<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) July 22, 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
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N/A
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(Former name or former address, if changed since last report)
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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, $132,329,000 principal
amount of Mortgage Pass-Through Certificates, Series MHELT 1998-1 (the
"Certificates") were issued on July 22, 1998.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement, dated as of June 30, 1998 (the "Pooling and Servicing Agreement"),
among the Depositor, Mellon Bank, N.A., 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.
2
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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 June 30, 1998, among
Mellon Residential Funding Corporation, as Depositor, Mellon
Bank, N.A., as Seller and Master Servicer, and Bankers Trust
Company of California, N.A., as Trustee.
3
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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
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Name: Stephen Cobain
Title: President
Dated: July 23, 1998
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EXHIBIT INDEX
Exhibit Page
4.1 Pooling and Servicing Agreement, dated as of June 30, 1998, among
Mellon Residential Funding Corporation, as Depositor, Mellon Bank,
N.A., 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 BANK, N.A.,
Seller and Master Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of June 30, 1998
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HOME EQUITY INSTALLMENT LOAN TRUST 1998-1
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES MHELT 1998-1
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TABLE OF CONTENTS
Page
<TABLE>
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ARTICLE I.........................................................................................................4
SECTION 1.01. Definitions...............................................................................4
SECTION 1.02. Calculations.............................................................................21
ARTICLE II.......................................................................................................23
SECTION 2.01. Conveyance of Mortgage Loans.............................................................23
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans..............................................25
SECTION 2.03. Representations, Warranties and Covenants of the Seller and Master Servicer..............26
SECTION 2.04. Representations and Warranties of the Depositor as to the Mortgage Loans.................28
SECTION 2.05. Delivery of Opinion of Counsel in Connection with Substitutions..........................28
SECTION 2.06. Execution and Delivery of Certificates...................................................29
SECTION 2.07. REMIC Matters............................................................................29
ARTICLE III......................................................................................................30
SECTION 3.01. Master Servicer to Service Mortgage Loans................................................30
SECTION 3.02. Subservicing; Enforcement of the Obligations of Servicers................................31
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the Master Servicer................31
SECTION 3.04. Trustee to Act as Master Servicer........................................................31
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate Account; Distribution Account..........32
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts......................35
SECTION 3.07. Access to Certain Documentation and Information Regarding the Mortgage Loans...........35
SECTION 3.08. Permitted Withdrawals from the Certificate Account and Distribution Account..............35
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption Agreements................................37
SECTION 3.11. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans..........38
SECTION 3.12. Superior Liens...........................................................................40
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files..........................................41
SECTION 3.14. Documents Records and Funds in Possession of Master Servicer to be Held for the Trustee..41
SECTION 3.15. Servicing Compensation...................................................................42
SECTION 3.16. Access to Certain Documentation..........................................................42
SECTION 3.17. Annual Statement as to Compliance........................................................42
</TABLE>
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<TABLE>
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SECTION 3.18. Annual Independent Public Accountants' Servicing Statement; Financial Statements.........43
SECTION 3.19. Errors and Omissions Insurance; Fidelity Bonds...........................................43
ARTICLE IV.......................................................................................................44
SECTION 4.01. Advances.................................................................................44
SECTION 4.02. Priorities of Distribution...............................................................44
SECTION 4.03. Allocation of Losses.....................................................................46
SECTION 4.04. Monthly Statements to Certificateholders.................................................46
SECTION 4.05. Determination of Pass-Through Rates for LIBOR Certificates...............................48
ARTICLE V........................................................................................................49
SECTION 5.01. The Certificates.........................................................................49
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates..............49
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates........................................54
SECTION 5.04. Persons Deemed Owners....................................................................54
SECTION 5.05. Access to List of Certificateholders' Names and Addresses................................54
SECTION 5.06. Maintenance of Office or Agency..........................................................54
ARTICLE VI.......................................................................................................55
SECTION 6.01. Respective Liabilities of the Depositor and the Master Servicer..........................55
SECTION 6.02. Merger or Consolidation of the Depositor or the Master Servicer..........................55
SECTION 6.03. Limitation on Liability of the Depositor, the Seller, the Master Servicer and Others.....55
SECTION 6.04. Limitation on Resignation of Master Servicer.............................................56
ARTICLE VII......................................................................................................57
SECTION 7.01. Events of Default........................................................................57
SECTION 7.02. Trustee to Act; Appointment of Successor.................................................58
SECTION 7.03. Notification to Certificateholders.......................................................59
ARTICLE VIII.....................................................................................................60
SECTION 8.01. Duties of Trustee........................................................................60
SECTION 8.02. Certain Matters Affecting the Trustee....................................................61
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans....................................62
SECTION 8.04. Trustee May Own Certificates.............................................................62
SECTION 8.05. Trustee's Fees and Expenses..............................................................62
SECTION 8.06. Eligibility Requirements for Trustee.....................................................62
SECTION 8.07. Resignation and Removal of Trustee.......................................................63
SECTION 8.08. Successor Trustee........................................................................64
SECTION 8.09. Merger or Consolidation of Trustee.......................................................64
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee............................................64
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.11. Tax Matters..............................................................................66
SECTION 8.12. Periodic Filings.........................................................................67
ARTICLE IX.......................................................................................................68
SECTION 9.01. Termination upon Liquidation or Purchase of all Mortgage Loans...........................68
SECTION 9.02. Special Termination......................................................................68
SECTION 9.03. Final Distribution on the Certificates...................................................69
SECTION 9.04. Additional Termination Requirements......................................................70
ARTICLE X........................................................................................................71
SECTION 10.01. Amendment...............................................................................71
SECTION 10.02. Recordation of Agreement; Counterparts..................................................72
SECTION 10.03. Governing Law...........................................................................72
SECTION 10.04. Intention of Parties....................................................................72
SECTION 10.05. Notices.................................................................................73
SECTION 10.06. Severability of Provisions..............................................................74
SECTION 10.07. Assignment..............................................................................74
SECTION 10.08. Limitation on Rights of Certificateholders..............................................74
SECTION 10.09. Inspection and Audit....................................................................75
SECTION 10.10. Certificates Nonassessable and Fully Paid...............................................75
SCHEDULES
Schedule I: Mortgage Loan Schedule...............................................................S-I-1
Schedule II: Representations and Warranties of the Seller/Master Servicer........................S-II-1
Schedule III: Representations and Warranties as to the Mortgage Loans............................S-III-1
Schedule IV: [Reserved]..........................................................................S-IV-1
Schedule V: Form of Monthly Master Servicer Report...............................................S-V-1
EXHIBITS
Exhibit A: Form of Senior Certificate................................................................A-1
Exhibit B: Form of Subordinated Certificate..........................................................B-1
Exhibit C: Form of Class R Certificate...............................................................C-1
Exhibit D: [Reserved]................................................................................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: Form of Transferor Certificate............................................................J-1
Exhibit K: Form of Investment Letter [Non-Rule 144A].................................................K-1
Exhibit L: Form of Rule 144A Letter..................................................................L-1
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
Exhibit P: Auction Solicitation Procedures...........................................................P-1
</TABLE>
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THIS POOLING AND SERVICING AGREEMENT, dated as of June 30,
1998, among MELLON RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), MELLON BANK, N.A., a national banking association
organized under the laws of the United States, 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 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>
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Integral
Initial Class Multiples
Certificate Pass-Through Minimum in Excess of
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Balance Rate Denomination Minimum
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Class A-1 $48,500,000 6.42% $25,000 $1,000
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Class A-2 $13,500,000 6.21% $25,000 $1,000
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Class A-3 $22,200,000 6.32% $25,000 $1,000
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Class A-4 $24,339,000 6.50% $25,000 $1,000
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Class A-5 $13,200,000 6.30% $25,000 $1,000
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Class B $10,590,000 6.86% $25,000 $1,000
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Class R (1) (1) (1) (1)
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</TABLE>
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1. The Class R Certificates will have no principal balance and
will not bear interest.
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Set forth below are designations of Classes of Certificates to
the categories used herein:
<TABLE>
<S> <C>
Book-Entry Certificates................ All Classes of Certificates other than the Physical Certificates.
ERISA-Restricted
Certificates........................... Subordinated Certificates and Residual Certificates.
Fixed Rate Certificates................ Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates.
Floating Rate Certificates............. None.
LIBOR Certificates..................... None.
Offered Certificates................... All Classes of Certificates other than the Residual Certificates.
Physical Certificates.................. Residual Certificates.
Rating Agencies........................ S&P and Moody's.
Regular Certificates................... All Classes of Certificates, other than the Residual Certificates.
