Prepayment Percentage,
or (B) if an Excess Loss was sustained with respect to such Liquidated Mortgage
Loan during such prior calendar month, the related Senior Percentage, of the
amount of the Liquidation Proceeds allocable to principal received with respect
to such Mortgage Loan, and (iii) the related Senior Prepayment Percentage of all
Principal Prepayments on the Mortgage Loans in the related Loan Group received
during the related Prepayment Period; provided, further, however, on any
Distribution Date on and after a Senior Termination Date, the Senior Principal
Distribution Amount for the remaining Senior Certificates will be calculated
pursuant to the above formula based on all the Mortgage Loans in the Mortgage
Pool, as opposed to the Mortgage Loans in the related Loan Group and, if such
Distribution Date is a Senior Termination Date, shall be reduced by the amount
of the principal distribution made pursuant to (a) if the Senior Certificates in
Certificate Group One are reduced to zero on such date, Section
4.02(a)(1)(iii)(y) or (b) if the Senior Certificates in Certificate Group Two
are reduced to zero on such date, Section 4.02(a)(2)(ii)(y).
Senior Step Down Conditions: As of the first Distribution Date as to
which any decrease in the Senior Prepayment Percentage for a Certificate Group
applies, (i) the outstanding principal balance of all Mortgage Loans in the
related Loan Group delinquent 60 days or more (averaged over the preceding six
month period), as a percentage of the related aggregate Assumed Balance of the
Subordinated Certificates on such Distribution Date, does not equal or exceed
50% or (ii) cumulative Realized Losses with respect to the Mortgage Loans in the
related Loan Group do not exceed (a) with respect to the Distribution Date on
the fifth anniversary of the first Distribution Date, 30% of the related
Original Subordinated Principal Balance, (b) with respect to the Distribution
Date on the sixth anniversary of the first Distribution Date, 35% of the related
Original Subordinated Principal Balance, (c) with respect to the Distribution
Date on the seventh anniversary of the first Distribution Date, 40% of the
related Original Subordinated Principal Balance, (d) with respect to the
Distribution Date on the eighth anniversary of the first Distribution Date, 45%
of the related Original Subordinated Principal Balance and (e) with respect to
the Distribution Date on the ninth anniversary of the first Distribution Date,
50% of the Original Subordinated Principal Balance; provided, however, that
after a Senior Termination Date, the amounts calculated pursuant to clause (i)
hereof shall be based on all of the Mortgage Loans in the Mortgage Pool.
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Senior Termination Date: The Distribution Date on which the Class
Certificate Balance of each Class of Senior Certificates of a Certificate Group
has been reduced to zero.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.09.
Servicing Officer: Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Special Hazard Coverage Termination Date: The point in time at which
the Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged
Property on account of direct physical loss but not including (i) any loss of a
type covered by a hazard insurance policy or a flood insurance policy required
to be maintained with respect to such Mortgaged Property pursuant to Section
3.09 to the extent of the amount of such loss covered thereby, or (ii) any loss
caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer or any of their agents or employees (without
regard to any portion of the loss not covered by any errors and omissions
policy);
(c) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues and then only for
the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive
or chemical contamination, all whether controlled or uncontrolled, and
whether such loss be direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or air
forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
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(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government
or public authority or risks of contraband or illegal transportation or
trade.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $6,399,822. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the principal balances of the Mortgage Loans, (ii) twice the
principal balance of the largest Mortgage Loan and (iii) the aggregate of the
principal balances of all Mortgage Loans secured by Mortgaged Properties located
in the single California postal zip code area having the highest aggregate
principal balance of any such zip code area and (b) the Special Hazard Loss
Coverage Amount as of the Closing Date less the amount, if any, of Special
Hazard Losses allocated to the Certificates since the Closing Date. All
principal balances for the purpose of this definition will be calculated as of
the first day of the calendar month preceding the month of such Distribution
Date after giving effect to Scheduled Payments on the Mortgage Loans then due,
whether or not paid.
Special Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which
a Special Hazard Loss has occurred.
SR Interest: Not applicable.
S&P: Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
If S&P is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to S&P shall be Standard &
Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Mortgage Surveillance Monitoring, or such other address as S&P may
hereafter furnish to the Depositor and the Master Servicer.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous partial Principal Prepayments
and Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Mortgage Loan) and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Percentage: As to any Distribution Date and Loan Group
on or prior to a Senior Termination Date, 100% minus the Senior Percentage for
the Certificate Group relating to such Loan Group for such Distribution Date. As
to any Distribution after a Senior Termination Date, 100% minus the Senior
Percentage for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution Date and
Loan Group on or prior to a Senior Termination Date, 100% minus the Senior
Prepayment Percentage for the related
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Certificate Group. As to any Distribution Date after a Senior Termination Date,
100% minus the Senior Prepayment Percentage for such Distribution Date.
Subordinated Principal Distribution Amount: With respect to any
Distribution Date (i) on and prior to a Senior Termination Date, the aggregate
of the amount calculated for the Mortgage Loans of each Loan Group and (ii)
after a Senior Termination Date, the amount calculated for the Mortgage Loans,
as follows: the sum of (i) the applicable Subordinated Percentage of (a) the
principal portion of each Scheduled Payment (without giving effect, prior to the
Bankruptcy Coverage Termination Date, to any reductions thereof caused by any
Debt Service Reductions or Deficient Valuations) due on each such Mortgage Loan
on the related Due Date, (b) the Stated Principal Balance of each such Mortgage
Loan that was repurchased by the Seller or the Master Servicer pursuant to this
Agreement as of such Distribution Date, (c) the Substitution Adjustment Amount
in connection with any such Deleted Mortgage Loan received with respect to such
Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable
to recoveries of principal of such Mortgage Loans that are not yet Liquidated
Mortgage Loans received during the calendar month preceding the month of such
Distribution Date, (ii) with respect to each such Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the Liquidation Proceeds allocable to principal received with
respect to such Mortgage Loan, after application of such amounts pursuant to
clause (ii) of the related definition of Senior Principal Distribution Amount
and (iii) the applicable Subordinated Prepayment Percentage of all Principal
Prepayments on such Mortgage Loans received during the related Prepayment
Period.
Subservicer: Any person to whom the Master Servicer has contracted
for the servicing of all or a portion of the Mortgage Loans pursuant to Section
3.02 hereof.
Subsidiary REMIC: Not applicable.
Subsidiary REMIC Interest: Not applicable.
Subsidiary REMIC Regular Interest: Not applicable.
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit N, (i)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining
term to maturity no greater than (and not more than one year less than that of)
the Deleted Mortgage Loan; (v) not be a Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative Loan and (vi) comply with each representation
and warranty set forth in Section 2.03 hereof.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03.
Support Classes: As specified in the Preliminary Statement.
Targeted Balance: Not applicable.
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Targeted Principal Classes: As specified in the Preliminary
Statement.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)1T. Initially, the Tax Matters Person
shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with a
Denomination of $1.00.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Trustee: Bankers Trust Company of California, N.A. and its
successors and, if a successor trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per annum
rate agreed upon in writing on or prior to the Closing Date by the Trustee and
the Depositor.
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the Cut-off Date to the extent not applied in computing
the Cut-off Date Principal Balance thereof; (ii) the Certificate Account and the
Distribution Account and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) property that secured a Mortgage
Loan and has been acquired by foreclosure, deed-in-lieu of foreclosure or
otherwise; and (iv) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing.
Unscheduled Principal Distribution Amounts: As to any Distribution
Date, the sum of (i) with respect to each Mortgage Loan in Loan Group One that
became a Liquidated Mortgage Loan during the calendar month preceding the month
of such Distribution Date, the Liquidation Proceeds allocable to principal
received with respect to such Mortgage Loan and (ii) all partial and full
principal prepayments by borrowers under Mortgage Loans in Loan Group One
received during the calendar month preceding the month of such Distribution
Date.
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, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates, if any (such Voting Rights to be allocated among
the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount Certificates) shall
be allocated among Holders of the remaining Classes of Certificates in
proportion to the Certificate Balances of their respective Certificates on such
date.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Seller, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Depositor, without recourse, all the right, title and interest of the Seller in
and to the Mortgage Loans, including all interest and principal received or
receivable by the Seller on or with respect to the Mortgage Loans after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including payments of principal and interest
due and payable on the Mortgage Loans on or before the Cut-off Date. On or prior
to the Closing Date, the Seller shall deliver to the Depositor or, at the
Depositor's direction, to the Trustee or other designee of the Depositor, the
Mortgage File for each Mortgage Loan listed in the Mortgage Loan Schedule. Such
delivery of the Mortgage Files shall be made against payment by the Depositor of
the purchase price, previously agreed to by the Seller and Depositor, for the
Mortgage Loans. With respect to any Mortgage Loan that does not have a first
payment date on or before the Due Date in the month of the first Distribution
Date, the Seller shall deposit into the Distribution Account on or before the
Distribution Account Deposit Date relating to the first Distribution Date, an
amount equal to one month's interest at the related Adjusted Mortgage Rate on
the Cut-off Date Principal Balance of such Mortgage Loan.
(b) The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the Certificateholders, without recourse, all the
right, title and interest of the Depositor in and to the Trust Fund together
with the Depositor's right to require the Seller to cure any breach of a
representation or warranty made herein by the Seller or to repurchase or
substitute for any affected Mortgage Loan in accordance herewith.
(c) In connection with the transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to the
Trustee for the benefit of the Certificateholders the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of
____________ without recourse," with all intervening endorsements
showing a complete chain of endorsement from the originator to the
Seller (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder
or assignee thereof, in and to that Mortgage Note);
(ii) except as provided below, within 45 days after the
Closing Date the original recorded Mortgage or a copy of such
Mortgage certified by the Seller as being a true and complete copy
of the Mortgage;
(iii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments), together with,
except as provided below, within 45 days after the Closing Date all
interim recorded assignments of such 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
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Mortgage to which the assignment relates) sufficient to show a
complete chain of assignment from the originator to the Seller;
provided that, if the related Mortgage has not been returned from
the applicable public recording office, such assignment of the
Mortgage may exclude the information to be provided by the recording
office;
(iv) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(v) except as provided below, within 45 days after the Closing
Date the original or duplicate original lender's title policy and
all riders thereto; and
(vi) in the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Coop Shares, together with a stock power in
blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence
of recording thereon which have been filed in all places
required to perfect the Seller's interest in the Coop Shares
and the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by state law,
evidencing a complete and unbroken line from the mortgagee to
the Trustee with evidence of recording thereon (or in a form
suitable for recordation).
In the event that in connection with any Mortgage Loan the Depositor
cannot deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments or (c) the lender's title policy (together with all riders thereto)
satisfying the requirements of clause (ii), (iii) or (v) above, respectively,
because such document or documents have not been returned from the applicable
public recording office in the case of clause (ii) or (iii) above, or because
the title policy has not been delivered to either the Master Servicer or the
Depositor by the applicable title insurer in the case of clause (v) above, the
Depositor shall promptly deliver to the Trustee, in the case of clause (ii) or
(iii) above, such original Mortgage or such interim assignment, as the case may
be, with evidence of recording indicated thereon upon receipt thereof from the
public recording office, or a copy thereof, certified, if appropriate, by the
relevant recording office, but in no event shall any such delivery of the
original Mortgage and each such interim assignment or a copy thereof, certified,
if appropriate, by the relevant recording office, be made later than one year
following the Closing Date, or, in the case of clause (v) above, no later than
120 days following the Closing Date; provided, however, in the event the
Depositor is unable to deliver by such date each Mortgage and each such interim
assignment by reason of the fact that any such documents have not been returned
by the appropriate recording office, or, in the case of each such interim
assignment, because the related Mortgage has not been returned by the
appropriate recording office, the
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Depositor shall deliver such documents to the Trustee as promptly as possible
upon receipt thereof and, in any event, within 720 days following the Closing
Date. The Depositor shall forward or cause to be forwarded to the Trustee (a)
from time to time additional original documents evidencing an assumption or
modification of a Mortgage Loan and (b) any other documents required to be
delivered by the Depositor or the Master Servicer to the Trustee. In the event
that the original Mortgage is not delivered and in connection with the payment
in full of the related Mortgage Loan and the public recording office requires
the presentation of a "lost instruments affidavit and indemnity" or any
equivalent document, because only a copy of the Mortgage can be delivered with
the instrument of satisfaction or reconveyance, the Master Servicer shall
execute and deliver or cause to be executed and delivered such a document to the
public recording office. In the case where a public recording office retains the
original recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, the Seller shall deliver to the
Trustee a copy of such Mortgage certified by such public recording office to be
a true and complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to such transfer and
assignment, and in any event, within thirty (30) days thereafter, the Master
Servicer shall (i) affix the Trustee's name to each assignment of Mortgage, as
the assignee thereof, (ii) cause such assignment to be in proper form for
recording in the appropriate public office for real property records and (iii)
cause to be delivered for recording in the appropriate public office for real
property records the assignments of the Mortgages to the Trustee, except that,
with respect to any assignments of Mortgage as to which the Master Servicer has
not received the information required to prepare such assignment in recordable
form, the Master Servicer's obligation to do so and to deliver the same for such
recording shall be as soon as practicable after receipt of such information and
in any event within thirty (30) days after receipt thereof and that the Master
Servicer need not cause to be recorded any assignment which relates to a
Mortgage Loan (a) the Mortgaged Property and Mortgage File relating to which are
located in California or (b) in any other jurisdiction under the laws of which,
as evidenced by an Opinion of Counsel delivered by the Seller (at the Seller's
expense) to the Trustee, the recordation of such assignment is not necessary to
protect the Trustee's and the Certificateholders' interest in the related
Mortgage Loan.
In the case of Mortgage Loans that have been prepaid in full as of
the Closing Date, the Depositor, in lieu of delivering the above documents to
the Trustee, will deposit in the Certificate Account the portion of such payment
that is required to be deposited in the Certificate Account pursuant to Section
3.05 hereof.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
The Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit G and declares that
it holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets as are included in the Trust Fund, in trust for the exclusive use and
benefit of all present and future Certificateholders. The Trustee acknowledges
that it will maintain possession of the Mortgage Notes in the State of
California or the State of New York, unless otherwise permitted by the Rating
Agencies.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer and the Seller an Initial Certification in the
form annexed hereto as Exhibit G. Based on its review and examination, and only
as to the documents identified in such Initial Certification, the Trustee
acknowledges that such documents appear regular on their face and relate to such
Mortgage Loan. The Trustee shall be under no duty or obligation to inspect,
review or examine said documents, instruments, certificates or other papers to
determine that the same are genuine, enforceable or
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appropriate for the represented purpose or that they have actually been recorded
in the real estate records or that they are other than what they purport to be
on their face.
