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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 12, 1997
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2
(Exact name of registrant as specified in its charter)
New York 333-8687-04 Application Pending
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o The Bank of New York
101 Barclay Street
New York, NY 10286
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 485-1784
No Change
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
AMRESCO Residential Securities Corporation registered issuances of up to
$2,000,000,000 principal amount of Mortgage Loan Pass-Through Certificates on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Act"), by a Registration Statement on Form S-3
(Registration File No. 333-8687) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1997-2 (the "Registrant" or the "Trust") issued
$740,000,000 in aggregate principal amount of its Mortgage Loan Pass-Through
Certificates, Series 1997-2 (the "Certificates"), on June 12, 1997. This Current
Report on Form 8-K is being filed to satisfy an undertaking to file copies of
certain agreements executed in connection with the issuance of the Certificates,
the forms of which were filed as Exhibits to the Registration Statement.
The Certificates were issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") attached hereto as Exhibit 4.1, dated as
of June 1, 1997, among AMRESCO Residential Securities Corporation (the
"Depositor"), AMRESCO Residential Capital Markets, Inc. (the "Seller"), Advanta
Mortgage Corp. USA, as a Servicer, Ameriquest Mortgage Company, as a Servicer
and Option One Mortgage Corporation, as a Servicer (collectively, the
"Servicers") and The Bank of New York, in its capacity as trustee (the
"Trustee"). The Certificates consist of the following classes: the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
Class A-9 Certificates (the "Class A Certificates"), Class M-1F and Class M-1A
Certificates (the "Class M-1 Certificates"), Class M-2F and Class M-2A
Certificates (the "Class M-2 Certificates" and, collectively with the Class M-1
Certificates, the "Mezzanine Certificates"), Class B-1F and Class B-1A
Certificates (the "Class B Certificates"), Class S Interest-Only Certificates
(the "Class S Certificates"), the Class C Certificates (the "Class C
Certificates") and the Class R Certificates (the "Class R Certificates" and,
together with the Class A Certificates the Mezzanine Certificates, the Class B
Certificates, the Class S Certificates and the Class C Certificates, the
"Certificates"). Only the Class A Certificates, the Mezzanine Certificates and
the Class B Certificates (collectively, the "Offered Certificates") were offered
pursuant to the Registration Statement. The Certificates evidence, in the
aggregate, 100% of the undivided beneficial ownership interests in the Trust.
The assets of the Trust initially include a pool of closed-end mortgage
loans (the "Mortgage Loans") secured by mortgages or deeds of trust primarily on
one-to-four family residential properties. Interest distributions on the Offered
Certificates are based on the Certificate Principal Balance thereof and the
applicable Pass-Through Rate thereof. The Pass-Through Rates for the Offered
Certificates are as follows: Class A-1, 6.800%; Class A-2, 6.700%; Class A-3,
6.795%; Class A-4, 6.930%; Class A-5, 7.100%; Class A-6, 7.210%; Class A-7,
7.570%; Class A-8, 7.175%; and Class A-9, a variable rate as defined in the
Pooling and Servicing Agreement; Class M-1F, 7.430%; Class M-1A, a variable rate
as defined in the Pooling and Servicing Agreement; Class M-2F, 7.665%; Class
M-2A, a variable rate as defined in the Pooling and Servicing Agreement, Class
B-1F, 7.975%; and Class B-1A, a variable rate as defined in the Pooling and
Servicing Agreement. The Offered Certificates have initial aggregate principal
amounts as follows: Class A-1, $48,800,000; Class A-2, $44,500,000; Class
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A-3, $68,100,000; Class A-4, $27,900,000; Class A-5, $21,300,000; Class A-6,
$14,900,000; Class A-7, $36,975,000; Class A-8, $28,900,000; Class A-9,
$334,757,000; Class M-1F, $12,487,000; Class M-1A, $25,438,000; Class M-2F,
$18,315,000; Class M-2A, $24,420,000; Class B-1F, $10,823,000; and Class B-1A,
$22,385,000.
As of the Cut-Off Date, the Mortgage Loans possessed the characteristics
described in the Prospectus dated July 29, 1996 and the Prospectus Supplement
dated June 5, 1997 filed pursuant to Rule 424(b)(5) of the Act on June 12, 1997.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated June 5, 1997, between AMRESCO Residential
Securities Corporation and Prudential Securities Incorporated, as
Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of June 1, 1997, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc., Advanta Mortgage Corp. USA, as a Servicer, Ameriquest
Mortgage Company, as a Servicer and Option One Mortgage Corporation,
as a Servicer and The Bank of New York, as Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMRESCO RESIDENTIAL SECURITIES
CORPORATION MORTGAGE LOAN TRUST 1997-2
By: AMRESCO Residential Securities Corporation,
as Depositor
By: \s\ Ronald B. Kirkland
-------------------------------------------
Name: Ronald B. Kirkland
Title: Chief Financial Officer and
Chief Accounting Officer
Dated: June 24, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated June 5, 1997, between
AMRESCO Residential Securities Corporation and
Prudential Securities Incorporated, as Representative
of the Several Underwriters. _____
4.1 Pooling and Servicing Agreement dated as of June 1, 1997,
AMRESCO Residential Securities Corporation, AMRESCO
Residential Capital Markets, Inc., Advanta Mortgage Corp.
USA, as a Servicer, Ameriquest Mortgage Company, as a
Servicer and Option One Mortgage Corporation, as a
Servicer and The Bank of New York, as Trustee. _____
Exhibit 1.1
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
PRUDENTIAL SECURITIES INCORPORATED
As Representative of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 FIXED RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 FIXED RATE CERTIFICATES
CLASS A-7 FIXED RATE CERTIFICATES
CLASS A-8 FIXED RATE CERTIFICATES
CLASS A-9 ADJUSTABLE RATE CERTIFICATES
CLASS M-1F FIXED RATE CERTIFICATES
CLASS M-1A ADJUSTABLE RATE CERTIFICATES
CLASS M-2F FIXED RATE CERTIFICATES
CLASS M-2A ADJUSTABLE RATE CERTIFICATES
CLASS B-1F FIXED RATE CERTIFICATES
CLASS B-1A ADJUSTABLE RATE CERTIFICATES
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 FIXED RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 FIXED RATE CERTIFICATES
CLASS A-7 FIXED RATE CERTIFICATES
CLASS A-8 FIXED RATE CERTIFICATES
CLASS A-9 ADJUSTABLE RATE CERTIFICATES
CLASS M-1F FIXED RATE CERTIFICATES
CLASS M-1A ADJUSTABLE RATE CERTIFICATES
CLASS M-2F FIXED RATE CERTIFICATES
CLASS M-2A ADJUSTABLE RATE CERTIFICATES
CLASS B-1F FIXED RATE CERTIFICATES
CLASS B-1A ADJUSTABLE RATE CERTIFICATES
UNDERWRITING AGREEMENT
June 5, 1997
Prudential Securities Incorporated
as Representative of the
several Underwriters
One New York Plaza, 15th Floor
New York, New York 10292-2015
Dear Ladies and Gentlemen:
AMRESCO Residential Securities Corporation (the "Depositor"), a Delaware
corporation, has authorized the issuance and sale of Mortgage Loan Pass-Through
Certificates, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8 and Class A-9 (the "Class A Certificates"), Class M-1F and
Class M-1A (the "Class M-1 Certificates"), Class M-2F and Class M-2A (the "Class
M-2 Certificates" and, collectively with the Class M-1 Certificates, the
"Mezzanine Certificates"), Class B-1F and Class B-1A (the "Class B Certificates
and, collectively with the Mezzanine Certificates, the "Subordinate
Certificates" and, collectively with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates") and the Class S Certificates, the
Class C and the Class R Certificates (the "Retained Certificates," and,
collectively with the Offered Certificates, the "Certificates"), evidencing
interests in a pool of fixed and adjustable rate mortgage loans (the "Mortgage
Loans"). The Mortgage Loans are secured primarily by first and second deeds of
trust or mortgages on one- to four-family residential properties.