Residual Certificates.................. Class R Certificates.
Senior Certificates. .................. Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates.
Subordinated Certificates.............. Class B Certificates.
</TABLE>
Defined terms and provisions herein relating to statistical
rating agencies not designated above as Rating Agencies shall be of no force or
effect.
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ARTICLE I
SECTION 1.01. Definitions.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Advance: 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 interest
(net of the Master Servicing Fee and net of any net income in the case of any
REO Property) on the Mortgage Loans that were due but not received during the
related Due Period (including, with respect to a Deferred Payment Loan, the
interest portion of the first Scheduled Payment) less the aggregate amount of
any such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced and the amounts previously
advanced and not reimbursed.
Agreement: This Pooling and Servicing Agreement and all
amendments or supplements hereto.
Amount Held for Future Distribution: As to any Distribution
Date, the aggregate amount held in the Certificate Account at the close of
business on the related Determination Date on account of (i) Principal
Prepayments and Liquidation Proceeds received in the month of such Distribution
Date and (ii) the principal portion of all Scheduled Payments due after the
related Due Period.
Applied Realized Loss Amount: As to any Distribution Date, an
amount equal to the excess, if any of (i) the aggregate of the Class Certificate
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the Pool Principal Balance as of the last
day of the immediately preceding Due Period.
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.
Available Funds: As to any Distribution Date, the sum of (a)
the aggregate amount held in the Certificate Account at the close of business on
the related Determination Date net of the 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) and amounts
permitted to be withdrawn from the Distribution Account pursuant to clauses
(i)-(iii) inclusive of Section 3.08(b), (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.
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Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Overcollateralization Release Amount, if any,
for such Distribution Date.
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 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 Bank, N.A. in
trust for the registered holders of Mellon Bank Home Equity Installment Loan
Trust 1998-1, Mortgage Pass-Through Certificates Series MHELT 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) in the case of any Subordinated Certificates, any Applied
Realized Loss Amounts.
Certificate Owner: With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate.
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 alpha-numeric
designation as set forth in the Preliminary Statement.
Class A-5 Principal Distribution Amount: As to any
Distribution Date, the product of (i) the applicable Class A-5 Principal Payment
Percentage for such Distribution Date and (ii) the Class A-5 Pro Rata Principal
Distribution Amount for such Distribution Date.
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Class A-5 Principal Payment Percentage: As to any Distribution
Date, the applicable percentage is set forth below.
Principal Payment
Distribution Dates Percentage
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August 1998- July 2001............................... 0%
August 2001 - July 2002.............................. 45%
August 2003 - July 2004.............................. 80%
August 2004 - July 2005..............................100%
August 2005 - and thereafter.........................300%
Class A-5 Pro Rata Principal Distribution Amount: As to any
Distribution Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Class Certificate Balance of the Class A-5
Certificates immediately prior to such Distribution Date and the denominator of
which is the aggregate Class Certificate Balance of all Classes of Senior
Certificates immediately prior to such Distribution Date and (y) the Senior
Principal Distribution Amount for such Distribution Date.
Class B Principal Distribution Amount: As to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the sum of (i) the
aggregate Class Certificate Balance of the Senior Certificates (after taking
into account the payment of the Senior Principal Distribution Amount on such
Distribution Date) and (ii) the Class Certificate Balance of the Class B
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 98% and (ii) the Pool Principal Balance as of the last
day of the related Due Period and (B) the Pool Principal Balance as of the last
day of the related Due Period minus $661,646.61.
Class Certificate Balance: With respect to any Class of
Certificates and any Distribution Date, the initial Class Certificate Balance
thereof reduced by the sum of (i) all amounts previously distributed to holders
of Certificates of such Class as payments of principal and (ii) in the case of
any Class of Subordinated Certificates, any Applied Realized Loss Amounts
allocated to such Class.
Closing Date: July 22, 1998.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Combined Loan-to-Value Ratio: With respect to any Mortgage
Loan, the fraction (expressed as a percentage) the numerator of which is the sum
of (i) the principal balance of the related Mortgage Loan at the date of
origination and (ii) the unpaid principal balance of any senior mortgage at the
date of origination of the Mortgage Loan and the denominator of which is the
Appraised Value of the related Mortgaged Property.
Corporate Trust Office: The designated office of the Trustee
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 Home Equity Installment Loan Trust 1998-1, facsimile no.
(714) 253-7577, and which is the address to which notices to and correspondence
with the Trustee should be directed.
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Current Interest: With respect to each Class of Certificates,
the amount of interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the related Class Certificate Balance.
Cut-off Date: June 30, 1998, except that the Cut-off Date with
respect to any Mortgage Note for a Mortgage Loan originated after June 30, 1998,
shall be the date of such Mortgage Note.
Cut-off Date Pool Principal Balance: $132,329,321.65.
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.
Defective Mortgage Loan: Any Mortgage Loan which is required
to be repurchased pursuant to Section 2.02 or 2.03.
Deferred Payment Loan: A Mortgage Loan with respect to which
the Mortgagor has elected to defer the first Scheduled Payment for 120 days or
less after the date of origination of such Mortgage Loan.
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).
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, with respect to a Class R Certificate, the Percentage Interest
appearing on the face thereof.
Depositor: Mellon Residential Funding Corporation, a 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(5) 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 15th day
of each month or if such 15th 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 "Banker Trust
Company of California, N.A. in trust for registered holders of Mellon Bank Home
Equity Installment Loan Trust 1998-1, Mortgage Pass-Through Certificates, Series
MHELT 1998-
7
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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 August, 1998.
Due Date: With respect to any Mortgage Loan and any Due
Period, the day of the month on which Scheduled Payments are due.
Due Period: With respect to any Determination Date or
Distribution Date, the calendar month immediately preceding such Determination
Date or Distribution Date, as the case may be.
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 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 for such Mortgage Loan in the
Due Period in which such Mortgage Loan
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became a Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage
Rate from the Due Date for such Mortgage Loan as to which interest was last paid
or advanced (and not reimbursed) to Certificateholders up to the Due Date for
such Mortgage Loan occurring in the Due Period applicable to the Distribution
Date immediately following the calendar month during which such liquidation
occurred.
Expense Rate: As to each Mortgage Loan, the Master Servicing
Fee Rate.
Extra Principal Distribution Amount: As to any Distribution
Date, the lesser of (x) the Monthly Excess Interest Amount for such Distribution
Date and (y) the Overcollateralization Deficiency for such Distribution Date.
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.
First Lien: With respect to any Mortgage Loan which is a
second priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Fixed Rate Certificates: As specified in the Preliminary
Statement.
Floating Rate Certificates: As specified in the Preliminary
Statement.
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.
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.
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 Fixed
Rate Certificates and any Distribution Date, the calendar month prior to the
month of such Distribution Date. With respect to the Floating Rate Certificates
and any Distribution Date, the period beginning on the Distribution Date in the
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month preceding the month of such Distribution Date (or in the case of the first
Distribution Date, beginning on the Closing Date) and ending on the day
preceding such Distribution Date.
Interest Carryover Amount: With respect to any Distribution
Date and any Class of Certificates, the sum of (i) the excess, if any, of the
Current Interest and any Interest Carryover Amount from the prior Distribution
Date, over the amount of interest actually distributed on such Class on such
prior Distribution Date and (ii) 30 days' interest on such excess at the
applicable Pass-Through Rate.
Interest Determination Date: With respect to any Interest
Accrual Period for any LIBOR Certificates, the second LIBOR Business Day prior
to the first day of such Interest Accrual Period.
Interest Distribution Amount: With respect to any Distribution
Date and any Class of Certificates, the sum of (a) the Current Interest and (b)
the Interest Carryover Amount, if any, for such Class.
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 rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Accrual Period relating to
the Floating Rate Certificates. "Telerate Page 3750" means the display
designated as page 3750 on the Dow Jones Markets (or such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks). If such rate does not appear on such page (or
such other page as may replace that page on that service, or if such service is
no longer offered, such other service for displaying LIBOR or comparable rates
as may be reasonably selected by the Trustee after consultation with the Master
Servicer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Remittance Date. On the second LIBOR Business Day
immediately preceding each Distribution Date (or July 20, 1998 for the initial
Distribution Date), the Trustee shall determine LIBOR for the Accrual Period
commencing on such Distribution Date and inform the Master Servicer of such
rate.
LIBOR Business Day: Any day on which commercial banks are open
for business and foreign currency deposits in the London interbank market.
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 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.
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Lost Note Affidavit: A lost note affidavit and indemnity in a
form acceptable to FNMA or FHLMC.