Not later than 90 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and the Seller a Final
Certification in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
If, in the course of such review, the Trustee finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Trustee shall list such as an exception in the Final
Certification; provided, however that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Seller shall
promptly correct or cure such defect within 90 days from the date it was so
notified of such defect and, if the Seller does not correct or cure such defect
within such period, the Seller shall either (a) substitute for the related
Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
the date the Seller was notified of such defect in writing at the Purchase Price
of such Mortgage Loan; provided, however, that in no event shall such
substitution or purchase occur more than 540 days from the Closing Date, except
that if the substitution or purchase of a Mortgage Loan pursuant to this
provision is required by reason of a delay in delivery of any documents by the
appropriate recording office, and there is a dispute between either the Master
Servicer or the Seller and the Trustee over the location or status of the
recorded document, then such substitution or purchase shall occur within 720
days from the Closing Date. The Trustee shall deliver written notice to each
Rating Agency within 270 days from the Closing Date indicating each Mortgage
Loan (a) which has not been returned by the appropriate recording office or (b)
as to which there is a dispute as to location or status of such Mortgage Loan.
Such notice shall be delivered every 90 days thereafter until the related
Mortgage Loan is returned to the Trustee. Any such substitution pursuant to (a)
above or purchase pursuant to (b) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, if any, and any substitution pursuant to (a) above shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit N. No substitution is permitted to be made
in any calendar month after the Determination Date for such month. The Purchase
Price for any such Mortgage Loan shall be deposited by the Seller in the
Certificate Account on or prior to the Distribution Account Deposit Date for the
Distribution Date in the month following the month of repurchase and, upon
receipt of such deposit and certification with respect thereto in the form of
Exhibit N hereto, the Trustee shall release the related Mortgage File to the
Seller and shall execute and deliver at the Seller's request such instruments of
transfer or assignment prepared by the Seller, in each case without recourse, as
shall be necessary to vest in the Seller, or a designee, the Trustee's interest
in any Mortgage Loan released pursuant hereto.
The Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. The Master Servicer shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
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It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan which does not meet the
requirements of Section 2.01 above shall constitute the sole remedy respecting
such defect available to the Trustee, the Depositor and any Certificateholder
against the Seller.
SECTION 2.03. Representations, Warranties and Covenants of the
Seller and Master Servicer.
(a) Mellon Mortgage Company, in its capacities as Seller and Master
Servicer, hereby makes the representations and warranties set forth in Schedule
II hereto, and by this reference incorporated herein, to the Depositor and the
Trustee, as of the Closing Date, or if so specified therein, as of the Cut-off
Date.
(b) The Seller, in its capacity as Seller, hereby makes the
representations and warranties set forth in Schedule III hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt notice thereof to the other
parties. The Seller hereby covenants that within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Section 2.03(b) which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
it shall cure such breach in all material respects, and if such breach is not so
cured, shall, (i) if such 90-day period expires prior to the second anniversary
of the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from
the Trust Fund and substitute in its place a Substitute Mortgage Loan, in the
manner and subject to the conditions set forth in this Section; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price in the manner set forth below; provided, however, that any such
substitution pursuant to (i) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05 hereof, if
any, and any such substitution pursuant to (i) above shall not be effected prior
to the additional delivery to the Trustee of a Request for Release substantially
in the form of Exhibit N and the Mortgage File for any such Substitute Mortgage
Loan. The Seller shall promptly reimburse the Master Servicer and the Trustee
for any expenses reasonably incurred by the Master Servicer or the Trustee in
respect of enforcing the remedies for such breach. With respect to the
representations and warranties described in this Section which are made to the
best of the Seller's knowledge, if it is discovered by either the Depositor, the
Seller or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan or the interests of the Certificateholders therein,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation or warranty, such inaccuracy shall be deemed a breach of the
applicable representation or warranty.
With respect to any Substitute Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the
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month of substitution, distributions to Certificateholders will include the
monthly payment due on any Deleted Mortgage Loan for such month and thereafter
the Seller shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage Loan
Schedule for the benefit of the Certificateholders to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Substitute Mortgage Loan
or Loans and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Substitute Mortgage Loan or
Loans shall be subject to-the terms of this Agreement in all respects, and the
Seller shall be deemed to have made with respect to such Substitute Mortgage
Loan or Loans, as of the date of substitution, the representations and
warranties made pursuant to Section 2.03(b) with respect to such Mortgage Loan.
Upon any such substitution and the deposit to the Certificate Account of the
amount required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release the Mortgage
File held for the benefit of the Certificateholders relating to such Deleted
Mortgage Loan to the Seller and shall execute and deliver at the Seller's
direction such instruments of transfer or assignment prepared by the Seller, in
each case without recourse, as shall be necessary to vest title in the Seller,
or its designee, the Trustee's interest in any Deleted Mortgage Loan substituted
for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly payments due in
the month of substitution). The amount of such shortage (the "Substitution
Adjustment Amount") plus an amount equal to the aggregate of any unreimbursed
Advances with respect to such Deleted Mortgage Loans shall be deposited in the
Certificate Account by the Seller on or before the Distribution Account Deposit
Date for the Distribution Date in the month succeeding the calendar month during
which the related Mortgage Loan became required to be purchased or replaced
hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.05 on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which the Seller
became obligated hereunder to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of the Opinion of Counsel
required by Section 2.05 and receipt of a Request for Release in the form of
Exhibit N hereto, the Trustee shall release the related Mortgage File held for
the benefit of the Certificateholders to such Person, and the Trustee shall
execute and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Person to cure, repurchase or replace
any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against such Persons respecting such breach available
to Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Mortgage Files to the Trustee for
the benefit of the Certificateholders.
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SECTION 2.04. Representations and Warranties of the Depositor as to
the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the date hereof or such other date set forth
herein that as of the Closing Date, and following the transfer of the Mortgage
Loans to it by the Seller, the Depositor had good title to the Mortgage Loans
and the Mortgage Notes were subject to no offsets, defenses or counterclaims
arising from the action or inaction of the Depositor.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee. Upon discovery by the Depositor or the Trustee of a breach of any
of the foregoing representations and warranties set forth in this Section 2.04
(referred to herein as a "breach"), which breach materially and adversely
affects the interest of the Certificateholders, the party discovering such
breach shall give prompt written notice to the others and to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than 90
days after the Closing Date unless the Seller delivers to the Trustee an Opinion
of Counsel, which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup Date, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii)
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer, or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within five (5) Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(c) with
respect to substitutions are satisfied, a Substitute Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty made pursuant to Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
SECTION 2.06. Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor, the Certificates in authorized
denominations evidencing directly or indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement to the best
of its ability, to the end that the interests of the Holders of the Certificates
may be adequately and effectively protected.
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SECTION 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. The "tax matters person" with respect to the REMIC designated
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters Person
Certificate. The fiscal year of the REMIC designated hereunder shall be the
calendar year.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with the terms of
this Agreement and customary and usual standards of practice of prudent mortgage
loan servicers. In connection with such servicing and administration, the Master
Servicer shall have full power and authority, acting alone and/or through
Subservicers as provided in Section 3.02 hereof, to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof (i) to execute and deliver, on behalf of
the Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Master Servicer shall not take any action that
is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor, the Trustee and the Certificateholders under this Agreement. The
Master Servicer shall represent and protect the interests of the Trust Fund in
the same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan, and
shall not make or permit any modification, waiver or amendment of any Mortgage
Loan which would cause the Trust Fund to fail to qualify as a REMIC or result in
the imposition of any tax under Section 860F(a) or Section 860G(d) of the Code.
Without limiting the generality of the foregoing, the Master Servicer, in its
own name or in the name of the Depositor and the Trustee, is hereby authorized
and empowered by the Depositor and the Trustee, when the Master Servicer
believes it appropriate in its reasonable judgment, to execute and deliver, on
behalf of the Trustee, the Depositor, the Certificateholders or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to the
Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Master Servicer shall prepare and deliver
to the Depositor and/or the Trustee such documents requiring execution and
delivery by either or both of them as are necessary or appropriate to enable the
Master Servicer to service and administer the Mortgage Loans to the extent that
the Master Servicer is not permitted to execute and deliver such documents
pursuant to the preceding sentence. Upon receipt of such documents, the
Depositor and/or the Trustee shall execute such documents and deliver them to
the Master Servicer.
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In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. The costs incurred by the Master Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Subservicer pursuant to a subservicing agreement; provided,
however, that such subservicing arrangement and the terms of the related
subservicing agreement must provide for the servicing of such Mortgage Loans in
a manner consistent with the servicing arrangements contemplated hereunder.
Unless the context otherwise requires, references in this Agreement to actions
taken or to be taken by the Master Servicer in servicing the Mortgage Loans
include actions taken or to be taken by a Subservicer on behalf of the Master
Servicer. Notwithstanding the provisions of any subservicing agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and liable
to the Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
All actions of each Subservicer performed pursuant to the related subservicing
agreement shall be performed as an agent of the Master Servicer with the same
force and effect as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans that are received by a Subservicer regardless of whether such
payments are remitted by the Subservicer to the Master Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Master Servicer.
The Depositor may, but is not obligated to, enforce the obligations
of the Master Servicer hereunder and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its obligations hereunder by virtue of
such performance by the Depositor or its designee. Neither the Trustee nor the
Depositor shall have any responsibility or liability for any action or failure
to act by the Master Servicer nor shall the Trustee or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
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SECTION 3.04. Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default),
the Trustee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Master Servicer pursuant to
Section 3.09 hereof or any acts or omissions of the predecessor Master Servicer
hereunder, (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not limited to, repurchases or
substitutions of Mortgage Loans pursuant to Section 2.02 or 2.03 hereof, (iv)
responsible for expenses of the Master Servicer pursuant to Section 2.03 or (v)
deemed to have made any representations and warranties of the Master Servicer
hereunder). Any such assumption shall be subject to Section 7.02 hereof. Each
subservicing agreement shall provide that if the Master Servicer shall for any
reason no longer be the Master Servicer (including by reason of any Event of
Default), the Trustee or its successor may, at its option, succeed to any rights
and obligations of the Master Servicer under each subservicing agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each subservicing agreement or substitute subservicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of the substitute subservicing
agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account.
(a) The Master Servicer shall make reasonable efforts in accordance
with the customary and usual standards of practice of prudent mortgage servicers
to collect all payments called for under the terms and provisions of the
Mortgage Loans to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Required Insurance Policy.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the due dates
for payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that the Master Servicer cannot extend the maturity of any
such Mortgage Loan past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan in accordance with the provisions of Section 4.01 during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements. The Master Servicer
shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise
or against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited on
a daily basis within two Business Days of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted by
Subservicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts required
to be deposited hereunder:
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(i) all payments on account of principal on the Mortgage Loans,
including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans, net
of the related Master Servicing Fee;
(iii) all Insurance Proceeds and Liquidation Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.09(b), 3.09(d), and in respect of net monthly rental
income from REO Property pursuant to Section 3.11 hereof;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to Section
4.01; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject to a
buydown agreement, on each Due Date for such Mortgage Loan, in addition to the
monthly payment remitted by the Mortgagor, the Master Servicer shall cause funds
to be deposited into the Certificate Account in an amount required to cause an
amount of interest to be paid with respect to such Mortgage Loan equal to the
amount of interest that has accrued on such Mortgage Loan from the preceding Due
Date at the Mortgage Rate net of the related Master Servicing Fee on such date.
The foregoing requirements for remittance by the Master Servicer
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted, it may at any time withdraw or direct the
institution maintaining the Certificate Account to withdraw such amount from the
Certificate Account, any provision herein to the contrary notwithstanding. Such
withdrawal or direction may be accomplished by delivering written notice thereof
to the Trustee or such other institution maintaining the Certificate Account
which describes the amounts deposited in error in the Certificate Account. The
Master Servicer shall maintain adequate records with respect to all withdrawals
made pursuant to this Section. All funds deposited in the Certificate Account
shall be held in trust for the Certificateholders until withdrawn in accordance
with Section 3.08.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(ix) the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.08(a)(ix);
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(x) any amount deposited by the Master Servicer pursuant to Section
3.05(d) in connection with any losses on Permitted Investments; and
(xi) any other amounts deposited hereunder which are required to be
deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Master Servicer.
(d) Each institution at which the Certificate Account or the
Distribution Account is maintained shall invest the funds therein as directed in
writing by the Master Servicer in Permitted Investments, which shall mature not
later than (i) in the case of the Certificate Account, the second Business Day
next preceding the related Distribution Account Deposit Date (except that if
such Permitted Investment is an obligation of the institution that maintains
such account, then such Permitted Investment shall mature not later than the
Business Day next preceding such Distribution Account Deposit Date) and (ii) in
the case of the Distribution Account, the Business Day next preceding the
Distribution Date (except that if such Permitted Investment is an obligation of
the institution that maintains such fund or account, then such Permitted
Investment shall mature not later than such Distribution Date) and, in each
case, shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses realized from any such
investment of funds on deposit in the Certificate Account or the Distribution
Account shall be for the benefit of the Master Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any realized losses in the Certificate Account or the Distribution Account
incurred in any such account in respect of any such investments shall promptly
be deposited by the Master Servicer in the Certificate Account or paid to the
Trustee for deposit into the Distribution Account, as applicable.
(e) The Master Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account prior to any change thereof. The Trustee
shall give notice to the Master Servicer, the Seller, each Rating Agency and the
Depositor of any proposed change of the location of the Distribution Account
prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall establish and maintain one
or more accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Master Servicer) for the
payment of taxes, assessments, hazard insurance premiums or comparable items for
the account of the Mortgagors. Nothing herein shall require the Master Servicer
to compel a Mortgagor to establish an Escrow Account in violation of applicable
law.