Only the Offered Certificates are being purchased by the Underwriters named
in Schedule A hereto, and the Underwriters are purchasing, severally, only the
Offered Certificates set forth opposite their names in Schedule A, except that
the amounts purchased by the Underwriters may change in accordance with Section
X of this Agreement. Prudential Securities Incorporated is acting as
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representative of the several Underwriters and in such capacity, is hereinafter
referred to as the "Representative."
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of June 1, 1997 among the
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller (the "Seller"),
Advanta Mortgage Corp. USA ("Advanta"), Ameriquest Mortgage Company
("Ameriquest") and Option One Mortgage Corporation ("Option One") as Servicers
(the "Servicers") and The Bank of New York, as trustee (the "Trustee"). The
Certificates will evidence fractional undivided interests in the trust (the
"Trust"). The assets of the Trust will initially include, among other things, a
pool of fixed and adjustable rate Mortgage Loans (the "Initial Mortgage Loans")
and such amounts as may be held by the Trustee in the Pre-Funding Account (the
"Pre-Funding Account"), the Capitalized Interest Account (the "Capitalized
Interest Account") and any other accounts held by the Trustee for the Trust. The
Initial Mortgage Loans will be acquired, in part, from the various Originators
pursuant to the various "Transfer Agreements" as such term is defined in the
Pooling and Servicing Agreement.
On the Closing Date, approximately $145,800,000 will be deposited by the
Depositor in the name of the Trustee in the Pre-Funding Account from the sale of
the Certificates. It is intended that additional Mortgage Loans satisfying the
criteria specified in the Pooling and Servicing Agreement (the "Subsequent
Mortgage Loans") will be purchased by the Trust for inclusion in the Trust from
the Depositor from time to time on or before September 3, 1997 from funds on
deposit in the Pre-Funding Account at the time of execution and delivery of each
Subsequent Transfer Agreement ("Subsequent Transfer Agreement"). Funds in the
Capitalized Interest Account will be applied by the Trustee to cover shortfalls
in interest during the Funding Period. The Offered Certificates will initially
represent an undivided ownership interest in the sum of (i) a pool of Initial
Mortgage Loans in an amount of $594,159,422.09 as of the close of business on
June 1, 1997 (the "Cut-Off Date") and (ii) approximately $145,800,000 on deposit
in the Pre-Funding Account. A form of the Pooling and Servicing Agreement has
been filed as an exhibit to the Registration Statement (hereinafter defined).
The Certificates are more fully described in a Registration Statement which
the Depositor has furnished to the Underwriters. Capitalized terms used but not
defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
SECTION I. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-8687), has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such Registration Statement have been delivered by the Depositor to the
Representative. As used in this Agreement, "Effective Time" means the date and
the time as of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time; "Registration
Statement" means such registration statement, at the Effective Time, including
any documents incorporated by reference therein at such time; "Basic Prospectus"
means such final prospectus dated July 28, 1996; and "Prospectus Supplement"
means the final prospectus supplement relating to the Offered Certificates, to
be filed with the Commission pursuant to paragraphs (2), (3) or (5) of Rule
424(b) of the Rules and Regulations. "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. Reference made herein to the Prospectus
shall be deemed to refer to and
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include any documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act as of the date of the Prospectus, any
reference to any amendment or supplement to the Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of
1934 (the "Exchange Act") after the date of the Prospectus and incorporated by
reference in the Prospectus, and any reference to any amendment to the
Registration Statement shall be deemed to include any report of the Depositor
filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the Registration
Statement. The Commission has not issued any order preventing or suspending the
use of the Prospectus. There are no contracts or documents of the Depositor
which are required to be filed as exhibits to the Registration Statement
pursuant to the Securities Act or the Rules and Regulations which have not been
so filed or incorporated by reference therein on or prior to the Effective Date
of the Registration Statement other than such documents or materials, if any, as
any Underwriter delivers to the Depositor pursuant to Section VIII D hereof for
filing on Form 8-K.
B. The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations. The Registration Statement, as of the Effective Date thereof
and of any amendment thereto, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus as of its date,
and as amended or supplemented as of the Closing Date does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in writing by the
Underwriters expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change, or any development
involving a prospective material adverse change, in the general affairs,
management, financial condition, or results of operations of the Depositor,
otherwise than as set forth or contemplated in the Prospectus as supplemented or
amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good
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standing as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its properties, to
conduct the business in which it is engaged and to enter into and perform its
obligations under this Agreement, the Pooling and Servicing Agreement or any
Subsequent Transfer Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending with respect
to which the Depositor has received service of process before or threatened by
any court, administrative agency or other tribunal to which the Depositor is a
party or of which any of its properties is the subject (a) which if determined
adversely to the Depositor would have a material adverse effect on the business
or financial condition of the Depositor, (b) asserting the invalidity of this
Agreement, the Pooling and Servicing Agreement, the Certificates, or any
Subsequent Transfer Agreement, (c) seeking to prevent the issuance of the
Certificates or the consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement, this Agreement or any
Subsequent Transfer Agreement, as the case may be, (d) which might individually
or in the aggregate materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, and this Agreement, the Certificates or any
Subsequent Transfer Agreement or (e) which might adversely affect the federal
income tax attributes of the Certificates as described in the Prospectus.
G. This Agreement has been, and the Pooling and Servicing Agreement and
each Subsequent Transfer Agreement when executed and delivered as contemplated
hereby and thereby will have been, duly authorized, executed and delivered by
the Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement when executed and delivered as contemplated herein, will constitute,
legal, valid and binding instruments enforceable against the Depositor in
accordance with their respective terms, subject as to enforceability to (x)
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law), and (z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the Pooling
and Servicing Agreement and any Subsequent Transfer Agreement by the Depositor
and the consummation of the transactions contemplated hereby and thereby,
compliance with the provisions thereof, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the Depositor is bound or
to which any of the properties or assets of the Depositor or any of its
subsidiaries is subject, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the Depositor, nor
will such actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor (which breach or violation would have
a material adverse effect on the business, operations or financial condition of
the Depositor), or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets. The Depositor is not a party to, bound by, or in breach or
violation of, any indenture or other agreement or instrument, or subject to or
in violation of any statute, order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor, which materially and adversely affects, or is reasonably likely in
the future to materially and adversely affect, (i) the ability of the Depositor
to perform its obligations under this Agreement and the Pooling and Servicing
Agreement or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Depositor.
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I. The Depositor has no reason to know that Deloitte & Touche, LLP are not
independent public accountants with respect to the Depositor as required by the
Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute, authenticate,
issue and deliver the Certificates has been duly authorized by the Depositor,
and assuming the Trustee has been duly authorized to do so, when executed,
authenticated, issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Pooling and
Servicing Agreement and any Subsequent Transfer Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under State securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses, certificates, authorities
or permits issued by the appropriate State, Federal or foreign regulatory
agencies or bodies necessary to conduct the business now conducted by it and as
described in the Prospectus, and there are no proceedings pending with respect
to which the Depositor has received service of process or, to the best knowledge
of the Depositor threatened, relating to the revocation or modification of any
such license, certificate, authority or permit which if decided adversely to the
Depositor would, singly or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Mortgage Loans
conveyed by the Seller, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Mortgage
Loans, in the Pooling and Servicing Agreement or in the Certificates being
issued pursuant thereto; and (iii) have the power and authority to sell its
interest in the Mortgage Loans to the Trustee and to sell the Offered
Certificates to the Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to the
Mortgage Loans. Upon delivery to the Underwriters of the Offered Certificates,
the Underwriters will have good title to the Offered Certificates, free of any
Liens.