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 Servicer: Mellon Bank, N.A., a national banking
association, 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 received equal to the product of (i) one-twelfth of
the Master Servicing Fee Rate and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the first day of the Due Period related to such
Distribution Date, subject to reduction as provided in Section 3.15.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
0.50% per annum.
Monthly Excess Interest Amount: As to any Distribution Date,
Available Funds remaining after distributions pursuant to Section 4.02(i) and
(ii) (other than the Extra Principal Distribution Amount).
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
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 or second 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 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 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
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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 Combined 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 townhouse, (c) a
condominium unit, (d) a duplex, (e) a multifamily property or (f)
other;
(xi) the Mortgage Rate;
(xii) a code indicating the lien status;
(xiii) the type of documentation program pursuant to which the
Mortgage Loan was originated; and
(xiv) a code indicating whether the Mortgage Loan is a
Deferred Payment Loan.
Such schedule shall also set forth the total of the amounts
described under (iv) and (v) above for all of the Mortgage Loans.
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.
Mortgagor: The obligor(s) on a Mortgage Note.
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Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the Expense Rate .
Net WAC Cap: As to any Distribution Date, the weighted average
of the Net Mortgage Rates of the Mortgage Loans as of the first day of the
related Due Period.
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.
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 Mortgage Loan: The mortgage loan refinanced in
connection with the origination of a Refinancing Mortgage Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and countersigned under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
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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.
Overcollateralization Amount: As to any Distribution Date, the
excess, if any, of (x) the Pool Principal Balance as of the last day of the
immediately preceding Due Period over (y) the aggregate Class Certificate
Balance of all Classes of Offered Certificates (after taking into account all
distributions of principal on such Distribution Date).
Overcollateralization Deficiency: As to any Distribution Date,
the excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralizaton Amount for such Distribution
Date, calculated for this purpose after taking into account the reduction on
such Distribution Date of the Class Certificate Balances of all Classes of the
Offered Certificates resulting from the distribution of the Basic Principal
Distribution Amount on such Distribution Date, but prior to taking into account
any Applied Realized Loss Amounts on such Distribution Date.
Overcollateralization Release Amount: With respect to any
Distribution Date after the Stepdown Date on which a Trigger Event is not in
effect, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the excess, if any, of (i) the Overcollateralization Amount for
such Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on the Offered Certificates on such Distribution
Date over (ii) the Targeted Overcollateralization Amount for such Distribution
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 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
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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;
(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 the Rating
Agency is Moody's, 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
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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 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.
Pool Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans which were
Outstanding Mortgage Loans on the last day of the related Due Period.
Prepayment Interest Shortfall: As to any Distribution Date,
Mortgage Loan and Principal Prepayment received during the related Due Period
but prior to the applicable Due Date, 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.
Principal Distribution Amount: With respect to any
Distribution Date, the sum of (i) the Basic Principal Distribution Amount for
such Distribution Date and (ii) the Extra Principal Distribution Amount for such
Distribution Date.
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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.
Principal Remittance Amount: With respect to any Distribution
Date, the sum of the following amounts (without duplication) with respect to the
immediately preceding Due Period: (i) each payment of principal on a Mortgage
Loan received by the Master Servicer during such Due Period, including all full
and partial Principal Prepayments, (ii) the Net Liquidation Proceeds allocable
to principal actually collected by the Master Servicer during the related Due
Period, (iii) the portion of the Purchase Price allocable to principal of all
repurchased Defective Mortgage Loans with respect to such Due Period and (iv)
any Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed.
Private Certificate: As specified in the Preliminary
Statement.
Prospectus: The Prospectus Supplement dated July 16, 1998,
together with the Prospectus dated July 16, 1998 relating to the Offered
Certificates.
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 Net 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 Due Period related to the Distribution Date on
which the Purchase Price is to be distributed to Certificateholders.
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 unpaid principal balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the unpaid
principal balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the 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 Due Period
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related to the Distribution Date on which the Liquidation Proceeds are required
to be distributed on the unpaid 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 Net Mortgage Rate and to principal of the
Liquidated Mortgage Loan.
Record Date: With respect to any Distribution Date and the
Fixed Rate Certificates (and the Floating Rate Certificates if issued as
Definitive Certificates), the close of business on the last Business Day of the
month preceding the month in which such Distribution Date occurs. With respect
to any Distribution Date and the Floating Rate Certificates which are Book-Entry
Certificates, the close of business on the Business Day preceding such
Distribution Date.
Reference Bank Rate: As to any Interest Accrual Period as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of a percent) of the offered rates for United States dollar deposits
for one month which are offered by the Reference Banks as of 11:00 A.M., London
time, on the second LIBOR Business Day prior to the first day of such Accrual
Period to prime banks in the London interbank market for a period of one month
in amounts approximately equal to the Class Certificate Balance of the Floating
Rate Certificates; provided that at least two such Reference Banks provide such
rate. If fewer than two offered rates appear, the Reference Bank Rate will be
the arithmetic mean of the rates quoted by one or more major banks in New York
City, selected by the Trustee after consultation with the Master Servicer, as of
11:00 A.M., New York City time, on such date for loans in U.S. Dollars to
leading European Banks for a period of one month in amounts approximately equal
to the Class Certificate Balance of the Floating Rate Certificates. If no such
quotations can be obtained, the Reference Bank Rate shall be the Reference Bank
Rate applicable to the preceding Accrual Interest Period.
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.
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.
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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.
Reserve Interest Rate: As defined in Section 4.05.
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.
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan due on any Due Date for such Mortgage Loan allocable to principal and/or
interest on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: Mellon Bank, N.A., a national banking association, 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 Enhancement Percentage: As to any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the Class Certificate
Balance of the Subordinated Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date by (y) the Pool Principal Balance
as of the last day of the related Due Period.
Senior Principal Distribution Amount: As to any Distribution
Date, (a) prior to the Stepdown Date or with respect to which a Trigger Event is
in effect, the lesser of (i) 100% of the Principal Distribution Amount and (ii)
the aggregate Class Certificate Balance of the Senior Certificates and (b) on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
positive difference, if any, of the excess of (x) the aggregate Class
Certificate Balance of the Senior Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 82% and (ii) the
Pool Principal Balance as of the last day of the related Due Period and (B) the
Pool Principal Balance as of the last day of the related Due Period minus
$661,646.61.
Senior Specified Enhancement Percentage: As to any date of
determination thereof, 18%.
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, (iv) compliance with the
obligations under Section 3.09 and (v) in connection with the liquidation of a
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Mortgage Loan, expenditures relating to the purchase or maintenance of the First
Lien pursuant to Section 3.12.
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.
SMMEA: The Secondary Mortgage Market Enhancement Act of 1984,
as amended.
S&P: Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. If S&P is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for notices
to S&P shall be Standard & Poor's 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, the unpaid
principal balance of such Mortgage Loan as of its respective 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).
Stepdown Date: The earlier to occur of (i) the later to occur
of (x) the Distribution Date in August 2001 and (y) the first Distribution Date
on which the Senior Enhancement Percentage (after taking into account
distributions of principal on such Distribution Date) is greater than or equal
to the Senior Specified Enhancement Percentage and (ii) the Distribution Date on
which the aggregate Class Certificate Balance of the Senior Certificates has
been reduced to zero.
Subordinated Certificates: As specified in the Preliminary
Statement.
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.
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 M,
(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 Combined
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 and (v) 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.
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Targeted Overcollateralization Amount: As to any Distribution
Date, (x) prior to the Stepdown Date, 1% of the original aggregate Class
Certificate Balance of the Offered Certificates and (y) on and after the
Stepdown Date and assuming a Trigger Event is not in effect, the greater of (i)
2% of the Pool Principal Balance, as of the last day of the related Due Period
and (ii) $661,646.61. If a Trigger Event is in effect on and after the Stepdown
Date, the Targeted Overcollateralization Amount shall be equal to the Targeted
Overcollateralization Amount for the immediately preceding Distribution Date.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss.1.860F-4(d) and
Treasury regulation ss.301.6231(a)(7)-1. Initially, the Tax Matters Person shall
be the Trustee.
Tax Matters Person Certificate: The Class R Certificate with a
Denomination of 0.01%.
Telerate Page 3750: The display designated as page 3750 on the
Dow Jones Markets (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rate rates of major
banks).
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Residual Certificate.
Trigger Event: A Trigger Event shall have occurred and be
continuing if on any Distribution Date the three-month rolling average of
Mortgage Loans which are 60 or more days delinquent equals or exceeds one-half
of the Senior Enhancement Percentage.
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 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.