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(b) Withdrawals of amounts so collected from the Escrow Accounts may
be made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Master Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.09 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest, if required by
law or the terms of the related Mortgage or Mortgage Note, to Mortgagors on
balances in the Escrow Account or to clear and terminate the Escrow Account at
the termination of this Agreement in accordance with Section 9.01 hereof. The
Escrow Accounts shall not be a part of the Trust Fund.
(c) The Master Servicer shall advance any payments referred to in
Section 3.06(a) that are not timely paid by the Mortgagors on the date when the
tax, premium or other cost for which such payment is intended is due, but the
Master Servicer shall be required so to advance only to the extent that such
advances, in the good faith judgment of the Master Servicer, will be recoverable
by the Master Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise.
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the Master
Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Master Servicer in
providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
Distribution Account.
(a) The Master Servicer may from time to time make withdrawals from
the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not previously
retained by the Master Servicer) the servicing compensation to which it is
entitled pursuant to Section 3.14, and to pay to the Master Servicer, as
additional servicing compensation, earnings on or investment income with
respect to funds in or credited to the Certificate Account;
(ii) to reimburse the Master Servicer for unreimbursed Advances made
by it, such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on the Mortgage Loan(s) in respect of which
any such Advance was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
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(iv) to reimburse the Master Servicer for Insured Expenses from the
related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed Servicing
Advances, the Master Servicer's right to reimbursement pursuant to this
clause (a) with respect to any Mortgage Loan being limited to amounts
received on such Mortgage Loan(s) which represent late recoveries of the
payments for which such advances were made pursuant to Section 3.01 or
Section 3.06 and (b) for unpaid Master Servicing Fees as provided in
Section 3.11 hereof;
(vi) to pay to the purchaser, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased pursuant to
Section 2.02, 2.03 or 3.11, all amounts received thereon after the date of
such purchase;
(vii) to reimburse the Seller, the Master Servicer or the Depositor
for expenses incurred by any of them and reimbursable pursuant to Section
6.03 hereof;
(viii) to withdraw any amount deposited in the Certificate Account
and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the Available Funds for each Loan Group for
such Distribution Date and remit such amount to the Trustee for deposit in
the Distribution Account; and
(x) to clear and terminate the Certificate Account upon termination
of this Agreement pursuant to Section 9.01 hereof.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to such subclauses (i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the Certificate Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account
for distributions to Certificateholders in the manner specified in this
Agreement (and to withhold and pay from the amounts so withdrawn, the amount of
any taxes that it is authorized to withhold pursuant to the last paragraph of
Section 8.11). In addition, the Trustee may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) [reserved];
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
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(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.
(a) The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (y) the outstanding principal
balance of the Mortgage Loan and (z) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the mortgagee from
becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. Any amounts collected by the Master Servicer under any such policies
(other than the amounts to be applied to the restoration or repair of the
related Mortgaged Property or amounts released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures) shall be deposited in
the Certificate Account. Any cost incurred by the Master Servicer in maintaining
any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding
that the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired in respect of a
Mortgage other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Mortgaged Property is located at the time of origination of the Mortgage Loan in
a federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the least of (i) the original principal
balance of the related Mortgage Loan, (ii) the replacement value of the
improvements which are part of such Mortgaged Property, and (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program.
(b) In the event that the Master Servicer shall obtain and maintain
a blanket policy insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Master Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of Section 3.09(a), and there shall
have been a loss that would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as Master
Servicer of the Mortgage Loans, the Master Servicer agrees to present, on behalf
of itself, the Depositor, and the Trustee for the benefit of the
Certificateholders, claims under any such blanket policy.
(c) The Master Servicer shall not take any action which would result
in non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Master Servicer, would have been covered thereunder.
The Master Servicer shall not cancel or refuse to
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renew any such Primary Insurance Policy that is in effect at the date of the
initial issuance of the Certificates and is required to be kept in force
hereunder unless the replacement Primary Insurance Policy for such canceled or
non-renewed policy is maintained with a Qualified Insurer. The Master Servicer
shall not be required to maintain any Primary Insurance Policy (i) with respect
to any Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80% as of
any date of determination or, based on a new appraisal, the principal balance of
such Mortgage Loan represents 80% or less of the new appraised value or (ii) if
maintaining such Primary Insurance Policy is prohibited by applicable law. The
Master Servicer agrees to effect the timely payment of the premiums on each
Primary Insurance Policy, and such costs not otherwise recoverable shall be
recoverable by the Master Servicer from the related liquidation proceeds.
(d) In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present on behalf of itself, the
Trustee and Certificateholders, claims to the insurer under any Primary
Insurance Policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under any
Primary Insurance Policies shall be deposited in the Certificate Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the Master Servicer
shall to the extent that it has knowledge of such conveyance, enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. Notwithstanding the foregoing, the Master
Servicer is not required to exercise such rights with respect to a Mortgage Loan
if the Person to whom the related Mortgaged Property has been conveyed or is
proposed to be conveyed satisfies the terms and conditions contained in the
Mortgage Note and Mortgage related thereto and the consent of the mortgagee
under such Mortgage Note or Mortgage is not otherwise so required under such
Mortgage Note or Mortgage as a condition to such transfer. In the event that the
Master Servicer is prohibited by law from enforcing any such due-on-sale clause,
or if coverage under any Required Insurance Policy would be adversely affected,
or if nonenforcement is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.10(b), to take or enter into an assumption and
modification agreement from or with the person to whom such property has been or
is about to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, unless prohibited by applicable state law, the Mortgagor
remains liable thereon, provided that the Mortgage Loan shall continue to be
covered (if so covered before the Master Servicer enters into such agreement) by
the applicable Required Insurance Policies. The Master Servicer, subject to
Section 3.10(b), is also authorized with the prior approval of the insurers
under any Required Insurance Policies to enter into a substitution of liability
agreement with such Person, pursuant to which the original Mortgagor is released
from liability and such Person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Notwithstanding the foregoing, the Master Servicer
shall not be deemed to be in default under this Section by reason of any
transfer or assumption which the Master Servicer reasonably believes it is
restricted by law from preventing, for any reason whatsoever.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.10(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification
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agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the Trustee
is required releasing the Mortgagor from liability on the Mortgage Loan, the
Master Servicer shall prepare and deliver or cause to be prepared and delivered
to the Trustee for signature and shall direct, in writing, the Trustee to
execute the assumption agreement with the Person to whom the Mortgaged Property
is to be conveyed and such modification agreement or supplement to the Mortgage
Note or Mortgage or other instruments as are reasonable or necessary to carry
out the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance with
its underwriting standards as then in effect. Together with each such
substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met in connection therewith. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Master Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional servicing compensation.
SECTION 3.11. Realization Upon Defaulted Mortgage Loans; Repurchase
of Certain Mortgage Loans.
The Master Servicer shall use reasonable efforts to foreclose upon
or otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
meet the requirements of the insurer under any Required Insurance Policy;
provided, however, that the Master Servicer may enter into, and shall give the
Rating Agencies notice of, a special servicing agreement with an unaffiliated
holder of 100% Percentage Interest of one or more Classes of Subordinated
Certificates or a holder of a class of securities representing interests in one
or more Classes of Subordinated Certificates and provided, further, that
entering into such special servicing agreement shall not result in the
downgrading or withdrawal of the respective ratings when assigned to the
Certificates. Any such agreement may contain provisions whereby such holder may
instruct the Master Servicer to commence or delay foreclosure proceedings with
respect to delinquent Mortgage Loans and will contain provisions for the deposit
of cash by the holder that would be available for distribution to
Certificateholders if Liquidation Proceeds are less than they otherwise may have
been had the Master Servicer acted in accordance with its normal procedures.
Notwithstanding the foregoing, the Master Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration of any property unless it shall determine (i) that such restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan after reimbursement to itself of such expenses and (ii) that such expenses
will be recoverable to it through Liquidation Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Certificate Account).
The Master Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the liquidation proceeds with respect to
the related Mortgaged Property, as provided in the
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definition of Liquidation Proceeds. If the Master Servicer has knowledge that a
Mortgaged Property which the Master Servicer is contemplating acquiring in
foreclosure or by deed in lieu of foreclosure is located within a 1 mile radius
of any site listed in the Expenditure Plan for the Hazardous Substance Clean Up
Bond Act of 1984 or other site with environmental or hazardous waste risks known
to the Master Servicer, the Master Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Master Servicer shall
ensure that the title to such REO Property references the Pooling and Servicing
Agreement and the Trustee's capacity thereunder. Pursuant to its efforts to sell
such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the Certificateholders for
the period prior to the sale of such REO Property. The Master Servicer shall
prepare for and deliver to the Trustee a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding required by
Sections 1445 and 6050J of the Code with respect to foreclosures and
abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to the cancellation
of indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required, and delivering the
same to the Trustee for execution, if required, and by filing the same.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to three years after its acquisition by the Trust Fund unless the Trustee
shall have been supplied with an Opinion of Counsel to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in section 860F of the Code or
cause any REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject the REMIC hereunder to
the imposition of any federal, state or local income taxes on the income earned
from such Mortgaged Property under Section 860G(c) of the Code or otherwise,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.
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The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding and if such determination cannot to be made, the Master
Servicer shall deal with such Mortgage Loan in a manner consistent with the
servicing standard in Section 3.01 hereof. The income earned from the management
of any REO Properties, net of reimbursement to the Master Servicer for expenses
incurred (including any property or other taxes) in connection with such
management and net of unreimbursed Master Servicing Fees, Advances and Servicing
Advances, shall be applied to the payment of principal of and interest on the
related defaulted Mortgage Loans (with interest accruing as though such Mortgage
Loans were still current) and all such income shall be deemed, for all purposes
in this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Certificate Account. To
the extent the net income received during any calendar month is in excess of the
amount attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Master Servicing Fees; second, to reimburse the Master Servicer for
any unreimbursed Advances; third, to reimburse the Certificate Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3.08(a)(iii) that related to such
Mortgage Loan; fourth, to accrued and unpaid interest (to the extent no Advance
has been made for such amount or any such Advance has been reimbursed) on the
Mortgage Loan or related REO Property, at the Adjusted Net Mortgage Rate to the
Due Date occurring in the month in which such amounts are required to be
distributed; and fifth, as a recovery of principal of the Mortgage Loan. Excess
Proceeds, if any, from the liquidation of a Liquidated Mortgage Loan will be
retained by the Master Servicer as additional servicing compensation pursuant to
Section 3.14.
The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Trust Fund any Mortgage Loan which is 91
days or more delinquent at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan purchased hereunder shall be deposited in the
Certificate Account and the Trustee, upon receipt of a certificate from the
Master Servicer in the form of Exhibit N hereto, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Trustee by delivering, or causing to be delivered a "Request for
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Release" substantially in the form of Exhibit N. Upon receipt of such request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer's direction execute and
deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. Expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the related Mortgagor. From time to time and
as shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose, collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a
partial release of any Mortgaged Property from the lien of the Mortgage or the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Trustee shall, upon delivery
to the Trustee of a Request for Release in the form of Exhibit M signed by a
Servicing Officer, release the Mortgage File to the Master Servicer. Subject to
the further limitations set forth below, the Master Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee when the
need therefor by the Master Servicer no longer exists, unless the Mortgage Loan
is liquidated and the proceeds thereof are deposited in the Certificate Account,
in which case the Master Servicer shall deliver to the Trustee a Request for
Release in the form of Exhibit N, signed by a Servicing Officer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this Agreement,
the Master Servicer shall deliver or cause to be delivered to the Trustee, for
signature, as appropriate, any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity.
SECTION 3.13. Documents Records and Funds in Possession of Master
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or which otherwise are
collected by the Master Servicer as Liquidation Proceeds or Insurance Proceeds
in respect of any Mortgage Loan. All Mortgage Files and funds collected or held
by, or under the control of, the Master Servicer in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds, including but not limited to, any funds on deposit in the
Certificate Account, shall be held by the Master Servicer for and on behalf of
the Trustee and shall be and remain the sole and exclusive property of the
Trustee, subject to the applicable provisions of this Agreement. The Master
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Certificate Account, Distribution
Account or any Escrow Account, or any funds that otherwise are or may become due
or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Master Servicer shall be entitled to
set off against and deduct from any such funds any amounts that are properly due
and payable to the Master Servicer under this Agreement.
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SECTION 3.14. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Certificate Account an amount
equal to the Master Servicing Fee for each Mortgage Loan, provided that the
aggregate Master Servicing Fee with respect to any Distribution Date shall be
reduced (i) by an amount equal to the aggregate of the Prepayment Interest
Shortfalls, if any, with respect to such Distribution Date, but not below an
amount equal to the aggregate Master Servicing Fee for such Distribution Date
before reduction thereof in respect of such Prepayment Interest Shortfalls, and
(ii) with respect to the first Distribution Date, an amount equal to any amount
to be deposited into the Distribution Account by the Depositor pursuant to
Section 2.01(a) and not so deposited.
Additional servicing compensation in the form of Excess Proceeds,
prepayment penalties, assumption fees, late payment charges and all income and
gain net of any losses realized from Permitted Investments shall be retained by
the Master Servicer to the extent not required to be deposited in the
Certificate Account pursuant to Section 3.05 hereof. The Master Servicer shall
be required to pay all expenses incurred by it in connection with its master
servicing activities hereunder (including payment of any premiums for hazard
insurance and any Primary Insurance Policy and maintenance of the other forms of
insurance coverage required by this Agreement) and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.
SECTION 3.15. Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of Subordinated
Certificates and the examiners and supervisory agents of the OTS, the FDIC and
such other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices designated by the Master Servicer.
Nothing in this Section shall limit the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section.
SECTION 3.16. Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the Trustee
on or before 120 days after the end of the Master Servicer's Fiscal Year,
commencing with its 1998 Fiscal Year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding Fiscal Year and of the performance of the Master Servicer
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall forward a copy of each such statement to each Rating
Agency.