N. As of the Cut-Off Date, each of the Mortgage Loans will meet the
eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
O. Neither the Depositor nor the Trust created by the Pooling and Servicing
Agreement is an "investment company" within the meaning of such term under the
Investment Company Act of 1940 (the "1940 Act") and the rules and regulations of
the Commission thereunder.
P. At the Closing Date, the Offered Certificates, each Transfer Agreement
and the Pooling and Servicing Agreement will conform in all material respects to
the descriptions thereof contained in the Prospectus.
Q. At the Closing Date, the Class A Certificates shall have been rated in
the highest rating category by Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, L.P. ("Fitch") and
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Duff & Phelps Credit Rating Co. ("DCR"). In addition, the Class M-1, Class M-2
and Class B Certificates shall receive ratings of "Aa2," "A3" and "Baa3,"
respectively from Moody's and "AA," "A" and "BBB," respectively, from Fitch and
DCR.
R. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Pooling and Servicing
Agreement and the Certificates have been paid or will be paid at or prior to the
Closing Date.
S. At the Closing Date, each of the representations and warranties of the
Depositor set forth in the Pooling and Servicing Agreement will be true and
correct in all material respects.
T. The transfer of the Mortgage Loans to the Trust at the Closing Date and,
if applicable, on each Subsequent Transfer Date, will be treated by the
Depositor for financial accounting and reporting purposes as a sale of assets
and not as a pledge of assets to secure debt.
U. The Depositor is not aware of (i) any request by the Commission for any
further amendment of the Registration Statement or the Prospectus or for any
additional information, or (ii) any notification with respect to the suspension
of the qualification of the Certificates for sale in any jurisdiction or the
initiating or threatening of any proceeding for such purpose.
V. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
Any certificate signed by an officer of the Depositor and delivered to the
Representative or counsel for the Representative in connection with an offering
of the Offered Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) severally and not jointly to purchase from
the Depositor the aggregate initial principal amounts or percentage interests of
the Offered Certificates set forth opposite their names on Schedule A, at the
purchase price or prices set forth in Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for the Offered
Certificates to be purchased by the Underwriters shall be made at the offices of
Arter & Hadden in Washington D.C., or at such other place as shall be agreed
upon by the Representative and the Depositor at 10:00 A.M. eastern daylight time
on June 12, 1997 or at such other time or date as shall be agreed upon in
writing by the Representative and the Depositor (such date being referred to as
the "Closing Date"). Payment shall be made to the Depositor by wire transfer of
same day funds payable to the account of the Depositor. Delivery of the Offered
Certificates shall be made to the Representative for the accounts of the
Underwriters against payment of the purchase price thereof. The Certificates
shall be in such authorized denominations and registered in such names as the
Underwriters may request in writing at least two business days prior to the
Closing Date. The Offered Certificates will be made available for examination by
the Representative no later than 2:00 p.m. eastern time on the first business
day prior to the Closing Date.
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SECTION IV. Offering by the Underwriters. It is understood that, subject to
the terms and conditions hereof, the Underwriters propose to offer the Offered
Certificates for sale to the public as set forth in the Prospectus.
SECTION V. Covenants of the Depositor. The Depositor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following the
availability of the Prospectus to the Underwriters; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the Closing
Date or any supplement to the Prospectus or any amended Prospectus has been
filed prior to the Closing Date and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Depositor with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and, for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Offered Certificates; to promptly
advise the Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or of: (i) any order preventing or suspending the
use of the Prospectus; (ii) the suspension of the qualification of the Offered
Certificates for offering or sale in any jurisdiction; (iii) the initiation of
or threat of any proceeding for any such purpose; (iv) any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. In the event of the issuance of
any stop order or of any order preventing or suspending the use of the
Prospectus or suspending any such qualification, the Depositor promptly shall
use its best efforts to obtain the withdrawal of such order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon any Underwriter's request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the Underwriters
are required to deliver a Prospectus in connection with sales of any of the
Offered Certificates at any time nine months or more after the Effective Time,
upon the request of an Underwriter but at its expense, the Depositor shall
prepare and deliver to such Underwriter as many copies as such Underwriter may
reasonably request of
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an amended or supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act. If such amendment or supplement to the Prospectus is required to
be contained in a post-effective amendment to the Registration Statement, the
Depositor will use its best efforts to cause such amendment of the Registration
Statement to be made effective as soon as possible.
D. To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Depositor or the Underwriters, be required by the Securities Act
or requested by the Commission.
E. To furnish the Underwriters and counsel for the Underwriters, prior to
filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i)
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates as
soon as practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Trust (which need not
be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Depositor, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Certificates have been so qualified.
H. So long as the Offered Certificates shall be outstanding the Depositor
shall cause the Trustee, pursuant to the Pooling and Servicing Agreement, to
deliver to the Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance delivered to the Trustee
pursuant to Section 8.16 of the Pooling and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to Section 8.17 of the Pooling and Servicing Agreement; (iii) the
monthly servicing report furnished to the Trustee pursuant to Section 8.29 of
the Pooling and Servicing Agreement; (iv) the monthly reports furnished to the
Certificateholders pursuant to Section 7.09 of the Pooling and Servicing
Agreement; and (v) from time to time, any other information concerning the Trust
filed with any government or regulatory authority that is otherwise publicly
available, as the Representative may reasonably request.
I. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing Date, neither
the Depositor nor any trust established, directly or indirectly, by the
Depositor will, without the Representative's prior written consent (which
consent shall not be unreasonably withheld), offer or sell mortgage pass-through
certificates backed by mortgage loans, except pursuant to this Agreement.
K. The Depositor will enter into the applicable agreements, to which it is
a party pursuant to the Pooling and Servicing Agreement, on or prior to the
Closing Date.
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L. On each Subsequent Transfer Date, the Depositor shall cause its special
counsel to deliver a favorable opinion substantially to the effect set forth in
Section VI.G (except as it applies to subdivisions 5 and 6 therein) hereof,
appropriately modified to refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Agreement, Subsequent Cut-Off Date and Subsequent Transfer
Date.
M. The Depositor will cause the Computational Materials (as defined in
Section VIII.D below) with respect to the Certificates which are delivered to
the Depositor as provided in Section VIII.D below to be filed with the
Commission on a Current Report on Form 8-K (the "Current Report") not later than
the date on which such materials are required to be filed pursuant to the
Kidder/PSA Letters (as defined in Section VIII.D below).
SECTION VI. Conditions to the Underwriters' Obligations. The obligations of
the Underwriters to purchase the Offered Certificates pursuant to this Agreement
are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor herein contained
(including those representations and warranties set forth in the Pooling and
Servicing Agreement and incorporated herein); (ii) the performance by the
Depositor of all of its obligations hereunder; (iii) the accuracy of the
statements of the Depositor made in any certificate or other document delivered
pursuant to the provisions hereof; and (iv) the following conditions as of the
Closing Date:
A. The Underwriters shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall have been
complied with. The Prospectus shall have been filed pursuant to Rule 424(b).