Voting Rights: The right to vote evidenced by a Certificate as
follows: the Residual Certificates, in the aggregate, shall evidence Voting
Rights equal to the percentage equivalent of a fraction, the numerator of which
is the Targeted Overcollateralization Amount and the denominator of which is the
Pool Principal Balance; the Offered Certificates, in the aggregate, shall
evidence Voting Rights equal to 100% minus the Voting Rights evidenced by the
Residual Certificates. The Voting Rights allocated to the Offered Certificates
shall be allocated among the Classes thereof in proportion to their respective
Class Certificate Balances. Voting Rights allocated to a Class of Certificates
shall be allocated among the Certificates of such Class in proportion to their
respective Percentage Interests.
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SECTION 1.02. Calculations.
All calculations of interest made pursuant to this Agreement
shall be made assuming a 360-day year consisting of twelve 30-day months;
provided, however, that calculations of the Current Interest for the Floating
Rate Certificates shall be made on the basis of a 360-day year for the actual
number of days elapsed in the applicable Interest Accrual Period.
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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. 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, other than
a Deferred Payment Loan, that does not have a first payment date on or before
the last day of the Due Period relating to 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 Net 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
Person endorsing it to the Trustee (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); provided, however, that with respect to up to ______ Mortgage
Loans, a Lost Note Affidavit may be delivered in lieu of the original
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) within 45 days after the Closing Date, a duly executed
assignment of the Mortgage (which may be included in a blanket
assignment or assignments), together with, except as provided below,
all interim recorded assignments of such mortgage (each such
assignment, when duly and validly completed, to be in recordable form
and
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sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which the assignment relates); 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; and
(iv) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
In the event that in connection with any Mortgage Loan the
Depositor cannot deliver (a) the original recorded Mortgage or (b) all interim
recorded assignments satisfying the requirements of clause (ii) or (iii) above,
respectively, because such document or documents have not been returned from the
applicable public recording office, the Depositor shall promptly deliver to the
Trustee 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; 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 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.
Except as provided below, as promptly as practicable
subsequent to delivery of each 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. Notwithstanding the foregoing, the Master
Servicer need not cause to be recorded any assignment which relates to a
Mortgage Loan and the Mortgaged Property relating to which are located in any
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.
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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, 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. As to each Mortgage Loan 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 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
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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.
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 Bank, N.A., 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
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(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 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.
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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.
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,
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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.
SECTION 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations for
federal income tax purposes of all interests created hereby. The "latest
possible maturity date" for federal income tax purposes shall be the Latest
Possible Maturity Date. The "Startup Day" for purposes of the REMIC Provisions
shall be the Closing Date. The "tax matters person" with respect to the Trust
Fund hereunder shall be the Trustee and the Trustee shall hold the Tax Matters
Person Certificate. The Trust Fund's fiscal year shall be the calendar year.
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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.
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 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.
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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.
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
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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) Except as otherwise provided in Section 3.05(f), 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:
(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;
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(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(d) in connection
with any losses on Permitted Investments;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.09(a), 3.09(b), 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.
The foregoing requirements for remittance by the Master
Servicer shall be exclusive. 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:
(i) the aggregate amount remitted by the Master Servicer
to the Trustee pursuant to Section 3.08(a)(ix);
(ii) any amount deposited by the Master Servicer pursuant
to Section 3.05(d) in connection with any losses on
Permitted Investments; and
(iii) 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.
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(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.
(f) Notwithstanding subsection (b) above and any other
provision herein relating to deposits to or withdrawals from the Certificate
Account, so long as (i) Mellon Bank, N.A. is the Master Servicer, (ii) the
long-term unsecured debt obligations of Mellon Bank, N.A. are rated at least A3
by Moody's and A by S&P and (iii) the short-term unsecured debt obligations of
Mellon Bank, N.A. are rated at least A1 by S&P, the Master Servicer shall not be
required to maintain a Certificate Account or make deposits to the Certificate
Account but instead may, at its option, retain possession of all amounts
received in respect of the Mortgage Loans and commingle such amounts with its
own funds until the next Distribution Account Deposit Date. On each Distribution
Account Deposit Date, the Master Servicer shall transfer to the Trustee for
deposit in the Distribution Account an amount equal to the Available Funds for
the related Distribution Date, such transfer being net of amounts which the
Master Servicer is entitled to retain or withdraw from the Certificate Account.
Notwithstanding such commingling, the Master Servicer shall maintain records of,
and account for, all amounts received in respect of the Mortgage Loans to the
same extent as though deposits and withdrawals were being made to and from the
Certificate Account as provided herein. Upon obtaining knowledge of the failure
to satisfy any of the conditions specified in clauses (i) to (iii) of this
subsection, the party obtaining such knowledge shall promptly give written
notice thereof to the other parties hereto, and the Master Servicer shall give
such notice to the Rating Agencies. As of the first day of the first Due Period
that begins at least 30 days after the receipt or giving of such notice by the
Master Servicer, the Master Servicer shall have established the Certificate
Account and thereafter shall make deposits to and withdrawals from the
Certificate Account as herein provided.
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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 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 or if
such Escrow Account is not required by the related Mortgage Note.
(b) Withdrawals of amounts so collected from the Escrow
Accounts may be made only to effect timely payment of taxes, assessments,
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), 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 or Section
9.02 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
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3.15, 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;
(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, (b) unreimbursed Servicing Advances
made pursuant to Section 3.12 and (c) 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 related Available
Funds 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 or Section 9.02 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.
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(b) The Trustee shall withdraw funds from the Distribution
Account for distributions to Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to 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
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01
or Section 9.02 hereof.
SECTION 3.09. [RESERVED]
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
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to a Person by a Mortgagor, sand such Person is to enter into an assumption
agreement or modification agreement or supplement to the Mortgage Note or
Mortgage that requires the signature of the Trustee, or if an instrument of
release signed by the Trustee is required releasing the Mortgagor from liability
on the Mortgage Loan, the Master Servicer shall prepare and deliver or cause to
be prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person. In connection with any such
assumption, no material term of the Mortgage Note 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 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 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.
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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 this Agreement and the
Trustee's capacity hereunder. As contemplated by Section 3.01 hereof, the
Trustee and the Depositor agree to execute and return to the Master Servicer any
powers of attorney or other instruments necessary to accomplish the foregoing.
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.
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 any 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.
The decision of the Master Servicer to foreclose on a
defaulted Mortgage Loan shall be subject to a determination by the Master
Servicer that the proceeds of such foreclosure would exceed the costs and
expenses of bringing such a proceeding. The income earned from the management of
any 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
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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 Net Mortgage
Rate through the Due Date occurring in the related Due Period; 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 3.15.
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. Superior Liens.
The Master Servicer shall file (or cause to be filed) a
request for notice of any action by a superior lienholder under a First Lien for
the protection of the Trustee's interest, where permitted by local law and
whenever applicable state law does not require that a junior lienholder be named
as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.
If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the First Lien, or has declared or intends to declare a default under the
mortgage or the promissory note secured thereby, or has filed or intends to file
an election to have the Mortgaged Property sold or foreclosed, the Master
Servicer shall take, on behalf of the Trust, whatever actions are necessary to
protect the interests of the Certificateholders and/or to preserve the security
of the related Mortgage Loan, subject to the application of the REMIC Provisions
in accordance with the terms of this Agreement. The Master Servicer shall
immediately notify the Trustee of any such action or circumstances. The Master
Servicer shall advance the necessary funds to cure the default or reinstate the
superior lien, if such advance is in the best interests of the
Certificateholders in accordance
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with the servicing standards in Section 3.01. The Master Servicer shall not make
such an advance except to the extent that it determines in its reasonable good
faith judgment that the advance would be recoverable from Liquidation Proceeds
on the related Mortgage Loan and in no event in an amount that is greater than
the Stated Principal Balance of the related Mortgage Loan. The Master Servicer
shall thereafter take such action as is necessary to recover the amount so
advanced.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by delivering, or causing to be delivered a "Request for
Release" substantially in the form of Exhibit N. Upon receipt of such request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer's direction execute and
deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. 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 3.14. Documents Records and Funds in Possession of
Master Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or 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
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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.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain or withdraw from the Certificate Account an
amount equal to the Master Servicing Fee, 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 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
maintenance of the forms of insurance coverage required by this Agreement) and
shall not be entitled to reimbursement therefor except as specifically provided
in this Agreement.
SECTION 3.16. 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 3.17. 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
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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 3.18. 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 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 Programs 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 3.19. 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.
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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.
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.