SECTION 3.17. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before 120 days after the end of the Master Servicer's Fiscal
Year, commencing with its 1998 Fiscal Year, the Master Servicer at its expense
shall cause a nationally or regionally
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recognized firm of independent public accountants (who may also render other
services to the Master Servicer, the Seller or any affiliate thereof) which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Trustee and the Depositor to the effect that such firm has
examined the Master Servicer's assertion of its compliance with the minimum
standards of the Uniform Single Attestation Program for Mortgage Bankers
("USAP"), to the extent applicable and that, on the basis of such examination,
conducted substantially in compliance with USAP to the extent applicable, such
assertion is fairly stated in all material respects except for such significant
exceptions or errors in records that, in the opinion of such firm, USAP requires
it to report. In rendering such statement, such firm may rely, as to matters
relating to direct servicing of mortgage loans by Subservicers, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC (rendered within one year of such
statement) of independent public accountants with respect to the related
Subservicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall for so long as it acts as master servicer
under this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Master Servicer hereunder and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the event
that any such policy or bond ceases to be in effect, the Master Servicer shall
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances.
The Master Servicer shall determine on or before each Master
Servicer Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, either (i)
deposit into the Certificate Account an amount equal to the Advance or (ii) make
an appropriate entry in its records relating to the Certificate Account that any
Amount Held for Future Distribution has been used by the Master Servicer in
discharge of its obligation to make any such Advance. Any funds so applied shall
be replaced by the Master Servicer by deposit in the Certificate Account no
later than the close of business on the next Master Servicer Advance Date. The
Master Servicer shall be entitled to be reimbursed from the Certificate Account
for all Advances of its own funds made pursuant to this Section as provided in
Section 3.08. The obligation to make Advances with respect to any Mortgage Loan
shall continue if such Mortgage Loan has been foreclosed or otherwise terminated
and the related Mortgaged Property has not been liquidated.
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The Master Servicer shall deliver to the Trustee on the related
Master Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Advance determined by the Master Servicer
to be a Nonrecoverable Advance.
SECTION 4.02. Priorities of Distribution.
(a) (1) With respect to the Available Funds for the Loan Group
One and Remaining Available Funds for Loan Group Two, on each
Distribution Date, the Trustee shall, to the extent on deposit
therein, withdraw such Available Funds from the Distribution Account
and apply such funds to distributions on the specified Classes of
Senior Certificates in Certificate Group One, in the following order
and priority and, in each case, to the extent of such funds
remaining:
(i) concurrently, to each interest-bearing Class of
Senior Certificates and the Class X-1 Component an amount
allocable to interest equal to the related Class Optimal
Interest Distribution Amount, any shortfall being allocated
among such Classes and Component in proportion to the amount
of the Class Optimal Interest Distribution Amount that would
have been distributed in the absence of such shortfall;
(ii) [Reserved for distribution of Accrual Amount, if
any.]
(iii) to each Class of Senior Certificates as follows:
(x) [reserved];
(y) on each Distribution Date prior to the Senior
Credit Support Depletion Date, up to the amount of the
related Senior Principal Distribution Amount for such
Distribution Date will be distributed as principal to
the following Classes of Senior Certificates, in the
following order of priority:
(A) to the Class A-R Certificates, until the Class Certificate
Balance thereof is reduced to zero;
(B) to the Class A-4 Certificates, the Priority Amount until the
Class Certificate Balance thereof is reduced to zero; and
(C) sequentially, to the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates, in that order, until the respective Class
Certificate Balances thereof are reduced to zero.
(2) With respect to the Available Funds for Loan Group Two on
each Distribution Date and Remaining Available Funds for Loan Group
One, the Trustee shall, to the extent on deposit therein, withdraw
such Available Funds from the Distribution Account and apply such
funds on the Senior Certificates in Certificate Group Two, in the
following order and priority and, in each case, to the extent of
such funds remaining:
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(i) concurrently, to each interest-bearing Class of
Senior Certificates and the Class X-2 Component an amount
allocable to interest equal to the related Class Optimal
Interest Distribution Amount, any shortfall being allocated
among such Classes and Component in proportion to the amount
of the Class Optimal Interest Distribution Amount that would
have been distributed in the absence of such shortfall;
(ii) to each Class of Senior Certificates as follows:
(x) [reserved]
(y) to the Class A-5 Certificates an amount
allocable to principal, up to the amount of the related
Senior Principal Distribution Amount for such
Distribution Date, until the Class Certificate Balance
thereof is reduced to zero.
(3) On each Distribution Date, Available Funds from both Loan
Groups remaining after making the distributions described in 4.02
(a) (1) and 4.02 (a) (2) above, will be distributed to the
Subordinated Certificates in the following order and priority and,
in each case, to the extent of such funds remaining:
(A) to the Class B-1 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for
such Distribution Date;
(B) to the Class B-1 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof is reduced to zero;
(C) to the Class B-2 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for
such Class for such Distribution Date;
(D) to the Class B-2 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof is reduced to zero;
(E) to the Class B-3 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for
such Class for such Distribution Date;
(F) to the Class B-3 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof is reduced to zero;
(G) to the Class B-4 Certificates, an amount allocable to
interest equal to the amount of the Class Optimal Interest
Distribution Amount for such Class for such Distribution Date;
(H) to the Class B-4 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof has been reduced to
zero;
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(I) to the Class B-5 Certificates, an amount allocable to
interest equal to the amount of the Class Optimal Interest
Distribution Amount for such Class for such Distribution Date;
(J) to the Class B-5 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof has been reduced to
zero;
(K) to the Class B-6 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for
such Class for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date
until the Class Certificate Balance thereof is reduced to zero.
(iii) to the Class A-R Certificates, any remaining funds.
(b) [Reserved for allocation of Accrual Amount, if any.]
(c) On each Distribution Date on or after the Senior Credit Support
Depletion Date, notwithstanding the allocation and priority set forth in Section
4.02(a)(1)(iii)(y), the portion of Available Funds for Loan Group One and
Remaining Available Funds for Loan Group Two available to be distributed as
principal of the related Senior Certificates shall be distributed concurrently,
as principal, on such Classes, pro rata, on the basis of their respective Class
Certificate Balances, until the Class Certificate Balances thereof are reduced
to zero.
(d) On each Distribution Date, the amount referred to in clause (i)
of the definition of Class Optimal Interest Distribution Amount for each Class
of Senior Certificates and Component in a Certificate Group and each Class of
Subordinated Certificates for such Distribution Date shall be reduced with
respect to each Loan Group by (i) the related Class' or Component's pro rata
share of Net Prepayment Interest Shortfalls for such Loan Group based (x) with
respect to a Class of Senior Certificates and Component, the related Class
Optimal Interest Distribution Amount and, (y) with respect to a Class of
Subordinated Certificates on and prior to a Senior Termination Date for the
related Certificate Group, the Assumed Interest Amount or after such Senior
Termination Date, the related Class Optimal Interest Distribution Amount without
taking into account such Net Prepayment Interest Shortfalls, (ii) after the
Special Hazard Coverage Termination Date, with respect to each Mortgage Loan in
the related Loan Group that became a Special Hazard Mortgage Loan during the
calendar month preceding the month of such Distribution Date, the excess of one
month's interest at the related Adjusted Net Mortgage Rate on the Stated
Principal Balance of such Mortgage Loan as of the Due Date in such month over
the amount of Liquidation Proceeds applied as interest on such Mortgage Loan
with respect to such month, (iii) after the Bankruptcy Coverage Termination
Date, with respect to each Mortgage Loan in the related Loan Group that became
subject to a Bankruptcy Loss during the calendar month preceding the month of
such Distribution Date, the interest portion of the related Debt Service
Reduction or Deficient Valuation, (iv) each Relief Act Reduction incurred during
the calendar month preceding the month of such Distribution Date and (v) after
the Fraud Coverage Termination Date, with respect to each Mortgage Loan in the
related Loan Group that became a Fraud Loan during the calendar month preceding
the month of such Distribution Date, the excess of one month's interest at the
related Adjusted
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Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan as of
the Due Date in such month over the amount of Liquidation Proceeds applied as
interest on such Mortgage Loan with respect to such month.
(e) Notwithstanding the priority and allocation contained in Section
4.02(a)(3), if with respect to any Class of Subordinated Certificates on any
Distribution Date the sum of the related Class Subordination Percentages of such
Class and of all Classes of Subordinated Certificates which have a higher
numerical Class designation than such Class (the "Applicable Credit Support
Percentage") is less than the Original Applicable Credit Support Percentage for
such Class, no distribution of Principal Prepayments will be made to any such
Classes (the "Restricted Classes") and the amount of such Principal Prepayments
otherwise distributable to the Restricted Classes shall be distributed to any
Classes of Subordinated Certificates having lower numerical Class designations
than such Class, pro rata, based on their respective Class Certificate Balances
immediately prior to such Distribution Date and shall be distributed in the
sequential order provided in Section 4.02(a)(3).
SECTION 4.03. Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Master Servicer
shall determine the total amount of Realized Losses, including Excess Losses,
with respect to the related Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) any Realized Loss (other than an Excess Loss) shall be allocated
first to the Subordinated Certificates in reverse order of their
respective numerical Class designations (beginning with the Class of
Subordinated Certificates then outstanding with the highest numerical
Class designation) until the respective Class Certificate Balance of each
such Class is reduced to zero, and second to the Senior Certificates in
the Certificate Group related to the Loan Group that experienced such
Realized Loss (other than the Notional Amount Certificates), pro rata on
the basis of their respective Class Certificate Balances immediately prior
to the related Distribution Date until the Class Certificate Balances
thereof have been reduced to zero;
(ii) any Excess Losses on the Mortgage Loans in a Loan Group shall
be allocated to the related Senior Certificates (other than the Notional
Amount Certificates) and the Subordinated Certificates then outstanding,
pro rata, on the basis of, with respect to such Senior Certificates, their
respective Class Certificate Balances and, with respect to each Class of
Subordinated Certificates, the applicable Assumed Balance for each such
Class relating to the Loan Group in which such Realized Loss occurs;
provided, however, on any Distribution Date after a Senior Termination
Date for a Certificate Group, such Excess Losses on the Mortgage Loans in
the related Loan Group will be allocated to the Subordinated Certificates
on the basis of their respective Class Certificate Balances and to the
remaining Senior Certificates.
(b) The Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the amount, if any, by which
the aggregate of the Class Certificate Balances of all outstanding Classes
of Certificates (after giving effect to the distribution of principal and
the allocation of Realized Losses on such Distribution Date) exceeds the
Pool Stated Principal Balance for the following Distribution Date.
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(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates pursuant
to Section 4.03(a) above shall be allocated among the Certificates of such Class
in proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or to any
Component or any reduction in the Certificate Balance of a Certificate, pursuant
to Section 4.03(a) above shall be accomplished by reducing the Certificate
Balance or Component Balance thereof, as applicable, immediately following the
distributions made on the related Distribution Date in accordance with the
definition of "Certificate Balance" or "Component Balance," as the case may be.
SECTION 4.04. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare
and cause to be forwarded by first class mail to each Certificateholder, the
Master Servicer and the Depositor a statement setting forth with respect to the
related distribution:
(i) the amount thereof allocable to principal for each
Certificate Group, separately identifying the aggregate amount of
any Principal Prepayments and Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest for each
Certificate Group, any Class Unpaid Interest Shortfall included in
such distribution and any remaining Class Unpaid Interest Shortfall
after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds
available therefor, the amount of the shortfall and the allocation
thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Stated Principal Balance and each Loan Group
Balance for the following Distribution Date;
(vi) each Senior Percentage, and Subordinated Percentage for
the following Distribution Date;
(vii) the amount of the Master Servicing Fees paid to or
retained by the Master Servicer with respect to such Distribution
Date;
(viii) the Pass-Through Rate for each such Class of
Certificates with respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on
such Distribution Date and the aggregate amount of Advances
outstanding as of the close of business on such Distribution Date;
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(x) the number and aggregate principal amounts of Mortgage
Loans by Loan Group (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days
and (4) 91 or more days and (B) in foreclosure and delinquent (1) 1
to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more
days, as of the close of business on the last day of the calendar
month preceding such Distribution Date;
(xi) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the last day of the calendar month preceding such
Distribution Date;
(xii) the total number and principal balance of any REO
Properties by Loan Group (and market value, if available) as of the
close of business on the last day of the calendar month preceding
such Distribution Date;
(xiii) each Senior Prepayment Percentage for the following
Distribution Date;
(xiv) the aggregate amount of Realized Losses by Loan Group
incurred during the preceding calendar month; and
(xv) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Bankruptcy Loss Coverage Amount, in each
case as of the related Determination Date.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability, timeliness
and accuracy of the information provided by the Master Servicer. The Trustee
will send a copy of each statement provided pursuant to this Section 4.04 to
each Rating Agency.
(c) Within one Business Day of each Determination Date, the Master
Servicer shall deliver to the Trustee (which delivery may be by electronic data
transmission) a report in substantially the form set forth as Schedule V hereto.
(d) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this
Section 4.04 aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
SECTION 4.05. Determination of Pass-Through Rates for COFI
Certificates.
The Pass-Through Rate for each Class of COFI Certificates for each
Interest Accrual Period after the initial Interest Accrual Period shall be
determined by the Trustee as provided below on the basis of the Index and the
applicable formulae appearing in footnotes corresponding to the COFI
Certificates in the table relating to the Certificates in the Preliminary
Statement.
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Except as provided below, with respect to each Interest Accrual
Period following the initial Interest Accrual Period, the Trustee shall not
later than two Business Days following the publication of the applicable Index
determine the Pass-Through Rate at which interest shall accrue in respect of the
COFI Certificates during the related Interest Accrual Period.
Except as provided below, the Index to be used in determining the
respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any Interest
Accrual Period, COFI for the second calendar month preceding such Interest
Accrual Period has not been published, the Trustee shall use COFI for the third
calendar month preceding such Interest Accrual Period. If COFI for neither the
second nor third calendar months preceding any Interest Accrual Period has been
published on or before the related Outside Reference Date, the Index for such
Interest Accrual Period and for all subsequent Interest Accrual Periods shall be
the National Cost of Funds Index for the third calendar month preceding such
Interest Accrual Period (or the fourth preceding calendar month if such National
Cost of Funds Index for the third preceding calendar month has not been
published by such Outside Reference Date). In the event that the National Cost
of Funds Index for neither the third nor fourth calendar months preceding an
Interest Accrual Period has been published on or before the related Outside
Reference Date, then for such Interest Accrual Period and for each succeeding
Interest Accrual Period, the Index shall be LIBOR, determined in the manner set
forth below.