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Dewey Ballantine,
counsel for the Underwriters, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and Servicing
Agreement, the Certificates, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriters, and the Depositor shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters. The Representative shall have received the Pooling and
Servicing Agreement and the Offered Certificates in form and substance
satisfactory to the Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
D. Arter & Hadden shall have furnished to the Underwriters their written
opinion, as counsel to the Depositor, addressed to the Underwriters and dated
the Closing Date, in form and substance satisfactory to the Underwriters, to the
effect that:
1. The conditions to the use by the Depositor of a registration statement
on Form S-3 under the Securities Act, as set forth in the General Instructions
to Form S-3, have been satisfied with respect to the Registration Statement and
the Prospectus.
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2. The Registration Statement and any amendments thereto have become
effective under the 1933 Act; to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
and not withdrawn and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement, the Prospectus
and each amendment or supplement thereto, as of their respective effective or
issue dates (other than the financial and statistical information contained
therein, as to which such counsel need express no opinion), complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the rules and regulations thereunder, and such counsel does not know of any
amendment to the Registration Statement required to be filed.
3. There are no material contracts, indentures or other documents of a
character required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement other
than those described or referred to therein or filed or incorporated by
reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the captions
"Description of The Securities" and in the Prospectus Supplement under the
captions "Description of The Offered Certificates" and "The Pooling and
Servicing Agreement," to the extent such statements purport to summarize certain
provisions of the Certificates or of the Pooling and Servicing Agreement, are
fair and accurate in all material respects.
5. The statements set forth in the Basic Prospectus and the Prospectus
Supplement under the captions "ERISA Considerations," "Certain Federal Income
Tax Consequences," "Legal Investment Matters" and, "Certain Legal Aspects of the
Mortgage Assets" to the extent that they constitute matters of federal law,
provide a fair and accurate summary of such law or conclusions.
6. The Pooling and Servicing Agreement and the Transfer Agreements conform
in all material respects to the description thereof contained in the Prospectus
and the Pooling and Servicing Agreement is not required to be qualified under
the Trust Indenture Act of 1939, as amended, and the Trust is not required to be
registered under the Investment Company Act of 1940, as amended.
7. Neither the Depositor nor the Trust is an "investment company" or under
the "control" of an "investment company" as such terms are defined in the 1940
Act.
8. Assuming that the Trustee causes certain assets of the REMIC Estate, as
the Trustee has covenanted to do in the Pooling and Servicing Agreement, to be
treated as a "real estate mortgage investment conduit" ("REMIC"), as such term
is defined in the Internal Revenue Code of 1986, as amended (the "Code"), and
the parties to the Pooling and Servicing Agreement comply with the terms
thereof, such assets of the REMIC Estate will be treated as a REMIC, the Offered
Certificates, the Class S Certificates and the Class C Certificates will be
treated as the "regular interests" in the REMIC and the Class R Certificates
will be treated as the sole "residual interest" in the REMIC. Neither the Trust
nor certain assets and accounts are subject to tax upon its income or assets by
any taxing authority of the State of New York or the City of New York.
9. Assuming that the Class A-9 Certificates and the Class M-1A Certificates
are rated at the time of issuance in one of the two highest rating categories by
a nationally recognized statistical rating organization, such Certificates at
such time will be a "mortgage related security" as such term is defined in
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
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10. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the status of
the REMIC Estate as a REMIC.
11. As a consequence of the qualification of the REMIC Estate as a REMIC,
the Offered Certificates will be treated as "qualifying real property loans"
under Section 593(d) of the Code, "regular . . . interest(s) in a REMIC" under
Section 7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)
of the Code in the same proportion that the assets in the Trust consist of
qualifying assets under such Sections. In addition, as a consequence of the
qualification of the REMIC Estate as a REMIC interest on the Offered
Certificates will be treated as "interest on obligations secured by mortgages on
real property" under Section 856(c) of the Code to the extent that such Offered
Certificates are treated as "real estate assets" under Section 856(c) of the
Code.
12. The Certificates will, when issued, conform to the description thereof
contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written statement,
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters to the effect that no facts have come to the
attention of such counsel which lead them to believe that: (a) the Registration
Statement, at the time such Registration Statement became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); (b) the Prospectus, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
E. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Arter & Hadden, special counsel to the Depositor, addressed to
the Depositor and satisfactory to Moody's, Fitch, DCR and the Underwriters, with
respect to certain matters relating to the transfer of the Mortgage Loans to the
Depositor and from the Depositor to the Trust, and such counsel shall have
consented to reliance on such opinion by Moody's, Fitch, DCR and the
Underwriters as though such opinion had been addressed to each such party.
F. Dewey Ballantine, counsel for Advanta, Morrison & Foerster, counsel for
Option One and Thacher Proffit and Wood, counsel for Long Beach, each shall have
furnished to the Underwriters their written opinion, as counsel to the related
Servicer, addressed to the Underwriters and the Depositor and dated the Closing
Date, in form and substance satisfactory to the Underwriters, to the effect
that:
1. Each Servicer is validly existing in good standing as a corporation
under the laws of its State of incorporation.
2. Each Servicer has full corporate power and authority to serve in the
capacity of servicers of the related Mortgage Loans as contemplated in the
Pooling and Servicing Agreement.
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3. The Pooling and Servicing Agreement has been duly authorized, executed
and delivered by each Servicer, and, assuming the due authorization, execution
and delivery of such agreements by the other parties thereto, constitute the
legal, valid and binding agreements of each Servicer, enforceable against them
in accordance with their terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium, receivership or other similar laws now
or hereafter in effect relating to creditors' rights generally and (y) the
qualification that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before which any
proceedings with respect thereto may be brought.
4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over each Servicer is required for the consummation by either of
them of the transactions contemplated by the Pooling and Servicing Agreement,
except such consents, approvals, authorizations, registrations and
qualifications as have been obtained.
5. The execution, delivery or performance by each Servicer of the Pooling
and Servicing Agreement and the transactions contemplated thereby do not (A)
conflict with or result in a breach of, or constitute a default under, (i) any
term or provision of the certificate of incorporation or by-laws of such
Servicer; (ii) any term or provision of any material agreement, deed of trust,
mortgage loan agreement, contract, instrument or indenture, or other agreement
to which such Servicer is a party or is bound or to which any of the property or
assets of such Servicer or any of its subsidiaries is subject; (iii) to the best
of such firm's knowledge without independent investigation any order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over such Servicer; or (iv) any law, rule or regulations applicable
to such Servicer; or (B) to the best of such firm's knowledge without
independent investigation, results in the creation or imposition of any lien,
charge or encumbrance upon the Trust Estate or upon the Certificates.
6. There are, to the best of such counsel's knowledge without independent
investigation, no actions, proceedings or investigations pending or threatened
against a Servicer before any court, administrative agency or other tribunal (a)
asserting the validity of the Pooling and Servicing Agreement or the
Certificates, (b) seeking to prevent the consummation of any of the transactions
contemplated by the Pooling and Servicing Agreement or (c) which would
materially and adversely affect the performance by the Servicers of its
obligations under, or the validity or enforceability of, the Pooling and
Servicing Agreement.
G. Counsel for the Depositor and the Seller (which may be in-house counsel)
shall have furnished to the Underwriters such counsel's written opinion,
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification (except where any such failure would
not have a material adverse effect on the Depositor's ability to perform its
obligations under this Agreement or the Pooling and Servicing Agreement, and has
all power and authority necessary to own or hold its properties and to conduct
the business in which it is engaged and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing Agreement, and to
cause the Certificates to be issued.