On each Distribution Date, the Trustee will withdraw from the
Distribution Account the Available Funds, and make the following disbursements
and transfers as described below and to the extent of Available Funds:
(i) to the Holders of each Class of Offered Certificates
in the following order of priority:
(a) concurrently, to each Class of Senior
Certificates, the aggregate of the related
Interest Distribution Amounts, pro rata, based
on the amount of interest to which each such
Class is entitled on such Distribution Date;
and
(b) to the Class B Certificates, the related
Current Interest for such Distribution Date;
(ii) A. on each Distribution Date (a) before the Stepdown
Date or (b) after the Stepdown Date and with respect
to which a Trigger Event is in effect, to the Holders
of the Class or Classes of Senior Certificates then
entitled to distributions of principal as set forth
below, an amount equal to the Principal Distribution
Amount in the following order of priority:
(x) to the Class A-5 Certificates, the Class A-5
Principal Distribution Amount; and
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(y) the balance of the Principal Distribution
Amount for such Distribution Date sequentially,
to the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, in that order,
until the Class Certificate Balance of each
such Class of Senior Certificates has been
reduced to zero;
B. on each Distribution Date on or after the Stepdown Date
and as long as a Trigger Event is not in effect, to the
Holders of the Class or Classes of Offered Certificates
then entitled to distributions of principal, an amount
equal to the Principal Distribution Amount in the
following amounts and order of priority:
(a) the lesser of (x) the Principal Distribution
Amount and (y) the Senior Principal
Distribution Amount in the following order of
priority:
(1) to the Class A-5 Certificates, the Class
A-5 Principal Distribution Amount; and
(2) the balance of the amount specified in
(a) for such Distribution Date
sequentially, to the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5
Certificates, in that order, until the
Class Certificate Balance of each Class
of Senior Certificates has been reduced
to zero;
(b) the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the
amount distributed to the Senior Certificates
in clause (ii)(B)(a) above and (y) the Class B
Principal Distribution Amount, to the Class B
Certificates, until the Class Certificate
Balance thereof has been reduced to zero;
(iii) any amounts remaining after the distributions in
clauses (i) and (ii) above shall be distributed in
the following order of priority:
(a) to fund the Extra Principal Distribution Amount
for such Distribution Date to be paid as a
component of the Principal Distribution Amount
in the same order of priority described in
clause (ii) above; and
(b) to the Class B Certificates, (i) the related
Interest Carryover Amount, if any, and (ii) the
related Applied Realized Loss Amount, if any,
in that order; and
(iv) to the Class R Certificates, the balance.
Notwithstanding the foregoing, on any Distribution Date (i) on
or after the date on which the Class Certificate Balance of the Subordinated
Certificates has been reduced to zero, distributions in respect of the Principal
Distribution Amount will be made to all Classes of Senior Certificates pro rata
based on their respective Class Certificate Balances and (ii) on or after which
the date on which the aggregate Class Certificate Balance of the Senior
Certificates has been reduced to zero, the excess of the
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Principal Distribution Amount over the portion thereof, if any, distributed on
the Senior Certificates shall be distributed on the Subordinated Certificates.
SECTION 4.03. Allocation of Losses.
On or prior to each Determination Date, the Master Servicer
shall determine the total Applied Realized Loss Amounts with respect to the
related Distribution Date. The Applied Realized Loss Amount for any Distribution
Date shall be applied after all distributions on such Distribution Date by
reducing the Class Certificate Balance of the Subordinated Certificates until
the Class Certificate Balance thereof is reduced to zero.
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, separately
identifying the aggregate amount of any Principal
Prepayments and Liquidation Proceeds included
therein;
(ii) the amount thereof allocable to interest, any
Interest Carryover Amount for any Class included in
such distribution and any remaining Interest
Carryover Amount for any Class 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 Principal Balance with respect to such
Distribution Date;
(vi) the Extra Principal Distribution Amount, the
Overcollateralization Amount and any
Overcollateralization Deficiency;
(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 (A) delinquent (exclusive of Mortgage
Loans in foreclosure) (1) 30 to 59 days (2) 60 to 89
days (3) 90 or more days and (B) in foreclosure 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
Determination Date preceding such Distribution Date
and the date of acquisition thereof;
(xii) the total number and principal balance of any REO
Properties (and market value, if available) as of the
close of business on the Determination Date preceding
such Distribution Date;
(xiii) the aggregate amount of Applied Realized Loss Amounts
for such Distribution Date; and
(xiv) the existence of any Trigger Event.
(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) On or before 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.
(e) In addition, the Trustee shall forward a copy of the
statement required by this Section 4.04 by overnight courier or facsimile
transmission (as instructed by the Depositor) on each Distribution Date to
certain secondary market agents designated from time to time by the Depositor.
The initial secondary market agents designated by the Depositor are TREPP, 477
Madison Avenue, 15th Floor, New York, NY 10022, facsimile number (212) 832-7630,
The Bloomberg Financial Markets, 100 Business Park Drive, P.O. Box 888,
Princeton, NJ 08542-0888, facsimile number (609) 683-7523, and CMO Passport. The
Trustee shall deliver to Bloomberg Financial Markets, 100 Business Park Drive,
P.O. Box 888, Princeton, New Jersey 08542-0888, and such other secondary market
facilitators designated by the Depositor on each Distribution Date a
computer-readable Magnetic Tape, or other mutually agreed upon electronic media,
containing the information also set forth in Schedule V hereto as provided by
the Master Servicer to the Trustee.
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SECTION 4.05. Determination of Pass-Through Rates for LIBOR
Certificates.
On each Interest Determination Date so long as the LIBOR
Certificates are outstanding, the Trustee shall determine LIBOR in accordance
with the definition thereof.
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.
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 9.03 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) 100% of the Class
Certificate Balance of any Class of Certificates or (B) 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.
The Depositor initially appoints the Trustee as custodian of
the Book-Entry Certificates.
(b) No transfer of a Residual 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 (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 Residual 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 Residual 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 Residual
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
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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 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") 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
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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 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) 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 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.
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(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 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 or its agent, 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.
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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 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 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.
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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 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
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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.
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.
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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, conservator or liquidator in
any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such
decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive
days; or
(iv) the Master Servicer shall consent to the appointment of
a receiver, conservator or liquidator in any
insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating
to the Master Servicer or all or substantially all of
the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become
due, file a petition to take advantage of, or commence
a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend
payment of its obligations; 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
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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 51% 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 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
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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.
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.
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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
(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.
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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);
(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.
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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
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 hereunder 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
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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.
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.
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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 Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 8.08.
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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 US 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
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with any governmental taxing agency, extend any statute of limitations relating
to any tax item of any 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 Net 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 Net 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 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. Special Termination.
If the Master Servicer does not exercise its option to
purchase the Mortgage Loans (and REO Properties) within ninety days after such
option may be exercised (the "Auction Commencement Date"), during the two Due
Periods beginning with the Due Period during which the Auction Commencement Date
occurs (the "Solicitation Period"), the Trustee shall solicit competitive bids
for the purchase of the Mortgage Loans (and REO Properties). Such solicitation
shall be conducted substantially in the manner described in Exhibit P hereto. In
the event that satisfactory bids are received as described below and in Exhibit
P, the proceeds of the sale of such assets shall be distributed to the
Certificateholders on the first Distribution Date after the Solicitation Period
(the "Auction Payment Date"). The Trustee shall solicit bids from no fewer than
two prospective purchasers that are considered at the time to be competitive
participants in the mortgage loan market ("Qualified Bidders").
If the Trustee receives bids from no fewer than two Qualified
Bidders and the highest bid is received from a Qualified Bidder and is at least
equal to the greater of (i) the Pool Principal Balance at the end of the Due
Period relating to the Auction Payment Date together with interest at the
related weighted average Net Mortgage Rate through the end of such Due Period or
(ii) an amount that, together with amounts on deposit in the Certificate Account
that would constitute Available Funds for the Auction Payment Date, would result
in proceeds sufficient to distribute the sum of the aggregate Class Certificate
Balances of the Offered Certificates, together with one month's interest thereon
at the applicable Pass-Through Rates plus the amount of any related Interest
Carryover Amounts, the Trustee shall sell and assign such assets either (i) at
the Master Servicer's option, to the Master Servicer at the price bid by the
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highest bidder, or (ii) if the Master Servicer declines to exercise such option
to the highest Qualified Bidder and the Trustee shall redeem the Certificates
from the proceeds of such sale.