On each Interest Determination Date so long as the COFI Certificates
are outstanding and the applicable Index therefor is LIBOR, the Trustee shall
either (i) request each Reference Bank to inform the Trustee of the quotation
offered by its principal London office 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 Interest Determination Date or (ii) in lieu of making any
such request, rely on such Reference Bank quotations that appear at such time on
the Reuters Screen LIBO Page (as defined in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions and Provisions for Swaps,
1986 Edition), to the extent available.
With respect to any Interest Accrual Period for which the applicable
Index is LIBOR, LIBOR for such Interest Accrual Period will be established by
the Trustee on the related Interest Determination Date as follows:
(a) If on any Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding
such arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR as
determined on the previous Interest 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 Interest
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
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City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
From such time as the applicable Index becomes LIBOR until all of
the COFI Certificates are paid in full, the Trustee will at all times retain at
least four Reference Banks for the purposes of determining LIBOR with respect to
each interest Determination Date. The Master Servicer initially shall designate
the Reference Banks. Each "Reference Bank" shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
shall not control, be controlled by, or be under common control with, the
Trustee and shall have an established place of business in London. If any such
Reference Bank should be unwilling or unable to act as such or if the Master
Servicer should terminate its appointment as Reference Bank, the Trustee shall
promptly appoint or cause to be appointed another Reference Bank. The Trustee
shall have no liability or responsibility to any Person for (i) the selection of
any Reference Bank for purposes of determining LIBOR or (ii) any inability to
retain at least four Reference Banks which is caused by circumstances beyond its
reasonable control.
In determining LIBOR and any Pass-Through Rate for the COFI
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely and
shall be protected in relying upon the offered quotations (whether written, oral
or on the Reuters Screen) from the Reference Banks or the New York City banks as
to LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to
time. The Trustee shall not have any liability or responsibility to any Person
for (i) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (ii) its inability, following a
good-faith reasonable effort, to obtain such quotations from the Reference Banks
or the New York City banks or to determine such arithmetic mean, all as provided
for in this Section 4.06.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.
SECTION 4.06. Determination of Pass-Through Rates for LIBOR
Certificates.
On each Interest Determination Date so long as the LIBOR
Certificates are outstanding, the Trustee shall either (i) request each
Reference Bank to inform the Trustee of the quotation offered by its principal
London office 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
Interest Determination Date or (ii) in lieu of making any such request, rely on
such Reference Bank quotations that appear at such time on the Reuters Screen
LIBO Page (as defined in the International Swap Dealers Association Inc. Code of
Standard Wording, Assumptions and provisions for Swaps, 1986 Edition), to the
extent available.
LIBOR for the next Interest Accrual Period will be established by
the Trustee on each interest Determination Date as follows:
(a) If on any interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding
such arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever
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is the higher of (i) LIBOR as determined on the previous Interest
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 Interest 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 Interest Determination
Date to leading European banks.
(c) If on any interest Determination Date the trustee is required
but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (b) above, LIBOR shall be LIBOR as determined on the
preceding Interest Determination Date, or, in the case of the first
Interest Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee
will at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each Interest Determination Date. The Master
Servicer initially shall designate the Reference Banks. Each "Reference Bank"
shall be a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Trustee and shall have an established place of
business in London. If any such Reference Bank should be unwilling or unable to
act as such or if the Master Servicer should terminate its appointment as
Reference Bank, the Trustee shall promptly appoint or cause to be appointed
another Reference Bank. The Trustee shall have no liability or responsibility to
any Person for (i) the selection of any Reference Bank for purposes of
determining LIBOR or (ii) any inability to retain at least four Reference Banks
which is caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely and
shall be protected in relying upon the offered quotations (whether written, oral
or on the Reuters Screen) from the Reference Banks or the New York City banks as
to LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to
time. The Trustee shall not have any liability or responsibility to any Person
for (i) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (ii) its inability, following a
good-faith reasonable effort, to obtain such quotations from the Reference Banks
or the New York City banks or to determine such arithmetic mean, all as provided
for in this Section 4.07.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in registered form, in the
minimum denominations, integral multiples in excess thereof (except that one
Certificate in each Class may be issued in a different amount which must be in
excess of the applicable minimum denomination) and aggregate denominations per
Class set forth in the Preliminary Statement.
Subject to Section 9.02 hereof respecting the final distribution on
the Certificates, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either (x) by
wire transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if (i) such Holder
has so notified the Trustee at least five Business Days prior to the related
Record Date and (ii) such Holder shall hold (A) a Notional Amount Certificate,
(B) 100% of the Class Certificate Balance of any Class of Certificates or (C)
Certificates of any Class with aggregate principal Denominations of not less
than $1,000,000 or (y) by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the execution and delivery of such Certificates or did
not hold such offices at the date of such Certificate. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trustee shall execute and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of the
same Class and aggregate Percentage Interest.
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At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
countersign, and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In the
event that a transfer is to be made in reliance upon an exemption from the
Securities Act and such laws, in order to assure compliance with the Securities
Act and such laws, the Certificateholder desiring to effect such transfer and
such Certificateholder's prospective transferee shall each certify to the
Trustee in writing the facts surrounding the transfer in substantially the forms
set forth in Exhibit J-1 or J-2 as applicable (the "Transferor Certificate") and
(i) deliver a letter in substantially the form of either Exhibit K (the
"Investment Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee at the expense of the transferor an Opinion of
Counsel that such transfer may be made pursuant to an exemption from the
Securities Act. The Depositor shall provide to any Holder of a Private
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Trustee and the Master Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Private Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the transferee
of such Certificate acceptable to and in form and substance satisfactory to the
Trustee (in the event such Certificate is a Private Certificate, such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit K or Exhibit L),
to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan or arrangement subject to
Section 4975 of the Code, nor a person acting on behalf of any such plan or
arrangement, nor using the assets of any such plan or arrangement to effect such
transfer, (ii) if the purchaser is an insurance company, a representation that
the purchaser is an insurance company which is purchasing such Certificates with
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funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60 or (iii) in the case of any such ERISA-Restricted Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or a plan or arrangement subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan or arrangement, or
using such plan's or arrangement's assets, an Opinion of Counsel satisfactory to
the Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust Fund, addressed to the Trustee to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation in addition to those expressly undertaken in this
Agreement or to any liability. For purposes of the preceding sentence, with
respect to an ERISA-Restricted Certificate that is a Book-Entry Certificate, in
the event the representation letter referred to in the preceding sentence is not
so furnished, such representation shall be deemed to have been made to the
Trustee by the transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee as
described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Residual Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") (in the event such Residual Certificate
is a Private Certificate) of the initial owner or the proposed transferee
in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual Certificate or to
cause the Transfer of an Ownership Interest in a Residual
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Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by Section 5.02(b) (in the event
such Residual Certificate is a Private Certificate) and this Section
5.02(c) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered after
receipt of the related Transfer Affidavit, Transferor Certificate and
either the Rule 144A Letter or the Investment Letter (in the event such
Residual Certificate is a Private Certificate). The Trustee shall be
entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Residual Certificate at
and after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Seller or
the Master Servicer, to the effect that the elimination of such restrictions
will not cause any REMIC hereunder to fail to qualify as a REMIC at any time
that the Certificates are outstanding or result in the imposition of any tax on
the Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any Ownership Interest in a Residual Certificate hereby consents to
any amendment of this Agreement which, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Residual Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Residual Certificate which is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry
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Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository, Depository Participants and indirect
participating firms as representatives of the Certificate Owners of the
Book-Entry Certificates for purposes of exercising the rights of holders under
this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Depositor is unable to locate a
qualified successor, (y) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (z) after the occurrence of an Event of Default, Certificate Owners
representing at least 51% of the Certificate Balance of the Book-Entry
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the Depository,
of the occurrence of any such event and of the availability of definitive,
fully-registered Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall
be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions.
The Master Servicer shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon the issuance of Definitive Certificates the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Master Servicer and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute
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complete and indefeasible evidence of ownership, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.04. Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Master Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of such Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
SECTION 5.06. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its affiliate, Bankers Trust Company, Four Albany Street,
New York, New York 10006 for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Master
Servicer.
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Master
Servicer.
The Depositor and the Master Servicer will each keep in full effect
its existence, rights and franchises as a corporation or association under the
laws of
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the United States or under the laws of one of the states thereof and will each
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged or consolidated, or any Person resulting from any merger or consolidation
to which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Seller,
the Master Servicer and Others.
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Seller, the Master Servicer or any such
Person from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Seller, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Seller or the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Seller or the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its respective duties hereunder and
which in its opinion may involve it in any expense or liability; provided,
however, that any of the Depositor, the Seller or the Master Servicer may in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Seller and the Master Servicer shall be entitled to be reimbursed
therefor out of the Certificate Account.
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SECTION 6.04. Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment by the Depositor of a successor
servicer reasonably satisfactory to the Trustee and receipt by the Trustee of a
letter from each Rating Agency that such a resignation and appointment will not
result in a downgrading of the rating of any of the Certificates or (b) upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination under clause (b) permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee. No such resignation shall become
effective until the Trustee or a successor master servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the
Certificate Account or remit to the Trustee any payment (other than
a payment required to be made under Section 4.01 hereof) required to
be made under the terms of this Agreement, which failure shall
continue unremedied for five days after the date upon which written
notice of such failure shall have been given to the Master Servicer
by the Trustee or the Depositor or to the Master Servicer and the
Trustee by the Holders of Certificates having not less than 25% of
the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on
the part of the Master Servicer contained in this Agreement, which
failure shall continue unremedied for a period of 60 days after the
date on which written notice of such failure shall have been given
to the Master Servicer by the Trustee or the Depositor, or to the
Master Servicer and the Trustee by the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the
Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of
a receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
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(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to
take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) so long as the Master Servicer is the Seller, any failure
by the Seller to observe or perform in any material respect any
other of the covenants or agreements on the part of the Seller
contained in this Agreement, which failure shall continue unremedied
for a period of 60 days after the date on which written notice of
such failure shall have been given to the Seller by the Trustee or
the Depositor, or to the Seller and the Trustee by the Holders of
Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates; or
(vii) any failure of the Master Servicer to make any Advance
in the manner and at the time required to be made pursuant to
Section 4.01 which continues unremedied for a period of one Business
Day after the date of such failure.
If an Event of Default described in clauses (i) to (vi) of this
Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, or at the
direction of the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates, the Trustee shall by notice in
writing to the Master Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Certificateholder hereunder. If an Event of Default described in clause
(vii) hereof shall occur, the Trustee shall, by notice in writing to the Master
Servicer and the Depositor, terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. On and
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer hereunder, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee. The Trustee
shall thereupon make any Advance described in clause (vii) hereof subject to
Section 3.04 hereof. The Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article VIII. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Certificate Account, or thereafter be received with
respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a Scheduled Payment on a Mortgage Loan which was due prior to
the notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
such Master Servicer would have been entitled pursuant to Sections 3.08(a)(i)
through (viii), and any
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other amounts payable to such Master Servicer hereunder the entitlement to which
arose prior to the termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, subject to and
to the extent provided in Section 3.04, be the successor to the Master Servicer
in its capacity as master servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to make
Advances pursuant to Section 4.01. As compensation therefor, the Trustee shall
be entitled to all funds relating to the Mortgage Loans that the Master Servicer
would have been entitled to charge to the Certificate Account or Distribution
Account if the Master Servicer had continued to act hereunder. Notwithstanding
the foregoing, if the Trustee has become the successor to the Master Servicer in
accordance with Section 7.01 hereof, the Trustee may, if it shall be unwilling
to so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution the appointment of which does not adversely
affect the then current rating of the Certificates by each Rating Agency as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Any successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $15,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section
6.03 hereof incurred prior to termination of the Master Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation.
Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.04 hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of the servicing compensation permitted the
Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other successor master servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master Servicer to
deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the term
of its service as master servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to Section 6.05.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) unless an Event of Default known to the Trustee shall have
occurred and be continuing, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall
be read into this Agreement against the Trustee and the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be
genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be finally proven that the Trustee
was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates evidencing
not less than 25% of the Voting Rights of Certificates relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no
responsibility to ascertain or confirm the genuineness of any
signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers
or accountants and the advice of any such counsel, financial
advisers or accountants and any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken
or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(iv) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing so to do by Holders of Certificates evidencing not less
than 25% of the Voting Rights allocated to each Class of
Certificates;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants or attorneys;
(vi) the Trustee shall not be required to risk or expend its
own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it;
(vii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement (other than as issuer
of the investment security);
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(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall
have received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any
of the trusts, rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred therein or
thereby.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken
as the statements of the Depositor or the Seller, as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any Mortgage Loan or related document other than with respect
to the Trustee's execution and counter-signature of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor or
the Master Servicer of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Certificate
Account by the Depositor or the Master Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Master Servicer agrees to pay the Trustee Fee to the Trustee, as
compensation for its activities hereunder. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Master
Servicer and held harmless against any loss, liability or expense (including
reasonable attorney's fees) (i) incurred in connection with any claim or legal
action relating to (a) this Agreement, (b) the Certificates or (c) in connection
with the performance of any of the Trustee's duties hereunder, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of any of the Trustee's duties hereunder and
(ii) resulting from any error in any tax or information return prepared by the
Master Servicer. Such indemnity shall survive the termination of this Agreement
or the resignation or removal of the Trustee hereunder. Without limiting the
foregoing, the Master Servicer covenants and agrees, except as otherwise agreed
upon in writing by the Depositor and the Trustee, and except for any such
expense, disbursement or advance as may arise from the Trustee's negligence, bad
faith or willful misconduct, to pay or reimburse the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement with respect to: (A) the
reasonable compensation and the expenses and disbursements of its counsel not
associated with the closing of the issuance of the Certificates, (B) the
reasonable compensation, expenses and disbursements of any accountant, engineer
or appraiser that is not regularly employed by the Trustee, to the extent that
the Trustee must engage such persons to perform acts or services hereunder and
(C) printing and engraving expenses in connection with preparing any Definitive
Certificates. Except as otherwise provided herein, the Trustee
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shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Trustee in the ordinary course of its duties as Trustee
or Tax Matters Person or for any other expenses.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to reduce their
respective then current ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction). If such
corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.06 the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07 hereof.