2. The Depositor is not in violation of its articles of incorporation or
by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained
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in any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its properties
may be bound, which default might result in any material adverse change in the
financial condition of the Depositor or which might materially and adversely
affect the properties or assets, taken as a whole, the Depositor.
3. This Agreement and the Pooling and Servicing Agreement have been duly
authorized, executed and delivered by the Depositor and the Subsequent Transfer
Agreements have been duly authorized, and when duly executed and delivered by
the Depositor and, assuming the due authorization, execution and delivery of
such agreements by the other parties thereto, such agreements constitute and in
the case of any Subsequent Transfer Agreement will constitute valid and binding
obligations, enforceable against the Depositor in accordance with their
respective terms, subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and (z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
4. The execution, delivery and performance of this Agreement, the Pooling
and Servicing Agreement and each Subsequent Transfer Agreement by the Depositor,
the consummation of the transactions contemplated hereby and thereby, and the
issuance and delivery of the Certificates (i) do not and will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party or
by which the Depositor is bound or to which any of the property or assets of the
Depositor or any of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business, operations or financial
condition of the Depositor, (ii) nor will such actions result in a violation of
the provisions of the articles of incorporation or by-laws of the Depositor,
which breach or violation would have a material adverse effect on the business,
operations or financial condition of the Depositor (or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets) and (iii)
nor will such actions result in the creation or imposition of any lien, charge
or encumbrance upon the Trust Estate or upon the Certificates, except as
otherwise contemplated by the Pooling and Servicing Agreement.
5. The direction by the Depositor to the Trustee to execute, issue,
authenticate and deliver the Certificates has been duly authorized by the
Depositor and, assuming that the Trustee has been duly authorized to do so, when
executed, authenticated and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits of the Pooling and Servicing
Agreement.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates, and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement and the Pooling and
Servicing Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the 1933 Act or State
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Certificates by the Underwriters or as have been previously
obtained.
7. There are no actions, proceedings or investigations pending with respect
to which the Depositor has received service of process before or, to the best of
such counsel's knowledge, without independent investigation, to the best of such
counsel's knowledge without independent investigation, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party or of
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which any of its properties is the subject: (a) which if determined adversely to
the Depositor would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting the invalidity
of the Pooling and Servicing Agreement or the Certificates; (c) seeking to
prevent the issuance of the Certificates or the consummation by the Depositor of
any of the transactions contemplated by the Pooling and Servicing Agreement or
this Agreement, as the case may be; or (d) which might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, the Pooling and Servicing Agreement, this
Agreement or the Certificates.
8. The Certificates have been duly and validly authorized and issued, and,
immediately prior to the sale of the Offered Certificates to the Underwriters,
such Certificates are owned by the Depositor, free and clear of all Liens.
9. AMRESCO Residential Capital Markets, Inc. (the "Seller") has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged and to enter into
and perform its obligations under the Transfer Agreements.
10. The Seller is not in violation of its articles of incorporation or
by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Seller is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Seller or which might materially and
adversely affect the properties or assets, taken as a whole, of the Seller.
11. The Transfer Agreements have been duly authorized, executed and
delivered by the Seller and, assuming the due authorization, execution and
delivery of such agreements by the parties thereto other than the Seller, such
agreements will constitute valid and binding obligations, enforceable against
the Seller in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally (y) general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
12. The execution, delivery and performance of the Transfer Agreements by
the Seller and the consummation of the transactions contemplated thereby do not
and will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Seller is a party or by which the Seller is bound or to which any of the
property or assets of the Seller or any of its subsidiaries is subject, which
breach or violation would have a material adverse effect on the business,
operations or financial condition of the Seller, nor will such actions result in
a violation of the provisions of the articles of incorporation or by-laws of the
Seller or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Seller or any of its
properties or assets, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the Seller.
13. The assignment of rights under each of the Transfer Agreements by the
Seller to the Depositor and by the Depositor to the Trust is effective to permit
the Trustee to exercise the Seller's rights thereunder.
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H. The Underwriters shall have received the favorable opinion of Emmet,
Marvin & Martin, counsel to the Trustee, dated the Closing Date, addressed to
the Underwriters and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
1. The Trustee is a banking corporation duly incorporated and validly
existing under the laws of the State of New York.
2. The Trustee has the full corporate trust power to execute, deliver and
perform its obligations under the Pooling and Servicing Agreement.
3. The execution and delivery by the Trustee of the Pooling and Servicing
Agreement and the performance by the Trustee of its obligations under the
Pooling and Servicing Agreement have been duly authorized by all necessary
corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally binding
obligation of the Trustee enforceable against the Trustee.
5. The execution and delivery by the Trustee of the Pooling and Servicing
Agreement does not (a) violate the organization certificate of the Trustee or
the By-laws of the Trustee, (b) to such counsel's knowledge, violate any
judgment, decree or order of any New York or United States federal court or
other New York or United States federal governmental authority by which the
Trustee is bound or (c) assuming the non-existence of any judgment, decree or
order of any court or other governmental authority that would be violated by
such execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or authorization of
any New York or United States federal court or other New York or United States
federal governmental authority.
6. The Certificates have been duly authenticated, executed and delivered by
the Trustee.
7. If the Trustee were acting in the stead of either Servicer under the
Pooling and Servicing Agreement as of the date of such opinion, the Trustee
would have the full corporate trust power to perform the obligations of either
Servicer under the Pooling and Servicing Agreement.
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting the
Trustee before or by any court, arbitrator, administrative agency or other
governmental authority which, if decided adversely to the Trustee, would
materially and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of counsel for the Underwriters, with
respect to the issue and sale of the Offered Certificates, this Agreement, the
Prospectus and such other related matters as the Underwriters may reasonably
require.
J. RESERVED.
K. The Depositor shall have furnished to the Underwriters a certificate,
dated the Closing Date and signed by the Chairman of the Board, the President or
a Vice President of the Depositor to the extent that the signer of such
certificate has carefully examined the Registration Statement (excluding any
documents incorporated therein by reference), the Pooling and Servicing
Agreement and this Agreement and that, to the best of his or her knowledge based
upon reasonable investigation:
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1. The representations and warranties of the Depositor in this Agreement,
the Pooling and Servicing Agreement and all related agreements are true and
correct as of the Closing Date; and the Depositor has complied with all
agreements and satisfied all the conditions on its part which are to have been
complied with on or prior to the Closing Date.
2. There has been no amendment or other document filed affecting the
certificate of incorporation or bylaws of the Depositor since November 9, 1995
and no such amendment has been authorized. No event has occurred since June 9,
1997 which has affected the good standing of the Depositor under the laws of the
State of Delaware.
3. There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Depositor from
March 31, 1997.
4. There are no actions, suits or proceedings pending with respect to which
it has received service of process or, to the best of such officer's knowledge,
threatened against or affecting the Depositor which if adversely determined,
individually or in the aggregate, would be reasonably likely to adversely affect
the Depositor's obligations under the Pooling and Servicing Agreement or this
Agreement in any material way; and no merger, liquidation, dissolution or
bankruptcy of the Depositor is pending or contemplated.
L. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Representative shall reasonably request.