If the conditions described above and in Exhibit P are not
met, the Trustee shall decline to consummate such sale. In addition, the Trustee
shall decline to consummate such sale unless it receives an Opinion of Counsel
from the Master Servicer to the effect that such sale will give rise neither to
any prohibited transactions tax under Section 860F(a)(1) of the Code, nor to any
tax on contributions to any REMIC hereunder after the Startup date under Section
860c(d)(1) of the Code. Such opinion will be delivered at the expense of the
Master Servicer as described in Section 9.04(a)(1) below. In the event such sale
is not consummated in accordance with the foregoing, the Trustee shall not
solicit any further bids or otherwise negotiate any further sale of such assets.
The Trustee will be reimbursed by the highest Qualified Bidder
for any fees and expenses (other than fees for the issuance of the Opinion of
Counsel which shall be borne by the Master Servicer) it incurs in connection
with this Section. In the event the Trustee is not so reimbursed by the highest
Qualified Bidder or the Auction Termination does not take place, the Depositor
will reimburse the Trustee for such fees and expenses.
SECTION 9.03. 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.
In the event such notice is given, the Master Servicer shall
cause all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the Mortgage
Loans.
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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 the Interest
Distribution Amount 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 R Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund which remain subject hereto.
SECTION 9.04. 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
9.04 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 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 9.03,
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 Counsel referred to in
Section 9.04(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.
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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 as a REMIC under the Code or to avoid or minimize the
risk of the imposition of any tax on any REMIC 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 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 or the Certificateholders or cause
any REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
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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 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
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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 3.17;
(3) Each annual independent public accountants' servicing
report described in Section 3.18; 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 Bank, N.A., One Mellon
Bank Center, 500 Grant Street, Pittsburgh Pennsylvania 15258, Attention: Patrick
Ryan or such other address as may be hereafter furnished to the Depositor and
the Trustee by the Master Servicer in writing, (c) in the case of the Trustee,
at the Corporate Trust Office, or such other address as the Trustee may
hereafter
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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 the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to
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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 Certificate holders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
* * * * * *
<PAGE> 80
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/ BARBARA CAMPBELL
---------------------
Name: Barbara Campbell
Title: Assistant Secretary
MELLON BANK, N.A.
as Seller and Master Servicer
By: /s/ WILLIAM WEINBRENNER
-------------------------
Name: William Weinbrenner
Title: Vice President
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SCHEDULE I
Mortgage Loan Schedule
[Delivered at Closing to Trustee]
<PAGE> 82
SCHEDULE II
Mellon Bank Home Equity Installment Loan Trust 1998-1
Mortgage Pass-Through Certificates
Series MHELT 1998-1
Representations and Warranties of the Seller/Master Servicer
Mellon Bank, N.A. ("Mellon") 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 Mellon, as seller and master servicer, Mellon Residential Funding
Corporation, as depositor, and Bankers Trust Company of California, N.A., as
trustee.
(1) Mellon is duly organized as a national banking association
and is validly existing and in good standing under the laws of the
United States of America and is duly authorized and qualified to
transact any and all business contemplated by the Pooling and Servicing
Agreement to be conducted by Mellon 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) Mellon 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 Mellon 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 Mellon,
enforceable against Mellon 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 the rights of creditors of national
banking associations and depository institutions the accounts of which
are insured by the FDIC 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 Mellon, the sale and servicing of the Mortgage Loans by
Mellon 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 Mellon and will not (A)
result in a material breach of any term or provision of the articles of
association or by-laws of Mellon 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 Mellon is a party or by which it may be bound, or
(C) constitute a material violation of any statute, order or regulation
applicable to Mellon of any court, regulatory body, administrative
agency or governmental body having jurisdiction over Mellon; and Mellon
is not in breach or violation of any material indenture or
<PAGE> 83
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 Mellon's ability to perform or meet any
of its obligations under the Pooling and Servicing Agreement.
(4) Mellon 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 Mellon's
knowledge, threatened, against Mellon that would materially and
adversely affect the execution, delivery or enforceability of the
Pooling and Servicing Agreement or the ability of Mellon 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 Mellon of, or compliance by Mellon 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, Mellon has obtained the same.
(7) Mellon 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 Bank Home Equity Installment Loan Trust 1998-1
Mortgage Pass-Through Certificates
Series MHELT 1998-1
Representations and Warranties as to the Mortgage Loans
Mellon Bank, N.A. ("Mellon") 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 Mellon, 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; provided,
however, that as of the Cut-off Date, no more than four Mortgage Loans
were contractually delinquent for more than 30 days (but less than 59
days).
(3) No Mortgage Loan had a Combined Loan-to-Value Ratio at
origination in excess of 96.33%.
(4) Each Mortgage is a valid and enforceable first or second
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, (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 and (d) in the case of a Mortgage Loan
secured by second lien, a valid and enforceable First Lien.
(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.
(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) [Reserved].
(13) 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.
(14) To the best of the Seller's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation. To the best of the Seller's
knowledge, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(15) 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.
(16) 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.
(17) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the
S-III-2
<PAGE> 86
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.
(18) 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.
(19) 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.
(20) 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.
(21) 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.
(22) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(23) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(24) Each Mortgage Loan contains a customary "due on sale"
clause.
(25) None of the Mortgage Loans provides for a prepayment
penalty.
(26) None of the Mortgage Loans are covered by primary
mortgage insurance.
(27) At the date of origination of each Mortgage Loan, 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 any First Lien 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. All such individual
insurance policies and all flood policies referred to in item (28)
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.
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<PAGE> 87
(28) 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.
(29) 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.
(30) Except as provided in (2) above, 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.
(31) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units, 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.
(32) Each Mortgage Loan is being serviced by the Master
Servicer.
(33) 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.
(34) 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 respective 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.
(35) Each Mortgage Loan was underwritten in all material
respects in accordance with the Seller's underwriting guidelines as set
forth in the Prospectus Supplement.
S-III-4
<PAGE> 88
(36) 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.
(37) 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.
(38) None of the Mortgage Loans are secured by a leasehold
estate.
(39) 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.
(40) Except for 2,058 Mortgage Loans, each Mortgage Loan
(other than a Deferred Payment Loan) has a payment date on or before
the last day of the Due Period relating to the first Distribution Date.
(41) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
S-III-5
<PAGE> 89
SCHEDULE IV
[RESERVED]
<PAGE> 90
SCHEDULE V
Form of Monthly Master Servicer Report
[TO BE AGREED UPON BY THE TRUSTEE AND THE MASTER SERVICER]
<PAGE> 91
EXHIBIT A
FORM OF SENIOR CERTIFICATE
<PAGE> 92
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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. : A-1-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $48,500,000
Initial Certificate Balances
of all Certificates of
this Class : $48,500,000
Certificate Rate : 6.42%
CUSIP : 585525 BP 2
<PAGE> 93
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class A-1
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 Initial Certificate Balance set forth on the face hereof,
as described 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 Cede & Co. 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, Mellon Bank, N.A., 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.
* * *
-2-
<PAGE> 94
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
-3-
<PAGE> 95
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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. : A-2-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $13,500,000
Initial Certificate Balances
of all Certificates of
this Class : $13,500,000
Certificate Rate : 6.21%
CUSIP : 585525 BQ 0
<PAGE> 96
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class A-2
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 Initial Certificate Balance set forth on the face hereof,
as described 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 Cede & Co. is the registered owner of the
Percentage Iterest 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, Mellon Bank, N.A., 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.
* * *
-2-
<PAGE> 97
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
-3-
<PAGE> 98
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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. : A-3-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $22,200,000
Initial Certificate Balances
of all Certificates of
this Class : $22,200,000
Certificate Rate : 6.32%
CUSIP : 585525 BR 8
<PAGE> 99
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class A-3
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 Initial Certificate Balance set forth on the face hereof,
as described 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 Cede & Co. 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, Mellon Bank, N.A., 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.
* * *
-2-
<PAGE> 100
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
-3-
<PAGE> 101
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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. : A-4-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $24,339,000
Initial Certificate Balances
of all Certificates of
this Class : $24,339,000
Certificate Rate : 6.50%
CUSIP : 585525 BS 6
<PAGE> 102
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class A-4
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 set forth on the face hereof, as
described 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 Cede & Co. 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, Mellon Bank, N.A., 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.
* * *
-2-
<PAGE> 103
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
- -3-
<PAGE> 104
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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. : A-5-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $13,200,000
Initial Certificate Balances
of all Certificates of
this Class : $13,200,000
Certificate Rate : 6.30%
CUSIP : 585525 BT 4
<PAGE> 105
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class A-5
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 set forth on the face hereof, as
described 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 Cede & Co. 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, Mellon Bank, N.A., 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.
* * *
-2-
<PAGE> 106
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
-3-
<PAGE> 107
EXHIBIT B
FORM OF SUBORDINATED CERTIFICATE
<PAGE> 108
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
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.