The entity serving as Trustee may have normal banking and trust relationships
with the Depositor and its affiliates or the Master Servicer and its affiliates;
provided, however, that such entity cannot be an affiliate of the Master
Servicer other than the Trustee in its role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor and the
Master Servicer and each Rating Agency not less than 60 days before the date
specified in such notice when, subject to Section 8.08, such resignation is to
take effect, and acceptance by a successor trustee in accordance with Section
8.08 meeting the qualifications set forth in Section 8.06. If no successor
trustee meeting such qualifications shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request thereto by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Master Servicer
may remove the Trustee and appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Master Servicer and one copy to the
successor trustee.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered by the successor Trustee to the Master Servicer, one complete
set to the Trustee so removed and one complete set to the successor so
appointed. Notice of any removal of the Trustee shall be given to each Rating
Agency by the Successor Trustee.
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Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The Depositor, the Master Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under
the provisions of Section 8.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06 and
no notice to
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Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) To the extent necessary to effectuate the purposes of this
Section 8.10, all rights, powers, duties and obligations conferred
or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the applicable
Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder and
such appointment shall not, and shall not be deemed to, constitute
any such separate trustee or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee; and
(iv) The Master Servicer, and not the Trustee, shall be liable
for the payment of reasonable compensation, reimbursement and
indemnification to any such 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 separate trustees and co-trustees, when
and as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
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SECTION 8.11. Tax Matters.
It is intended that the assets with respect to which any REMIC
election is to be made, as set forth in the Preliminary Statement, shall
constitute, and that the conduct of matters relating to such assets shall be
such as to qualify such assets as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of any such REMIC and
that in such capacity it shall: (a) prepare and file, or cause to be prepared
and filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Return (Form 1066 or any successor form adopted by the Internal
Revenue Service) and prepare and file or cause to be prepared and filed with the
Internal Revenue Service and applicable state or local tax authorities income
tax or information returns for each taxable year with respect to any such REMIC,
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;
(c) make or cause to be made elections that such assets be treated as a REMIC on
the federal tax return for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns and reports as and
when required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue discount
using the Prepayment Assumption (as defined in the Prospectus Supplement); (e)
provide information necessary for the computation of tax imposed on the transfer
of a Residual Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct matters relating to such assets
at all times that any Certificates are outstanding so as to maintain the status
as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
REMIC status; (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on any such REMIC prior to its
termination when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (i) ensure that federal, state or local income tax or
information returns shall be signed by the Trustee or such other person as may
be required to sign such returns by the Code or state or local laws, regulations
or rules; (j) maintain records relating to any such REMIC, including but not
limited to the income, expenses, assets and liabilities thereof and the fair
market value and adjusted basis of the assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information; and (k) as and when necessary and
appropriate, represent any such REMIC in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of any
such REMIC, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of any
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such REMIC, and otherwise act on behalf of any such REMIC in relation to any tax
matter or controversy involving it.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.
In the event that any tax is imposed on "prohibited transactions" of
the REMIC as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in Section 860G(c) of the Code, on
any contribution to the REMIC after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax is imposed, including, without limitation, any
minimum tax imposed upon the REMIC pursuant to Sections 23153 and 24874 of the
California Revenue and Taxation Code, if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Agreement, (ii) the Master Servicer, in the case of any such minimum tax,
or if such tax arises out of or results from a breach by the Master Servicer or
Seller of any of their obligations under this Agreement, (iii) the Seller, if
any such tax arises out of or results from the Seller's obligation to repurchase
a Mortgage Loan pursuant to Section 2.02 or 2.03 or (iv) in all other cases, or
in the event that the Trustee, the Master Servicer or the Seller fails to honor
its obligations under the preceding clauses (i),(ii) or (iii), any such tax will
be paid with amounts otherwise to be distributed to the Certificateholders, as
provided in Section 3.08(b).
SECTION 8.12. Periodic Filings.
Pursuant to written instructions from the Depositor, the Trustee
shall prepare, execute and file all periodic reports required under the
Securities Exchange Act of 1934 in connection with this Agreement (other than
any such reports due as a result of the original issuance of the Certificates).
In connection with the preparation and filing of such periodic reports, the
Depositor and the Master Servicer shall timely provide to the Trustee all
material information available to them which is required to be included in such
reports and not known to them to be in the possession of the Trustee and such
other information as the Trustee reasonably may request from either of them and
otherwise reasonably shall cooperate with the Trustee. The Trustee shall have no
liability with respect to any failure to properly prepare or file such periodic
reports resulting from or relating to the Trustee's inability or failure to
obtain any information not resulting from its own negligence or willful
misconduct.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all
Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Master Servicer and the Trustee created hereby with respect to
the Trust Fund shall terminate upon the earlier of (a) the purchase by the
Master Servicer of all Mortgage Loans (and REO Properties) remaining in the
Trust Fund at the price equal to the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan plus one month's accrued interest thereon at the
applicable Adjusted Mortgage Rate and (ii) the lesser of (x) the appraised value
of any REO Property as determined by the higher of two appraisals completed by
two independent appraisers selected by the Master Servicer at the expense of the
Master Servicer and (y) the Stated Principal Balance of each Mortgage Loan
related to any REO Property, in each case plus accrued and unpaid interest
thereon at the applicable Adjusted Mortgage Rate and (b) the later of (i) the
maturity or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement. In no event shall the
trusts created hereby continue beyond the earlier of (i) the expiration of 21
years from the death of the survivor of the descendants of Joseph P. Kennedy,
the late Ambassador of the United States to the Court of St. James's, living on
the date hereof and (ii) the Latest Possible Maturity Date. The right to
purchase all Mortgage Loans and REO Properties pursuant to clause (a) above
shall be conditioned upon the Pool Stated Principal Balance, at the time of any
such repurchase, aggregating less than ten percent of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Certificate Account, the Master Servicer
shall direct the Trustee promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders, the Master Servicer
shall notify the Depositor and the Trustee of the date the Master Servicer
intends to terminate the Trust Fund and of the applicable repurchase price of
the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given to the
extent reasonably practicable by the Trustee by letter to Certificateholders
mailed not earlier than the 15th day and no later than the 10th day of the month
next preceding the month of such final distribution. Any such notice shall
specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at the
office therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made, and (d) that the Record Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon presentation and
surrender of the Certificates at the office therein specified. The Master
Servicer will give such notice to each Rating Agency at the time such notice is
given to Certificateholders.
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In the event such notice is given, the Master Servicer shall cause
all funds in the Certificate Account to be remitted to the Trustee for deposit
in the Distribution Account on the Business Day prior to the applicable
Distribution Date. Upon such final deposit with respect to the Trust Fund and
the receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the Mortgage
Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Certificateholders of each Class, in the
order set forth in Section 4.02 hereof, on the final Distribution Date, in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (i) as to each Class of
Regular Certificates, the Certificate Balance thereof plus accrued interest
thereon (or on their Notional Amount, if applicable) in the case of an interest
bearing Certificate, and (ii) as to the Residual Certificates, the amount, if
any, which remains on deposit in the Distribution Account (other than the
amounts retained to meet claims) after application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class A-R Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund which remain subject hereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase option
as provided in Section 9.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been supplied
with an Opinion of Counsel, at the expense of the Master Servicer, to the effect
that the failure to comply with the requirements of this Section 9.03 will not
(i) result in the imposition of taxes on "prohibited transactions" on any REMIC
as defined in section 860F of the Code, or (ii) cause any REMIC hereunder to
fail to qualify as a REMIC at any time that any Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Master Servicer under Section 9.02, the Master
Servicer shall prepare and the Trustee, at the expense of the "tax matters
person," shall adopt a plan of complete liquidation within the meaning of
section 860F(a)(4) of the Code which, as evidenced by an Opinion of
Counsel (which opinion shall not be an expense of the Trustee or the Tax
Matters Person), meets the requirements of a qualified liquidation; and
(2) Within 90 days after the time of adoption of such a plan of
complete liquidation, the Trustee shall sell all of the assets of the
Trust Fund to the Master Servicer for cash in accordance with Section
9.01.
(b) The Trustee as agent for any REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the Master
Servicer, and the receipt of the Opinion of
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Counsel referred to in Section 9.03(a)(1) and to take such other action in
connection therewith as may be reasonably requested by the Master Servicer.
(c) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to prepare and the Trustee to adopt and
sign a plan of complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor,
the Master Servicer and the Trustee without the consent of any of the
Certificateholders to cure any ambiguity or defect, or to correct or supplement
any provisions herein, (including to give effect to the expectations of
investors), or to make such other provisions with respect to matters or
questions arising under this Agreement as shall not be inconsistent with any
other provisions herein; provided that such action shall not, as evidenced by an
Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund), adversely affect in any material respect the
interests of any Certificateholder; provided, however, that the amendment shall
not be deemed to adversely affect in any material respect the interests of the
Certificateholders if the Person requesting the amendment obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor and the Master Servicer
also may at any time and from time to time amend this Agreement without the
consent of the Certificateholders to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or helpful to maintain the
qualification of any REMIC hereunder as a REMIC under the Code or to avoid or
minimize the risk of the imposition of any tax on any REMIC hereunder pursuant
to the Code that would be a claim at any time prior to the final redemption of
the Certificates, provided that the Trustee has been provided an Opinion of
Counsel, which opinion shall be an expense of the party requesting such opinion
but in any case shall not be an expense of the Trustee or the Trust Fund, to the
effect that such action is necessary or helpful to maintain such qualification
or to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of a Majority in Interest of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing, as
to such Class, Percentage Interests aggregating 66% or (iii) reduce the
aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which
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opinion shall not be an expense of the Trustee or the Trust Fund, to the effect
that such amendment will not cause the imposition of any tax on any REMIC
hereunder or the Certificateholders or cause any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund, satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at its expense, but only
upon direction by the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance
of the Trust Fund by the Depositor to the Trustee be, and be construed as, an
absolute sale thereof to the Trustee. It is, further, not
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the intention of the parties that such conveyance be deemed a pledge thereof by
the Depositor to the Trustee. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Depositor,
or if for any other reason this Agreement is held or deemed to create a security
interest in such assets, then (i) this Agreement shall be deemed to be a
security agreement within the meaning of the Uniform Commercial Code of the
State of New York and (ii) the conveyance provided for in this Agreement shall
be deemed to be an assignment and a grant by the Depositor to the Trustee, for
the benefit of the Certificateholders, of a security interest in all of the
assets that constitute the Trust Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to
the extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Trust Fund, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Agreement.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03; and
5. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
1. Each report to Certificateholders described in Section 4.04;
2. Each annual statement as to compliance described in Section 3.16;
3. Each annual independent public accountants' servicing report
described in Section 3.17; and
4. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in the
case of the Depositor, Mellon Residential Funding Corporation, One Mellon Bank
Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258, Attention: Stephen
Cobain , (b) in the case of the Master Servicer, Mellon Mortgage Company, 3100
Travis, Houston, Texas 77006, Attention:___________ or such other address as may
be hereafter
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furnished to the Depositor and the Trustee by the Master Servicer in writing,
(c) in the case of the Trustee, at the Corporate Trust Office, or such other
address as the Trustee may hereafter furnish to the Depositor or Master
Servicer, and (d) in the case of the Rating Agencies, the address specified
therefor in the definition corresponding to the name of such Rating Agency.
Notices to Certificateholders shall be deemed given when mailed, first class
postage prepaid, to their respective addresses appearing in the Certificate
Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of
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the Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 10.09. Inspection and Audit.
The Master Servicer agrees that, on reasonable prior notice, it will
permit and will cause each Subservicer to permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes said accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 10.09
shall be borne by the party requesting such inspection; all other such expenses
shall be borne by the Master Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
* * * * * *
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IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and the
Master Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
MELLON RESIDENTIAL FUNDING CORPORATION,
as Depositor
By: /s/ Stephen Cobain
---------------------------------------
Name: Stephen Cobain
Title: President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ [ILLEGIBLE]
---------------------------------------
Name:
Title:
MELLON MORTGAGE COMPANY,
as Seller and Master Servicer
By: /s/ Rex F. Adams
---------------------------------------
Name: Rex F. Adams
Title: First Vice President
<PAGE> 92
SCHEDULE I
Mortgage Loan Schedule
[Delivered at Closing to Trustee]
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SCHEDULE II
Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of the Seller/Master Servicer
Mellon Mortgage Company ("MMC") hereby makes the representations and
warranties set forth in this Schedule II to the Depositor and the Trustee, as of
the Closing Date, or if so specified herein, as of the Cut-off Date. Capitalized
terms used but not otherwise defined in this Schedule II shall have the meanings
ascribed thereto in the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") relating to the above-referenced Series, among MMC, as
seller and master servicer, Mellon Residential Funding Corporation, as
depositor, and Bankers Trust Company of California, N.A., as trustee.
(1) MMC is duly organized as a Colorado corporation and is validly
existing and in good standing under the laws of the State of Colorado and
is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by MMC
in any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Mortgage Loan,
to service the Mortgage Loans in accordance with the terms of the Pooling
and Servicing Agreement and to perform any of its other obligations under
the Pooling and Servicing Agreement in accordance with the terms thereof.
(2) MMC has the full corporate power and authority to sell and
service each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by the Pooling and
Servicing Agreement and has duly authorized by all necessary corporate
action on the part of MMC the execution, delivery and performance of the
Pooling and Servicing Agreement; and the Pooling and Servicing Agreement,
assuming the due authorization, execution and delivery thereof by the
other parties thereto, constitutes a legal, valid and binding obligation
of MMC, enforceable against MMC in accordance with its terms, except that
(a) the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought.
(3) The execution and delivery of the Pooling and Servicing
Agreement by MMC, the sale and servicing of the Mortgage Loans by MMC
under the Pooling and Servicing Agreement, the consummation of any other
of the transactions contemplated by the Pooling and Servicing Agreement,
and the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of MMC and will not (A) result in a material
breach of any term or provision of the charter or by-laws of MMC or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which MMC is a party or by which
it may be bound, or (C)
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constitute a material violation of any statute, order or regulation
applicable to MMC of any court, regulatory body, administrative agency or
governmental body having jurisdiction over MMC; and MMC is not in breach
or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair MMC's
ability to perform or meet any of its obligations under the Pooling and
Servicing Agreement.