M. RESERVED.
N. The Class A Certificates shall have been rated "Aaa" by Moody's and
"AAA" by Fitch and DCR. The Class M-1, Class M-2 and Class B Certificates shall
have been rated "Aa2," "A3" and "Baa3," respectively, by 's and "AA," "A" and
"BBB," respectively, by Fitch and DCR.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of the
following shall have occurred: (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the over-the counter market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such exchange or
by any
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other regulatory body or governmental authority having jurisdiction; (ii) a
banking moratorium shall have been declared by Federal or state authorities;
(iii) the United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States; or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States shall be
such) as to make it in each of the instances set forth in clauses (i), (ii),
(iii) and (iv) herein, in the reasonable judgment of the Representative,
impractical or inadvisable to proceed with the public offering or delivery of
the Certificates on the terms and in the manner contemplated in the Prospectus.
R. The Representative shall have received a letter from Deloitte & Touche,
LLP, dated on or before the Closing Date, in form and substance satisfactory to
the Representative and special counsel for the Underwriters, addressed to each
of the Underwriters to the effect that they have performed certain specified
procedures requested by the Representative with respect to the information set
forth in the Prospectus and certain matters relating to the Depositor.
S. The Representative and special counsel for the Underwriters shall have
received copies of any opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to each of the Underwriters or
accompanied by reliance letters to the Representative or shall state that each
of the Underwriters may rely upon them.
T. RESERVED.
U. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1996, of the Depositor and
its subsidiaries, that is in the Representative's judgment material and adverse
and that makes it in the Representative's judgment impracticable to market the
Offered Certificates on the terms and in the manner contemplated in the
Prospectus.
V. Counsel for the Originators shall have furnished to the Underwriters
their written opinion addressed to the Underwriters and the Depositor and dated
the Closing Date, in form and substance satisfactory to the Underwriters, to the
effect that the respective Purchase Agreement has been duly authorized, executed
and delivered by such Originator, and assuming the due authorization, execution
and deliver of such agreements by the other parties thereto, constitutes the
legal, valid and binding agreement of such Originator, enforceable against it in
accordance with its terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium, receivership or other similar laws now
or hereafter in effect relating to creditors' rights generally and (y) the
qualification that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before which any
proceedings with respect thereto may be brought.
If any condition specified in this Section VI shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Depositor at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
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SECTION VII. Payment of Expenses. If the transaction closes, or if the
transaction fails to close other than as a result of a failure of the
Underwriters to perform hereunder, the Depositor, agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto (including the Prospectus);
(c) the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the fees and expenses of qualifying the Certificates under the securities
laws of the several jurisdictions as provided in Section V(G) hereof and of
preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Representative); (f) any fees charged by securities rating services for rating
the Offered Certificates; (g) the cost of the accountant's letter relating to
the Prospectus except for expenses relating to the accountant's audit of the
loan files; and (h) all other costs and expenses incident to the performance of
the obligations of the Depositor (including costs and expenses of its counsel);
provided that, except as provided in this Section VII, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Offered Certificates which they may sell and
the expenses of advertising any offering of the Offered Certificates made by the
Underwriters, and the Underwriters shall pay the cost of any accountant's
comfort letters which such Underwriters choose to request relating to any
Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section VI or Section XI, whether or not the transactions
contemplated hereunder are consummated, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses.
SECTION VIII. Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 12 of the Exchange Act from and against any and all loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Offered Certificates), to which such
Underwriter or any such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereof or supplement thereto, (ii) the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state in the Prospectus a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and shall
reimburse such Underwriter and each such controlling person promptly upon demand
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus, or any
amendment thereof or supplement thereto, or the Registration Statement, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein (except to the extent that any
untrue statement or alleged untrue statement or omission or alleged
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omission is a result of Seller Provided Information which is not accurate and
complete in all material respects). The foregoing indemnity agreement is in
addition to any liability which the Depositor may otherwise have to any
Underwriter or any controlling person of any of such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act or Section 12 of the
Exchange Act against any and all loss, claim, damage or liability, or any action
in respect thereof, to which the Depositor or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or supplement
thereto, or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements in the
Prospectus, when considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Depositor or any director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred, provided, however, that no Underwriter shall be liable to
the extent that such untrue statements or alleged untrue statement or omission
or alleged omission is a result of Seller Provided Information that is not
accurate and complete in all material respects. The foregoing indemnity
agreement is in addition to any liability which any Underwriter may otherwise
have to the Depositor or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section VIII
of notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section VIII, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section VIII except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section VIII.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section VIII for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such
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indemnified party to employ separate counsel; or (iii) the indemnifying party
has failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, the indemnifying party shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to one local
counsel per jurisdiction) at any time for all such indemnified parties, which
firm shall be designated in writing by the related Underwriter, if the
indemnified parties under this Section VIII consist of one or more Underwriters
or any of its or their controlling persons, or the Depositor, if the indemnified
parties under this Section VIII consist of the Depositor or any of the
Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section VIII(A) and (B), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
D. Computational Materials. Not later than 10:30 a.m. New York City time,
on the business day before the date on which the Current Report relating to the
Certificates is required to be filed by the Depositor with the Commission
pursuant to Section V.M hereof, each Underwriter shall deliver to the Depositor
five complete copies of all materials, if any, provided by such Underwriter to
prospective investors in such Certificates which constitute "Computational
Materials" within the meaning of the no-action letter dated May 20, 1994, issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation, the no-action letter dated May 27, 1994, issued by
the Division of Corporation Finance of the Commission to the Public Securities
Association and the no-action letter of February 17, 1995 issued by the
Commission to the Public Securities Association (collectively, the "Kidder/PSA
Letters") and the filing of which is a condition of the relief granted in such
letters (such materials being the "Computational Materials"). Each delivery of
Computational Materials to the Depositor pursuant to this paragraph (a) shall be
effected by delivering four copies of such material to counsel for the Depositor
on behalf of the Depositor and one copy of such materials to the Depositor.
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E. Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Depositor, each of the Depositor's officers and directors and each
person who controls the Depositor within the meaning of Section 15 of the
Securities Act and Section 12 of the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Computational
Materials provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus, and in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred,
provided, however, that no Underwriter shall be liable to the extent that such
untrue statements or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information that is not accurate and complete in all
material respects. The obligations of an Underwriter under this Section VIII (E)
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally applicable to
this Section VIII (E).
F. If the indemnification provided for in this Section VIII shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section VIII (A), (B) or (E) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII(C),
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be deemed
to be in such proportion as the total net proceeds from the offering (before
deducting expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied or prepared by the Depositor or by such Underwriter, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII(F) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred
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to above in this Section VIII(F) shall be deemed to include, for purposes of
this Section VIII(F), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
For purposes of this Section VIII, in no case shall any Underwriter (except
with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered Certificates) be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates over (y)
the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Depositor and each Underwriter expressly waive, and agree not to
assert, any defense to their respective indemnification and contribution
obligations under this Section VIII which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reason of public policy.
"Seller-Provided Information" means any computer tape (or other information)
furnished to any Underwriter by the Seller concerning the assets comprising the
Trust.
G. Each Underwriter severally confirms that the information regarding such
Underwriter set forth in the last paragraph on the front cover page of the
Prospectus Supplement and the Computational Materials furnished by such
Underwriter are correct, and, the Depositor acknowledges that such information
constitutes the only information furnished in writing to the Depositor by or on
behalf of any Underwriter specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION IX. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
contained in agreements delivered pursuant hereto or certificates of officers of
the Depositor submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriters or controlling persons thereof, or by or on behalf of the Depositor
and shall survive delivery of any Offered Certificates to the Underwriters.