<PAGE> 109
Certificate No. : B-1
Cut-off Date : June 30, 1998
First Distribution Date : August 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $10,590,000
Initial Certificate Balances
of all Certificates of
this Class : $10,590,000
Certificate Rate : 6.86%
CUSIP : 585525 BU 1
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class B
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 fixed-rate mortgage loans (the
"Mortgage Loans") secured by first or second 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 Initial 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 Cede & Co. 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, Mellon Bank, N.A., 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.
-2-
<PAGE> 110
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, (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 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. 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.
* * *
-3-
<PAGE> 111
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
-4-
<PAGE> 112
EXHIBIT C
[FORM OF RESIDUAL CERTIFICATE]
<PAGE> 113
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 CLASS R-1 CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED IN THE AGREEMENT REFERRED
TO HEREIN.
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.
<PAGE> 114
Certificate No. : R-1
Percentage Interest
evidenced by this
Certificate : 99.99%
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Class R
evidencing the distributions allocable to the Class R Certificates with
respect to a Trust Fund consisting primarily of a pool of fixed-rate
mortgage loans (the "Mortgage Loans") secured by first or second 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 Mellon Bank, N.A. is the registered owner
of the Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs 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, Mellon Bank, N.A., 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.
This Certificate does not have a principal balance or
pass-through rate and will be entitled to distributions only to the extent set
forth in the Agreement. Any distribution of the proceeds of any remaining assets
of the Trust Fund will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
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 of 1933, as amended (the "Securities Act") and any
applicable state securities laws or is exempt from the registration requirements
under the Securities Act and such 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 Holder
desiring to effect such transfer and such Holder'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 to the Agreement, there shall also
be delivered (except in the case of a transfer pursuant to Rule 144A of the
Securities Act) to the Trustee of an
-2-
<PAGE> 115
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Securities Act, which Opinion of Counsel shall not be obtained at the
expense of the Trustee, the Seller 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 (ii) in the case of any such
Class 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 to the effect that the purchase or holding of such
Class 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 to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee. Notwithstanding anything else to the contrary
herein, any purported transfer of a Class 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.
Each Holder of this Class 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 R Certificate must be a Permitted Transferee,
(ii) no Ownership Interest in this Class 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 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 R Certificate must agree not to
transfer an Ownership Interest in this Class 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 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.
* * *
-3-
<PAGE> 116
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
-4-
<PAGE> 117
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
CERTIFICATE" 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.
THIS CLASS R-2 CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED IN THE AGREEMENT REFERRED
TO HEREIN.
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.
<PAGE> 118
Certificate No. : R-2
Percentage Interest
evidenced by this
Certificate : .01%
MELLON RESIDENTIAL FUNDING CORPORATION.
Mortgage Pass-Through Certificates, Series MHELT 1998-3
Class R
evidencing the distributions allocable to the Class R Certificates with
respect to a Trust Fund consisting primarily of a pool of fixed-rate
mortgage loans (the "Mortgage Loans") secured by first or second 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 Bankers Trust Company of California, N.A.,
as Trustee is the registered owner of the Percentage Interest evidenced by this
Certificate specified above in the interest represented by all Certificates of
the Class to which this Certificate belongs) 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, Mellon Bank, N.A., 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.
This Certificate does not have principal balance or
pass-through rate and will be entitled to distributions only to the extent set
forth in the Agreement. Any distribution of the proceeds of any remaining assets
of the Trust Fund will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
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 of 1933, as amended (the "Securities Act") and any applicable
state securities laws or is exempt from the registration requirements under the
Securities Act and such 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 Holder desiring to
effect such transfer and such Holder'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 to the Agreement, there shall also be
delivered (except in the case of a transfer pursuant to Rule 144A of the
Securities Act) to the Trustee of an Opinion of Counsel
-2-
<PAGE> 119
that such transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be obtained at the expense of the Trustee,
the Seller 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 (ii) in the case of any such
Class 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 to the effect that the purchase or holding of such
Class 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 to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee. Notwithstanding anything else to the contrary
herein, any purported transfer of a Class 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.
Each Holder of this Class 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 R Certificate must be a Permitted Transferee,
(ii) no Ownership Interest in this Class 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 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 R Certificate must agree not to
transfer an Ownership Interest in this Class 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 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.
-3-
<PAGE> 120
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: July 22, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By
-------------------------
This is one of the Certificates referenced in the within-mentioned Agreement.
Countersigned:
By
----------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
-4-
<PAGE> 121
EXHIBIT D
[Reserved]
<PAGE> 122
EXHIBIT E
[FORM OF REVERSE OF CERTIFICATES]
<PAGE> 123
MELLON RESIDENTIAL FUNDING CORPORATION
Mellon Bank Home Equity Installment
Loan Trust 1998-1
Mortgage Pass-Through Certificates, Series MHELT 1998-1
This Certificate is one of a duly authorized issue of
Certificates designated as Mellon Residential Funding Corporation Mortgage
Pass-Through Certificates, Series MHELT 1998-1 (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.
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.
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
<PAGE> 124
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 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
and the Mortgage Loans are not sold in an Auction Sale for which the Trustee is
required to solicit bids in the event the Master Servicer does not exercise its
optional termination right as more fully described in the Agreement, 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> 125
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> 126
STATE OF )
) ss.:
COUNTY OF )
On the day of 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> 127
EXHIBIT F
[RESERVED]
<PAGE> 128
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF TRUSTEE
Mellon Residential Funding Corporation, as Depositor
One Mellon Bank Center
500 Grant Street
Room 410
Pittsburgh, PA 15258
Attention:
_________________
Mellon Bank, N.A., as Seller and Master Servicer
One Mellon Bank Center
500 Grant Street
Room 410
Pittsburgh, PA 15258
Attention:
_________________
Re: Pooling and Servicing Agreement among
Mellon Residential Funding Corporation,
as Depositor, Mellon Bank, N.A. as Seller
and Master Servicer, and Bankers Trust
Company of California, N.A., as Trustee,
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Ladies and 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:
the original Mortgage Note endorsed in the following form:
"Pay to the order of _____________________ without recourse".
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.
<PAGE> 129
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> 130
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
Mellon Residential Funding Corporation, as Depositor
One Mellon Bank Center
500 Grant Street
Room 410
Pittsburgh, PA 15258
Attention: ______________________
Mellon Bank, N.A., as Seller and Master Servicer
One Mellon Bank Center
500 Grant Street
Room 410
Pittsburgh, PA 15258
Attention: ______________________
Re: Pooling and Servicing Agreement among
Mellon Residential Funding Corporation,
as Depositor, Mellon Bank, N.A. as Seller
and Master Servicer, and Bankers Trust
Company of California, N.A., as Trustee,
Mortgage Pass-Through Certificates, Series MHELT 1998-1
Ladies and 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.
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.
<PAGE> 131
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> 132
EXHIBIT I
TRANSFER AFFIDAVIT
Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates
Series MHELT 1998-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of ______________ , the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and among Mellon
Residential Funding Corporation, as depositor (the "Depositor"), Mellon Bank,
N.A. 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.
2. The Transferee is, as of the date hereof, and will be, as
of the date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate either (i) for its own account or (ii)
as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that
(i) a tax will be imposed on Transfers of the Certificate to Persons that are
not Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a
tax will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement (attached hereto as Exhibit 2 and incorporated herein
by reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory
<PAGE> 133
sales. The Transferee expressly agrees to be bound by and to abide by the
provisions of Section 5.02(c) of the Agreement and the restrictions noted on the
face of the Certificate. The Transferee understands and agrees that any breach
of any of the representations included herein shall render the Transfer to the
Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from
any Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit 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.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.
8. The Transferee's taxpayer identification number is
__________________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. 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.
11. 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> 134
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> 135
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 R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(c), (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the Transfer of
an Ownership Interest in a Class R Certificate to such Person may cause the
Trust Fund to fail to qualify as a REMIC at any time that certain Certificates
are Outstanding. The terms "United States," "State" and "International
Organization" shall have the meanings set forth in Code Section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the FHLMC, a majority
of its board of directors is not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint
venture, bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Transfer": Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate, including the acquisition of a Certificate
by the Depositor.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
<PAGE> 136
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 R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership Interest in a Class R
Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that
such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Class R Certificate that is in fact
not permitted by Section 5.02(b) and this Section 5.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit, Transferor Certificate and either the
Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
(v) The 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
<PAGE> 137
860E(e) of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
<PAGE> 138
0703638.02
EXHIBIT J
FORM OF TRANSFEROR 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: Mellon HEL Trust 1998-1
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series MHELT 1998-1, 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, (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 and
(c) to the extent we are disposing of a Class R Certificate, we have no
knowledge the Transferee is not a Permitted Transferee.