(4) MMC is an approved servicer of conventional mortgage loans for
FNMA or FHLMC and is a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to sections 203 and 211 of the National Housing
Act.
(5) No litigation is pending or, to the best of MMC's knowledge,
threatened, against MMC that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of MMC to sell or service the Mortgage Loans or
to perform any of its other obligations under the Pooling and Servicing
Agreement in accordance with the terms thereof.
(6) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by MMC of, or compliance by MMC with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, MMC has obtained the same.
(7) MMC intends to treat the transfer of the Mortgage Loans to the
Depositor as a sale of the Mortgage Loans for all tax, accounting and
regulatory purposes.
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SCHEDULE III
Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties as to the Mortgage Loans
Mellon Mortgage Company ("MMC") hereby makes the representations and
warranties set forth in this Schedule III to the Depositor and the Trustee, as
of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule III shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among MMC, as seller and master servicer, Mellon Residential Funding
Corporation, as depositor, and Bankers Trust Company of California, N.A., as
trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to each Mortgage Loan is true and correct
in all material respects as of the Closing Date
(2) As of the Closing Date, all payments due with respect to each
Mortgage Loan prior to the Cut-off Date have been made; and as of the
Cut-off Date, no Mortgage Loan has been contractually delinquent for 30 or
more days during the twelve months prior to the Cut-off Date.
(3) No Mortgage Loan had a Loan-to-Value Ratio at origination in
excess of 95%.
(4) Each Mortgage is a valid and enforceable first lien on the
Mortgaged Property subject only to (a) the lien of non delinquent current
real property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, such exceptions appearing of
record being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan, and (c) 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.
(5) Immediately prior to the assignment of the Mortgage Loans to the
Depositor, the Seller had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any pledge, lien, encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to
pay the unpaid principal of or interest on such Mortgage Note.
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(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property
is free of material damage and in good repair.
(10) Each Mortgage Loan at origination complied in all material
respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Mortgage Loan may have been modified by a written instrument which
has been recorded or submitted for recordation, if necessary, to protect
the interests of the Certificateholders and the original or a copy of
which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance
of each such Mortgage Loan or a commitment (binder) to issue the same was
effective on the date of the origination of each Mortgage Loan, each such
policy is valid and remains in full force and effect, and each such policy
was issued by a title insurer qualified to do business in the jurisdiction
where the Mortgaged Property is located and acceptable to FNMA or FHLMC
and is in a form acceptable to FNMA or FHLMC, which policy insures the
Seller and successor owners of indebtedness secured by the insured
Mortgage, as to the first priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
(13) Each Mortgage Loan was originated by an entity that satisfied
at the time of origination the requirements of Section 3(a)(41) of the
Securities Exchange Act of 1934, as amended.
(14) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the Appraised Value of
the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best
III-2
<PAGE> 97
of the Seller's knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and the Mortgaged Property
is lawfully occupied under applicable law.
(16) The Mortgage Note and the related Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to the Mortgage Note and the
Mortgage had legal capacity to execute the Mortgage Note and the Mortgage
and each Mortgage Note and Mortgage have been duly and properly executed
by such parties.
(17) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, or closing or recording
the Mortgage Loans were paid.
(18) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under
the Mortgage or the related Mortgage Note.
(22) The origination, underwriting and collection practices used by
the Seller with respect to each Mortgage Loan have been in all respects
legal, prudent and customary in the mortgage lending and servicing
business.
(23) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations.
III-3
<PAGE> 98
(24) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature.
(25) Each Mortgage Loan contains a customary "due on sale" clause.
(26) None of the Mortgage Loans provides for a prepayment penalty.
(27) Each Mortgage Loan which had a Loan-to-Value Ratio at
origination in excess of 80% is the subject of a Primary Insurance Policy
that insures that portion of the principal balance thereof that exceeds
the amount equal to 75% of the Appraised Value of the related Mortgaged
Property. Each such Primary Insurance Policy is issued by a Qualified
Insurer. All provisions of any such Primary Insurance Policy have been and
are being complied with, any such policy is in full force and effect, and
all premiums due thereunder have been paid. Any Mortgage subject to any
such Primary Insurance Policy obligates either the Mortgagor or the
mortgagee thereunder to maintain such insurance and to pay all premiums
and charges in connection therewith. The Mortgage Rate for each Mortgage
Loan is net of any such insurance premium.
(28) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy with
a generally acceptable carrier that provides for fire and extended
coverage and coverage for such other hazards as are customary in the area
where the Mortgaged Property is located in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the
proceeds of such policy shall be sufficient to prevent the Mortgagor
and/or the mortgagee from becoming a co-insurer. If the Mortgaged Property
is a condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual insurance
policies and all flood policies referred to in item (29) below contain a
standard mortgagee clause naming the Seller or the original mortgagee, and
its successors in interest, as mortgagee, and the Seller has received no
notice that any premiums due and payable thereon have not been paid; the
Mortgage obligates the Mortgagor thereunder to maintain all such insurance
including flood insurance at the Mortgagor's cost and expense, and upon
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
(29) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing coverage not less
than the least of (A) the original outstanding principal balance of the
Mortgage Loan, (B) the minimum amount required to compensate for damage or
loss on a replacement cost basis, or (C) the maximum amount of insurance
that is available under the Flood Disaster Protection Act of 1973, as
amended.
(30) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
the Mortgaged Property.
III-4
<PAGE> 99
(31) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of the Seller's
knowledge, there is no material event which, with the passage of time or
with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration under the
Mortgage or the related Mortgage Note; and the Seller has not waived any
default, breach, violation or event of acceleration.
(32) Each Mortgaged Property is improved by a one- to four-family
residential dwelling including condominium units and dwelling units in
PUDs, which, to the best of Seller's knowledge, does not include
cooperatives or mobile homes and does not constitute other than real
property under state law.
(33) Each Mortgage Loan is being serviced by the Master Servicer.
(34) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the Mortgage
Loan Schedule. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan. The Mortgage Note does not
permit or obligate the Master Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(35) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed, but is not yet due and
payable. Except for (A) payments in the nature of escrow payments, and (B)
interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day
which precedes by one month the Due Date of the first installment of
principal and interest, including without limitation, taxes and insurance
payments, the Master Servicer has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than
the Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage.
(36) Each Mortgage Loan was underwritten in all material respects in
accordance with the Seller's underwriting guidelines as set forth in the
Prospectus Supplement.
(37) Prior to the approval of the Mortgage Loan application, an
appraisal of the related Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct
or indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan; such appraisal is in a form acceptable
to FNMA and FHLMC.
(38) None of the Mortgage Loans is a graduated payment mortgage loan
or a growing equity mortgage loan and none of the Mortgage Loans are
subject to a buydown or similar arrangement.
III-5
<PAGE> 100
(39) Any leasehold estate securing a Mortgage Loan has a term of not
less than five years in excess of the term of the related Mortgage Loan.
(40) The Mortgage Loans were selected from among the outstanding
fixed-rate one- to four-family mortgage loans in the Seller's portfolio at
the Closing Date as to which the representations and warranties made as to
the Mortgage Loans set forth in this Schedule III can be made. Such
selection was not made in a manner that would adversely affect the
interests of Certificateholders.
(41) Except for 0 Mortgage Loans, each Mortgage Loan has a payment
date on or before the Due Date in the month of the first Distribution
Date.
(42) With respect to any Mortgage Loan as to which an affidavit has
been delivered to the Trustee certifying that the original Mortgage Note
is a Lost Mortgage Note, if such Mortgage Loan is subsequently in default,
the enforcement of such Mortgage Loan or of the related Mortgage by or on
behalf of the Trustee will not be materially adversely affected by the
absence of the original Mortgage Note. A "Lost Mortgage Note" is a
Mortgage Note the original of which was permanently lost or destroyed and
has not been replaced.
(43) The Mortgage Loans, individually and in the aggregate, conform
in all material respects to the descriptions thereof in the Prospectus
Supplement.
III-6
<PAGE> 101
SCHEDULE IV
[RESERVED]
IV-1
<PAGE> 102
SCHEDULE V
Form of Monthly Master Servicer Report
[TO BE AGREED UPON BY THE TRUSTEE AND THE MASTER SERVICER]
V-1
<PAGE> 103
EXHIBIT A
[FORM OF SENIOR CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER 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.]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").]
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
CUSIP :
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series 199 -
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the
"Mortgage Loans") secured by first liens on one- to four-family
residential properties
MELLON RESIDENTIAL FUNDING CORPORATION, as Depositor
A-1
<PAGE> 104
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below or
any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate by the aggregate Initial Certificate Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Mortgage
Loans deposited by Mellon Residential Funding Corporation (the "Depositor"). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as of
the Cut-off Date specified above (the "Agreement") among the Depositor,
_________________, as seller (in such capacity, the "Seller") and as master
servicer (in such capacity, the "Master Servicer"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"). To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
A-2
<PAGE> 105
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________, 19__
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By
-------------------------
Countersigned:
By
------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA N.A., as Trustee
A-3
<PAGE> 106
EXHIBIT B
[FORM OF SUBORDINATED CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER 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.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________, 199_. THE
INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS ____%. ASSUMING THAT
THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF ____% PER ANNUM
(THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH $ ____ OF
OID PER $1,000 OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE; THE ANNUAL
YIELD TO MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF
OID IS APPROXIMATELY ____% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO
THE SHORT FIRST ACCRUAL PERIOD IS $____ PER $1,000 OF THE ORIGINAL PRINCIPAL
AMOUNT OF THIS CERTIFICATE COMPUTED USING THE MONTHLY YIELD AND DAILY
COMPOUNDING DURING THE SHORT ACCRUAL PERIOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT
ANY OTHER RATE. THE ACTUAL YIELD TO MATURITY MAY DIFFER FROM THAT SET FORTH
ABOVE, AND THE ACCRUAL OF OID WILL BE ADJUSTED, IN ACCORDANCE WITH SECTION
1272(a)(6) OF THE CODE, TO TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING
ANY ACCRUAL PERIOD. THE PREPAYMENT ASSUMPTION IS INTENDED TO BE THE PREPAYMENT
ASSUMPTION REFERRED TO IN SECTION 1272(a)(6)(B)(iii) 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 ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.]
B-1
<PAGE> 107
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR DELIVERS TO THE
TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. [SUCH REPRESENTATION SHALL BE DEEMED TO HAVE BEEN MADE TO
THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF A CERTIFICATE OF THIS CLASS AND BY
A BENEFICIAL OWNER'S ACCEPTANCE OF ITS INTEREST IN A CERTIFICATE OF THIS CLASS.]
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-2
<PAGE> 108
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series 199_ -
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional loans (the "Mortgage
Loans") secured by first liens on one- to four-family residential
properties
MELLON RESIDENTIAL FUNDING CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below or
any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that _______________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Mortgage Loans deposited by Mellon Residential Funding Corporation (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
the Depositor, ____________________, as seller (in such capacity, the "Seller")
and as master servicer (in such capacity, the "Master Servicer"), and Bankers
Trust Company of California, N.A., as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
[No transfer of a Certificate of this Class shall be made unless
such transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
B-3
<PAGE> 109
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant hereto, there shall also be delivered (except in the case
of a transfer pursuant to Rule 144A of the Securities Act) to the Trustee an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Securities Act and such state securities laws, which Opinion of Counsel
shall not be obtained at the expense of the Trustee, the Seller, the Master
Servicer or the Depositor. The Holder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Depositor against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.]
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation [letter] from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee or the Master Servicer, (ii) if
the purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60, or (iii)
in the case of any such Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the Master Servicer to the effect that
the purchase or holding of such Certificate will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those undertaken in the Agreement, which Opinion
of Counsel shall not be an expense of the Trustee or the Master Servicer. [Such
representation shall be deemed to have been made to the Trustee by the
Transferee's acceptance of a Certificate of this Class and by a beneficial
owner's acceptance of its interest in a Certificate of this Class.]
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate of this Class to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the opinion of counsel satisfactory to the
Trustee as described above shall be void and of no effect.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
B-4
<PAGE> 110
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________, 19__
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By
-------------------------
Countersigned:
By
------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
B-5
<PAGE> 111
EXHIBIT C
[FORM OF RESIDUAL CERTIFICATE]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY NOT BE
TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE
TRANSFEREE OF THE DUTIES OF THE SERVICER UNDER SUCH AGREEMENT.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. :
Cut-off Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
CUSIP :
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series 199 -
C-1
<PAGE> 112
evidencing the distributions allocable to the Class A-R Certificates with
respect to a Trust Fund consisting primarily of a pool of conventional
loans (the "Mortgage Loans") secured by first liens on one- to four-family
residential properties
MELLON RESIDENTIAL FUNDING CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below or
any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that _________________ is the registered owner of the
Percentage Interest (obtained by dividing the Denomination of this Certificate
by the aggregate Initial Certificate Balances of all Certificates of the Class
to which this Certificate belongs) in certain monthly distributions with respect
to a Trust Fund consisting of the Mortgage Loans deposited by Mellon Residential
Funding Corporation (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement") among the Depositor, _________________ as seller (in such
capacity, the "Seller") and as master servicer (in such capacity, the "Master
Servicer"), and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the
Trust Fund will be made only upon presentment and surrender of this Class A-R
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
No transfer of a Class A-R Certificate shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee or the Master Servicer, or (ii) in
the case of any such Class A-R Certificate presented for registration in the
name of an employee benefit plan subject to ERISA, or Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the Master Servicer to the effect that
the purchase or holding of such Class A-R Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee or the Master Servicer to any obligation in addition to those undertaken
in this Agreement, which Opinion of Counsel shall not be an expense of the
Trustee or the Master Servicer. Notwithstanding anything else to the contrary
herein, any purported transfer of a Class A-R Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
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<PAGE> 113
Each Holder of this Class A-R Certificate will be deemed to have
agreed to be bound by the restrictions of the Agreement, including but not
limited to the restrictions that (i) each person holding or acquiring any
Ownership Interest in this Class A-R Certificate must be a Permitted Transferee,
(ii) no Ownership Interest in this Class A-R Certificate may be transferred
without delivery to the Trustee of (a) a transfer affidavit of the proposed
transferee and (b) a transfer certificate of the transferor, each of such
documents to be in the form described in the Agreement, (iii) each person
holding or acquiring any Ownership Interest in this Class A-R Certificate must
agree to require a transfer affidavit and to deliver a transfer certificate to
the Trustee as required pursuant to the Agreement, (iv) each person holding or
acquiring an Ownership Interest in this Class A-R Certificate must agree not to
transfer an Ownership Interest in this Class A-R Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Class A-R
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
C-3
<PAGE> 114
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________, 19__
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.,
By
-------------------------
Countersigned:
By
------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
C-4
<PAGE> 115
EXHIBIT D
[FORM OF NOTIONAL AMOUNT CERTIFICATE]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").]