SECTION X. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 48 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth (as used in this Agreement, the term
"Underwriter" includes any underwriter substituted for an Underwriter under this
Section X). If, however, the Underwriters have not completed such arrangements
within such 48-hour period, then:
(i) if the aggregate original principal amount of Defaulted Certificates
does not exceed 10% of the aggregate original principal amount of the Offered
Certificates to be purchased pursuant to this Agreement, the non-defaulting
Underwriters named in this Agreement shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all such non-defaulting
Underwriters, or
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(ii) if the aggregate original principal amount of Defaulted Certificates
exceeds 10% of the aggregate original principal amount of the Offered
Certificates to be purchased pursuant to this Agreement, this Agreement shall
terminate, without any liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
X, each of the Underwriters and the Depositor shall have the right to postpone
the Closing Date for a period not exceeding seven Business Days in order that
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor, at any time at or prior to
the Closing Date if any of the events or conditions described in Section VI(Q)
of this Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity agreement set forth in
Section VIII, and the provisions of Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to the Representative at its address set forth above;
B. if to the Depositor, shall be delivered or sent by overnight mail or
facsimile transmission to 700 North Pearl Street, Suite 2400, LB #342, Dallas,
TX 75201-7424, Attn.: General Counsel, Fax No. 214-953-7757.
SECTION XIII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION XIV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them. The
provisions of Sections V, VII and VIII hereof shall survive the termination or
cancellation of this Agreement.
SECTION XV. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
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SECTION XVI. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United States
District Court for the Southern District of New York and any court in the State
of New York located in the City and County of New York, and appellate court from
any thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION XVII. Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
SECTION XIX. Amendments and Waivers. This Agreement may be amended,
modified, altered or terminated, and any of its provisions waived, only in a
writing signed on behalf of the Depositor and the Representative.
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If the foregoing correctly sets forth the agreement between the Depositor
and the Underwriters, please indicate your acceptance in the space provided for
the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
/s/ Janice M. Cott
By:--------------------------------------
Name: Janice M. Cott
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
/s/ Sean Low
By:------------------------------
Name: Sean Low
Title: Vice President
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Class of Certificates Initial Principal Amount of Purchase
Name of Purchased by the Certificates Purchased by Price
Underwriter Underwriters Underwriters (% of Par)
- ----------- ------------ ------------ ----------
<S> <C> <C> <C>
Prudential Securities
Incorporated
A-1 $29,270,850 99.96875%
A-2 $26,700,000 100.00000%
A-3 $40,853,616 99.98438%
A-4 $16,737,384 99.98438%
A-5 $12,776,006 99.96875%
A-6 $8,938,603 99.98438%
A-7 $22,174,601 99.95313%
A-8 $17,340,000 100.00000%
A-9 $200,854,200 100.00000%
M-1F $7,489,859 99.96875%
M-1A $15,262,800 100.00000%
M-2F $10,987,283 99.98438%
M-2A $14,652,000 100.00000%
B-1F $6,491,771 99.96875%
B-1A $13,431,000 100.00000%
-----------
TOTAL $
Credit Suisse First Boston
A-1 $9,756,950 99.96875%
A-2 $8,900,000 100.00000%
A-3 $13,617,872 99.98438%
A-4 $5,579,128 99.98438%
A-5 $4,258,669 99.96875%
A-6 $2,979,534 99.98438%
A-7 $7,391,534 99.95313%
A-8 $5,780,000 100.00000%
A-9 $66,951,400 100.00000%
M-1F $2,496,620 99.96875%
M-1A $5,087,600 100.00000%
M-2F $3,662,428 99.98438%
M-2A 4,884,000 100.00000%
B-1F $2,163,924 99.96875%
B-1A $4,477,000 100.00000%
----------
TOTAL: $
Morgan Stanley & Co.
Incorporated
A-1 $$9,756,950 99.96875%
A-2 $8,900,000 100.00000%
A-3 $13,617,872 99.98438%
A-4 $5,579,128 99.98438%
A-5 $4,258,669 99.96875%
A-6 $2,979,534 99.98438%
A-7 $7,391,534 99.95313%
A-8 $5,780,000 100.00000%
A-9 $66,951,400 100.00000%
M-1F $2,496,620 99.96875%
M-1A $5,087,600 100.00000%
M-2F $3,662,428 99.98438%
M-2A $4,884,000 100.00000%
B-1F $2,163,924 99.96875%
B-1A $4,477,000 100.00000%
----------
TOTAL $739,933,287.50
TOTAL: $
</TABLE>
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller,
ADVANTA MORTGAGE CORP., USA,
AMERIQUEST MORTGAGE COMPANY and
OPTION ONE MORTGAGE CORPORATION,
as Servicers
and
THE BANK OF NEW YORK,
as Trustee
Dated as of June 1, 1997
<PAGE>
CONTENTS
Page
CONVEYANCE................................................................... 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION......................................... 2
Section 1.01 Definitions............................................... 2
Section 1.02 Use of Words and Phrases ................................. 39
Section 1.03 Captions; Table of Contents............................... 40
Section 1.04 Opinions.................................................. 40
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST................................ 41
Section 2.01 Establishment of the Trust................................ 41
Section 2.02 Office.................................................... 41
Section 2.03 Purposes and Powers....................................... 41
Section 2.04 Appointment of the Trustee; Declaration of Trust.......... 41
Section 2.05 Expenses of the Trust..................................... 41
Section 2.06 Ownership of the Trust.................................... 41
Section 2.07 Situs of the Trust........................................ 42
Section 2.08 Miscellaneous REMIC Provisions............................ 42
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS................................ 44
Section 3.01 Representations and Warranties of the Depositor........... 44
Section 3.02 Representations and Warranties of the Servicers........... 46
Section 3.03 Representations and Warranties of the Seller.............. 47
Section 3.04 Covenants of Seller to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations....... 50
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage
Loans and Qualified Replacement Mortgages................. 52
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.................. 55
Section 3.07 Conveyance of the Subsequent Mortgage Loans............... 56
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.......................................... 59
Section 4.01 Issuance of Certificates.................................. 59
Section 4.02 Sale of Certificates...................................... 59
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS..................................... 60
Section 5.01 Terms..................................................... 60
Section 5.02 Forms..................................................... 60
Section 5.03 Execution, Authentication and Delivery.................... 60
<PAGE>
Section 5.04 Registration and Transfer of Certificates................. 61
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates......... 63
Section 5.06 Persons Deemed Owners..................................... 63
Section 5.07 Cancellation.............................................. 63
Section 5.08 Limitation on Transfer of Ownership Rights................ 64
Section 5.09 Assignment of Rights...................................... 65
ARTICLE VI
COVENANTS.................................................................. 66
Section 6.01 Distributions............................................. 66
Section 6.02 Money for Distributions to be Held in Trust;
Withholding............................................... 66
Section 6.03 Protection of Trust Estate................................ 67
Section 6.04 Performance of Obligations................................ 67
Section 6.05 Negative Covenants........................................ 68
Section 6.06 No Other Powers........................................... 68
Section 6.07 Limitation of Suits....................................... 68
Section 6.08 Unconditional Rights of Owners to Receive
Distributions............................................. 69
Section 6.09 Rights and Remedies Cumulative............................ 69
Section 6.10 Delay or Omission Not Waiver.............................. 69
Section 6.11 Control by Owners......................................... 69
Section 6.12 Access to Owners of Certificates' Names and Addresses..... 70
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................................... 71
Section 7.01 Collection of Money....................................... 71
Section 7.02 Establishment of Accounts................................. 71