Very truly yours,
______________________________________
Print Name of Transferor
By:
__________________________________
Authorized Officer
<PAGE> 139
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: Mellon HEL Trust 1998-1
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series MHELT 1998-1, 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 either (i) 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 or (ii) are 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 the purchase and holding
of such Certificates are covered under PTCE 95-60, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of 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
<PAGE> 140
exemption from the Act, (2) the purchaser or transferee of such Certificate has
executed and delivered to you a certificate to substantially the same effect as
this certificate, and (3) the purchaser or transferee has otherwise complied
with any conditions for transfer set forth in the Pooling and Servicing
Agreement.
Very truly yours,
--------------------------------------
Print Name of Transferor
By:
----------------------------------
Authorized Officer
K-2
<PAGE> 141
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: Mellon HEL Trust 1998-1
Re: Mellon Residential Funding Corporation
Mortgage Pass-Through Certificates,
Series MHELT 1998-1, 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 either (i) 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 or (ii) are 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 the purchase and holding
of such Certificates are covered under PTCE 95-60, (e) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the
<PAGE> 142
Securities Act and have completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. We are aware that the sale to us
is being made in reliance on Rule 144A. We are acquiring the Certificates for
our own account or for resale pursuant to Rule 144A and further, understand that
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> 143
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 by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
L-3
<PAGE> 144
___ 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 loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
<PAGE> 145
----------------------------------
Print Name of Buyer
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Date:
---------------------------
L-5
<PAGE> 146
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.
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.
L-6
<PAGE> 147
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 or Adviser
Date:
---------------------------
L-7
<PAGE> 148
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
MELLON RESIDENTIAL FUNDING CORPORATION
Mortgage Pass-Through Certificates
Series MHELT 1998-1
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, Mellon Bank, N.A., 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. _______________
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.
<PAGE> 149
( ) _____________________________________________________
( ) _____________________________________________________
( ) _____________________________________________________
( ) _____________________________________________________
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> 150
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 as of June 30, 1998
among Mellon Bank, N.A., 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. Mortgage Loan repurchased (Master Servicer hereby certifies that the
Purchase Price has been deposited in the Certificate Account).
5. Other (explain):
N-1
<PAGE> 151
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-2
<PAGE> 152
EXHIBIT P
AUCTION PROCEDURES
Pre-Auction Process
a. On or about the Auction Commencement Date, a plan of complete
liquidation with respect to the REMIC will be adopted by the
Trustee at the direction of the Master Servicer in order to
satisfy the REMIC Provisions, and the Trustee will notify J.P.
Morgan Securities Inc. as the advisor to the Trustee with
respect to the assets of the proposed auction.
b. Upon receiving notice of the proposed auction, J.P. Morgan
Securities Inc. will initiate its general auction procedures
consisting of the following: (i) with the assistance of the
Master Servicer, prepare a general solicitation package along
with a confidentiality agreement; (ii) prepare a list of
Qualified Bidders in a commercially reasonable manner; (iii)
initiate contact with all Qualified Bidders; (iv) send a
confidentiality agreement to all Qualified Bidders; (v) upon
receipt of a signed confidentiality agreement, send
solicitation packages to all interested Qualified Bidders on
behalf of the Trustee; and (vi) notify the Master Servicer of
all potential Qualified Bidders and anticipated timetable.
c. The general solicitation package will include: (i) the
Prospectus; (ii) a copy of all monthly servicing reports or a
copy of all annual servicing reports and the prior years'
monthly servicing reports; (iii) a form of a Purchase and Sale
Agreement and Servicing Agreement; (iv) a description of the
minimum purchase price required to cause the Trustee to sell
the assets of the REMIC as set forth in Section 9.02 of the
Pooling and Servicing Agreement; (v) a formal bidsheet; (vi) a
detailed timetable; and (vii) a preliminary data tape of the
Mortgage Pool as of the succeeding Distribution Date
reflecting the same data attributes used to create the
original Cut-off Date tables for the Prospectus.
d. The Trustee, with the assistance of the Master Servicer and
J.P. Morgan Securities Inc. will maintain an auction package,
which will contain items (i)-(iii) listed in the preceding
paragraph. If J.P. Morgan Securities Inc. is unable or
unwilling to perform its role as advisor to the Trustee, the
Master Servicer, acting in its capacity as Master Servicer
under the Pooling and Servicing Agreement, will select a
successor advisor and inform the Trustee of the successor
advisor.
e. J.P. Morgan Securities Inc. will send solicitation packages to
all Qualified Bidders no later than the Distribution Date
succeeding the Auction Commencement Date. Qualified Bidders
will be required to submit any due diligence questions in
writing to J.P. Morgan Securities Inc., for determination of
their relevancy, no later than fifteen (15) Business Days
before the second succeeding Distribution Date (such date, the
"Auction Date"). The Master Servicer and J.P. Morgan
Securities Inc. will be required to satisfy all relevant
questions at least five (5) Business Days prior to the Auction
Date and distribute the questions and answers to all Qualified
Bidders.
P-1
<PAGE> 153
I. Auction Process
a. J.P. Morgan Securities Inc., in its role as advisor to the
Trustee, will be allowed to bid in the auction, but will not
be required to do so.
b. On the Auction Date, all bids will be due by facsimile to such
office as shall be designated by the Trustee by 1:00 p.m. EST;
with the winning Qualified Bidders to be notified by 3:00 p.m.
EST. All acceptable bids (as described in Section 9.02 of the
Pooling and Servicing Agreement) will be due on a conforming
basis on the bid sheet contained in the solicitation package.
c. If the Trustee receives fewer than two fair market value bids
from Qualified Bidders in the manufactured housing market, the
Trustee shall decline to consummate the sale.
d. J.P. Morgan Securities Inc., in its capacity as advisor to the
Trustee, will provide to the Trustee and the Master Servicer a
letter concluding whether or not the winning bid is a fair
market value bid. J.P. Morgan Securities Inc. will also
provide this letter if it is the winning Qualified Bidder. In
the case where J.P. Morgan Securities Inc. is the winning
Qualified Bidder, it will provide in its letter for market
comparables and valuations.
e. As provided in Section 9.02 of the Pooling and Servicing
Agreement, the Master Servicer may exercise its option to
purchase the assets of the Trust Fund at a price equal to the
winning bid.
f. If the Master Servicer declines to exercise such option, upon
notification to the winning Qualified Bidder, a one percent
(1%) good faith deposit of the aggregate Stated Principal
Balances of the Mortgage Loans as of the last day of the
preceding Due Period will be required to be wired to the
Trustee upon acceptance of the bid, such acceptance to be
received by 5:00 p.m. EST on the Auction Date. This deposit,
along with any interest income attributable to it, will be
credited to the purchase price, but will not be refundable. In
the event the Auction Termination does not occur, such
deposit, together with interest income accrued on it, will be
applied toward the reimbursement of fees and expenses incurred
by the Trustee in connection with the Auction Termination. The
Trustee will establish a separate account for the acceptance
of the good faith deposit, until such time as the account is
fully funded and all monies are transferred into the
Certificate Account, such time not to exceed one (1) Business
Day before the second succeeding Distribution Date.
g. The winning Qualified Bidder will receive on the Auction Date
a copy of the draft Purchase and Sale Agreement, Servicing
Agreement and Master Servicer's representations and warranties
(which shall be substantially similar to the representations
and warranties set forth in Section 2.03 of the Pooling and
Servicing Agreement).
P-2
<PAGE> 154
h. The auction will stipulate that the Master Servicer or a
successor master servicer be retained to service the Mortgage
Loans sold pursuant to the terms of the Purchase and Sale
Agreement and Servicing Agreement.
II. Modification of Auction Procedures
The Trustee, the Master Servicer and J.P. Morgan Securities Inc.,
without the giving of notice to or the receipt of the consent of
Holders of the Certificates, may, at any time, modify the Auction
Procedures described in clauses (I) and (II) above.
III. Fees of J.P. Morgan Securities Inc. or successor advisor
The Trustee will pay J.P. Morgan Securities Inc. or a successor advisor
a fee based upon J.P. Morgan Securities Inc.'s or the successor
advisor's hourly consulting rates at the time of the Auction
Termination as compensation for J.P. Morgan Securities Inc.'s or the
successor advisor's services in connection with the Auction
Termination. Such fee shall be reimbursed to the Trustee in accordance
with Section 9.02 of the Pooling and Servicing Agreement.