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY
DISTRIBUTIONS IN RESPECT OF PRINCIPAL.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________, 199_. THE
INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS ____%. ASSUMING THAT
THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF ____% PER ANNUM
(THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH $_____ OF
OID ON THE INITIAL POOL STATED PRINCIPAL BALANCE; THE ANNUAL YIELD TO MATURITY
OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF OID IS
APPROXIMATELY ____% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD IS $_____ ON THE INITIAL POOL STATED PRINCIPAL
BALANCE; AND THE METHOD USED TO CALCULATE THE ANNUAL YIELD TO MATURITY AND THE
AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD IS THE EXACT METHOD AS
DEFINED IN PROPOSED TREASURY REGULATIONS. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT
ANY OTHER RATE. THE ACTUAL YIELD TO MATURITY MAY DIFFER FROM THAT SET FORTH
ABOVE, AND THE ACCRUAL OF OID WILL BE ADJUSTED, IN ACCORDANCE WITH SECTION
1272(a)(6) OF THE CODE, TO TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING
ANY ACCRUAL PERIOD. THE PREPAYMENT ASSUMPTION IS INTENDED TO BE THE PREPAYMENT
ASSUMPTION REFERRED TO IN SECTION 1272(a)(6)(B)(iii) OF THE CODE.]
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Notional Amount
of this Certificate
("Denomination") :
Initial Notional Amount
of all Certificates
of this Class :
D-1
<PAGE> 116
CUSIP :
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series 199 -
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional loans (the "Mortgage
Loans") secured by first liens on one- to four-family residential
properties
MELLON RESIDENTIAL FUNDING CORPORATION, as Depositor
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Seller, the Master Servicer or
the Trustee referred to below or any of their respective affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that _______________ is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Mortgage Loans deposited by Mellon Residential Funding Corporation (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of Cut-off Date specified above (the "Agreement") among the
Depositor, _______________ as seller (in such capacity, the "Seller") and as
master servicer (in such capacity, the "Master Servicer"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
D-2
<PAGE> 117
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________, 19__
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By
-------------------------
Countersigned:
By
------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
D-3
<PAGE> 118
EXHIBIT E
[Form of Reverse of Certificates]
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Mellon Residential Funding Corporation. Mortgage Pass-Through
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer and the Trustee with the consent of the
Holders of Certificates affected by such amendment evidencing the requisite
Percentage Interest, as provided in the Agreement. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
E-1
<PAGE> 119
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the Corporate Trust Office or the office or agency
maintained by the Trustee in New York, New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Seller and the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any notice
to the contrary.
On any Distribution Date on which the Pool Stated Principal Balance
is less than 10% of the aggregate Cut-off Date Principal Balances of the
Mortgage Loans, the Master Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon the later of the maturity or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan remaining in the Trust Fund or
the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
E-2
<PAGE> 120
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
- ---------------------------------------- .
Dated:
--------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________,
________________________________________________________, for the account of
____________________________________________, account number ______________, or,
if mailed by check, to _______________________________________. Applicable
statements should be mailed to _________________________________________,
________________________________________.
This information is provided by _____________, the assignee named
above, or ___________________, as its agent.
E-3
<PAGE> 121
STATE OF )
) ss.:
COUNTY OF )
On the day of , 19 before me, a notary public in and for said State,
personally appeared , known to me who, being by me duly sworn, did depose and
say that he executed the foregoing instrument.
-----------------------------
Notary Public
[Notarial Seal]
E-4
<PAGE> 122
EXHIBIT F
[RESERVED]
F-1
<PAGE> 123
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
[Seller]
_____________________
_____________________
Re: Pooling and Servicing Agreement among
Mellon Residential Funding Corporation,
as Depositor, ________________________,
as Seller and Master Servicer, and
Bankers Trust Company of California, N.A., as Trustee
Mortgage Pass-Through Certificates, Series 199 -_______
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached schedule) it has received:
(i) the original Mortgage Note endorsed in the following form: "Pay
to the order of __________, without recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
G-1
<PAGE> 124
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
--------------------------------
G-2
<PAGE> 125
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
[Seller]
_____________________
_____________________
Re: Pooling and Servicing Agreement among
Mellon Residential Funding Corporation,
as Depositor , _______________., as Seller and
Master Servicer and Bankers Trust Company of
California, N.A., as Trustee, Mortgage Pass-Through
Certificates, Series 199_-________________________
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached Document Exception Report) it has received:
(i) The original Mortgage Note endorsed in the form provided in
Section 2.01(c) of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator to the
Seller.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form
provided in Section 2.01(c) of the Pooling and Servicing Agreement, or, if the
Depositor has certified or the Trustee otherwise knows that the related Mortgage
has not been returned from the applicable recording office, a copy of the
assignment of the Mortgage (excluding information to be provided by the
recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from the
originator to the Seller.
(v) The original or copies of each assumption, modification, written
assurance or substitution agreement.
H-1
<PAGE> 126
(vi) The original or duplicate original lender's title policy and
all riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (i), (ii), (iii),
(iv), (vi), and (xi) of the definition of the "Mortgage Loan Schedule" in
Section 1.01 of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
--------------------------------
H-2
<PAGE> 127
EXHIBIT I
TRANSFER AFFIDAVIT
Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates
Series 199 -_
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
a. The undersigned is an officer of _____________, the proposed
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and among Mellon
Residential Funding Corporation, as depositor (the "Depositor"),
________________, as seller and master servicer and Bankers Trust Company of
California, N.A.,, as Trustee. Capitalized terms used, but not defined herein or
in Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee.
b. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
c. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
d. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
I-1
<PAGE> 128
e. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
f. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
g. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.
h. The Transferee's taxpayer identification number is .
i. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
j. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
k. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, and the Transferee
is not acting on behalf of such a plan.
* * *
I-2
<PAGE> 129
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this __ day of _________, 19__.
---------------------------------
PRINT NAME OF TRANSFEREE
By:
------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named _______, known or
proved to me to be the same person who executed the foregoing instrument and to
be the __________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _____ day of _________, 19__.
NOTARY PUBLIC
My Commission expires the __ day of _______, 19__.
I-3
<PAGE> 130
EXHIBIT 1
to EXHIBIT I
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest
in such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Code Section 511 on unrelated business taxable income) on any excess inclusions
(as defined in Code Section 860E(c)(1)) with respect to any Class A-R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause the Trust Fund to fail to qualify as a
REMIC at any time that certain Certificates are Outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in Code Section 7701 or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any State or political
subdivision thereof if all of its activities are subject to tax, and, with the
exception of the FHLMC, a majority of its board of directors is not selected by
such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
1-I-1
<PAGE> 131
EXHIBIT 2
to EXHIBIT I
Section 5.02(c) of the Agreement
(a) Each Person who has or who acquires any Ownership Interest in a
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class A-R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class A-R Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class A-R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class A-R Certificate and (C)
not to Transfer its Ownership Interest in a Class A-R Certificate or to
cause the Transfer of an Ownership Interest in a Class A-R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class A-R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class A-R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class A-R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class A-R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and either the Rule 144A Letter or the Investment Letter. The
Trustee shall be entitled but not obligated to recover from any Holder of
a Class A-R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Class A-R
Certificate at and after either such time. Any such payments so recovered
by the Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
2-I-1
<PAGE> 132
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Class A-R Certificate to any Holder
who is not a Permitted Transferee.
2-I-2
<PAGE> 133
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE
(Private Certificate)
---------------------
Date
Mellon Residential Funding Corporation
One Mellon Bank Center
500 Grant Street, Room 410
Pittsburgh, PA 15258
Attention:
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention:
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series 199 -_, Class ,__________________
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act.
Very truly yours,
--------------------------
Print Name of Transferor
By:
-----------------------
Authorized Officer
J-1-1
<PAGE> 134
EXHIBIT J-2
FORM OF TRANSFEROR CERTIFICATE
(Class A-R)
---------------------
Date
Mellon Residential Funding Corporation
One Mellon Bank Center
500 Grant Street, Room 410
Pittsburgh, PA 15258
Attention:
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention:
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series 199_, Class A-R Certificates
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that we have no knowledge the Transferee is not a Permitted Transferee.
Very truly yours,
--------------------------
Print Name of Transferor
By:
-----------------------
Authorized Officer
J-2-1
<PAGE> 135
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
---------------------------
Date
Mellon Residential Funding Corporation
One Mellon Bank Center
500 Grant Street, Room 410
Pittsburgh, PA 15258
Attention:
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention:
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series 199 -_, Class ___________________
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (e) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (f) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same
K-1
<PAGE> 136
effect as this certificate, and (3) the purchaser or transferee has otherwise
complied with any conditions for transfer set forth in the Pooling and Servicing
Agreement.
Very truly yours,
------------------------------
Print Name of Transferee
By:
-----------------------------
Authorized Officer
K-2
<PAGE> 137
EXHIBIT L
FORM OF RULE 144A LETTER
------------------------
Date
Mellon Residential Funding Corporation
One Mellon Bank Center
500 Grant Street, Room 410
Pittsburgh, PA 15258
Attention:
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention:
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series 199 -_, Class ___________________
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Certificates,
any interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates
L-1
<PAGE> 138
for our own account or for resale pursuant to Rule 144A and further, understand
that such Certificates may be resold, pledged or transferred only (i) to a
person reasonably believed to be a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer to
whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from registration
under the Securities Act.
L-2
<PAGE> 139
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis either at least $100,000 in securities
or, if Buyer is a dealer, Buyer must own and/or invest on a discretionary basis
at least $10,000,000 in securities (except for the excluded securities referred
to below) as of the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A and (ii) the Buyer satisfies the
criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision
1-L-1
<PAGE> 140
by the insurance commissioner or a similar official or agency
of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and
1-L-2
<PAGE> 141
loan is provided above, the Buyer agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.
---------------------------------------
Print Name of Buyer
By:
------------------------------------
Name:
Title:
Date:
----------------------
1-L-3
<PAGE> 142
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $______ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
2-L-1
<PAGE> 143
5. The Buyer is familiar with Rule 144A and under-stands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
---------------------------
Print Name of Buyer or Adviser
By:
----------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------
Print Name of Buyer
Date:
-----------------
2-L-2
<PAGE> 144
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates
Series 199 -_
Loan Information
Name of Mortgagor: ________________________________
Servicer
Loan No.: ________________________________
Trustee
Name: ________________________________
Address: ________________________________
________________________________
Trustee
Mortgage File No.: ________________________________
The undersigned Master Servicer hereby acknowledges that it has
received from Bankers Trust Company of California, N.A., as Trustee for the
Holders of Mortgage Pass-Through Certificates, of the above-referenced Series,
the documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
relating to the above-referenced Series among the Trustee, ________________., as
Seller and Master Servicer and Mellon Residential Funding Corporation., as
Depositor.
( ) Mortgage Note dated ____________, 19__, in the original principal
sum of $__________, made by __________________. payable to, or
endorsed to the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no. _________
_____________________ in the County Recorder's Office of the
County of ___________________, State of _______________ in
book/reel/docket ________________ of official records at
page/image ________________.
( ) Deed of Trust recorded on __________________ as instrument no. _____
in the County Recorder's Office of the County of ________________,
State of _______________ in book/reel/docket __________ of official
records at page/image _______.
.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded
on _________________ as instrument no. ____________ in the County
Recorder's Office of the County of __________, State of ____________
in book/reel/docket _______________ of official records at
page/image ______.
M-1
<PAGE> 145
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) _____________________________________________________
( ) _____________________________________________________
( ) _____________________________________________________
( ) _____________________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights of
setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted
to the Certificate Account and except as expressly provided in the
Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master Servicer
shall at all times be earmarked for the account of the Trustee, and the
Master Servicer shall keep the Documents and any proceeds separate and
distinct from all other property in the Master Servicer's possession,
custody or control.
---------------------------------
By
------------------------------
Its
------------------------------
Date: ______________, 19__
M-2
<PAGE> 146
EXHIBIT N
REQUEST FOR RELEASE OF DOCUMENTS
To: Bankers Trust Company of California, N.A. Attn: Mortgage Custody
Services
Re: The Pooling & Servicing Agreement dated ________ among
_____________, as Seller and as Master Servicer, Mellon
Residential Funding Corporation, as Depositor, and Bankers
Trust Company of California, N.A., as Trustee
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by
you as Trustee for Mellon Residential Funding Corporation, we request the
release of the Mortgage Loan File for the Mortgage Loan(s) described below, for
the reason indicated.
FT Account#: Pool #:
Mortgagor's Name, Address and Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
1. Mortgage Loan paid in full (__________________hereby certifies that
all amounts have been received.)
2. Mortgage Loan Liquidated (__________________. hereby certifies
that all proceeds of foreclosure, insurance, or other liquidation
have been finally received.)
3. Mortgage Loan in Foreclosure.
4. Repurchased Mortgage Loan (Seller hereby certifies that the Purchase
Price has been deposited in the Certificate Account.)
N-1
<PAGE> 147
5. Deleted Mortgage Loan (the Seller hereby certifies that the related
Substitute Mortgage Loan meets the criteria of a Substitute Mortgage
Loan and any Substitution Adjustment Amount has been deposited in
the Certificate Account.)
6. Other (explain):
N-2
<PAGE> 148
If item 1 or 2 above is checked, and if all or part of the Mortgage
File was previously released to us, please release to us our previous receipt on
file with you, as well as any additional documents in your possession relating
to the above-specified Mortgage Loan. If item 3 or 4 is checked, upon return of
all of the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
__________________________________.
___________________________________.
____________________________________
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
Date:
---------------------------------
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGMENT OF RECEIPT
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
Date:
---------------------------------
N-3