Section 7.03 Flow of Funds............................................. 71
Section 7.04 Pre-Funding Account and Capitalized Interest Account...... 78
Section 7.05 Investment of Accounts.................................... 79
Section 7.06 Reserved.................................................. 80
Section 7.07 Eligible Investments...................................... 80
Section 7.08 Accounting and Directions by Trustee...................... 82
Section 7.09 Reports by Trustee........................................ 82
Section 7.10 Additional Reports by Trustee ............................ 83
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS.......................................................... 86
Section 8.01 Servicers and Subservicers................................ 86
Section 8.02 Collection of Certain Mortgage Loan Payments.............. 87
Section 8.03 Subservicing Agreements Between Servicer
and Subservicer........................................... 88
Section 8.04 Successor Subservicer..................................... 88
Section 8.05 Liability of Servicer..................................... 88
Section 8.06 No Contractual Relationship Between Subservicer
and Trustee or the Owners................................. 88
Section 8.07 Assumption or Termination of Subservicing
Agreement by Trustee...................................... 88
Section 8.08 Principal and Interest Accounts; Escrow Accounts.......... 89
Section 8.09 Delinquency Advances and Servicing Advances............... 91
Section 8.10 Compensating Interest; Purchase of Mortgage Loans......... 92
Section 8.11 Maintenance of Insurance.................................. 92
ii
<PAGE>
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements................................... 93
Section 8.13 Realization Upon Defaulted Mortgage Loans................. 94
Section 8.14 Trustee and Custodian to Cooperate; Release of Files...... 95
Section 8.15 Servicing Compensation.................................... 96
Section 8.16 Annual Statement as to Compliance......................... 97
Section 8.17 Annual Independent Certified Public
Accountants' Reports...................................... 97
Section 8.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans ............................. 97
Section 8.19 Assignment of Agreement................................... 97
Section 8.20 Events of Servicing Termination........................... 97
Section 8.21 Resignation of a Servicer and Appointment
of Successor.............................................. 99
Section 8.22 Waiver of Past Events of Servicing Termination............102
Section 8.23 Assumption or Termination of Subservicing
Agreement By the Trustee..................................102
Section 8.24 Powers and Duties of the Trustee as
Successor Servicer........................................102
Section 8.25 Liability of the Servicers................................103
Section 8.26 Inspections by Trustee and Seller; Errors
and Omissions Insurance...................................103
Section 8.27 Merger, Conversion, Consolidation or Succession
to Business of Servicer...................................104
Section 8.28 Notices of Material Events................................104
Section 8.29 Monthly Servicing Report and Servicing Certificate........104
Section 8.30 Indemnification by the Servicer...........................106
Section 8.31 Reserved..................................................106
Section 8.32 Servicing Standard........................................107
Section 8.33 No Solicitation...........................................107
ARTICLE IX
TERMINATION OF TRUST.......................................................108
Section 9.01 Termination of Trust......................................108
Section 9.02 Auction Call; Servicer Termination........................108
Section 9.03 Termination Upon Loss of REMIC Status.....................110
Section 9.04 Disposition of Proceeds...................................111
ARTICLE X
THE TRUSTEE................................................................112
Section 10.01 Certain Duties and Responsibilities.......................112
Section 10.02 Removal of Trustee for Cause..............................113
Section 10.03 Certain Rights of the Trustee.............................114
Section 10.04 Not Responsible for Recitals or Issuance
of Certificates...........................................116
Section 10.05 May Hold Certificates.....................................116
Section 10.06 Money Held in Trust.......................................116
Section 10.07 Compensation and Reimbursement; No Lien for Fees..........116
Section 10.08 Corporate Trustee Required; Eligibility...................116
Section 10.09 Resignation and Removal; Appointment of Successor.........117
Section 10.10 Acceptance of Appointment by Successor Trustee............118
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee...................................118
Section 10.12 Reporting; Withholding....................................119
Section 10.13 Liability of the Trustee..................................119
iii
<PAGE>
Section 10.14 Appointment of Co-Trustee or Separate Trustee.............120
Section 10.15 Appointment of Custodians.................................121
ARTICLE XI
MISCELLANEOUS..............................................................122
Section 11.01 Compliance Certificates and Opinions......................122
Section 11.02 Form of Documents Delivered to the Trustee................122
Section 11.03 Acts of Owners............................................123
Section 11.04 Notices, etc. to Trustee..................................123
Section 11.05 Notices and Reports to Owners; Waiver of Notices..........124
Section 11.06 Rules by Trustee..........................................124
Section 11.07 Successors and Assigns....................................124
Section 11.08 Severability..............................................124
Section 11.09 Benefits of Agreement.....................................124
Section 11.10 Legal Holidays............................................125
Section 11.11 Governing Law; Submission to Jurisdiction.................125
Section 11.12 Counterparts..............................................125
Section 11.13 Usury.....................................................126
Section 11.14 Amendment.................................................126
Section 11.15 Paying Agent; Appointment and Acceptance of Duties........127
Section 11.16 REMIC Status..............................................127
Section 11.17 Additional Limitation on Action and
Imposition of Tax.........................................129
Section 11.18 Appointment of Tax Matters Person.........................129
Section 11.19 Attorneys' Fees...........................................129
Section 11.20 Notices...................................................129
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II SCHEDULE OF ADVANTA LOANS
SCHEDULE III LIST OF TRANSFER AGREEMENTS
SCHEDULE IV LIST OF ORIGINATORS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT A-9 FORM OF CLASS A-9 CERTIFICATE
EXHIBIT B-1 FORM OF CLASS M-1F CERTIFICATE
EXHIBIT B-2 FORM OF CLASS M-1A CERTIFICATE
EXHIBIT B-3 FORM OF CLASS M-2F CERTIFICATE
EXHIBIT B-4 FORM OF CLASS M-2A CERTIFICATE
EXHIBIT B-5 FORM OF CLASS B-1F CERTIFICATE
EXHIBIT B-6 FORM OF CLASS B-1A CERTIFICATE
EXHIBIT B-7 FORM OF CLASS C CERTIFICATE
iv
<PAGE>
EXHIBIT B-8 FORM OF CLASS R CERTIFICATE
EXHIBIT B-9 FORM OF CLASS S CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L FORM OF CUSTODIAL AGREEMENT
EXHIBIT M AUCTION SALE BID PROCEDURES
v
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL SECURITIES
CORPORATION MORTGAGE LOAN TRUST 1997-2, dated as of June 1, 1997, by and among
AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware corporation, in its
capacity as Depositor (the "Depositor"), AMRESCO RESIDENTIAL CAPITAL MARKETS,
INC., a Delaware corporation, in its capacity as the Seller (the "Seller"),
ADVANTA MORTGAGE CORP. USA, AMERIQUEST MORTGAGE COMPANY and OPTION ONE MORTGAGE
CORPORATION as the Servicers (the "Servicers") and THE BANK OF NEW YORK, a New
York banking corporation, in its capacity as the Trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a portion of the
Mortgage Loans, respectively, which constitute the principal assets of the Trust
Estate;
WHEREAS, all things necessary to make the Certificates, when executed by
the Depositor and authenticated by the Trustee valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, The Bank of New York is willing to serve in the capacity of the
Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Seller, each Servicer and the Trustee
hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on the
Certificates in accordance with their terms, all of the sums distributable under
this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns, and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to any
and all benefits accruing to them from (a) the Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date or
Subsequent Cut-Off Date in the case of Subsequent Mortgage Loans) listed in
Schedules I-A and I-B to this Agreement (or Schedules I-A and I-B to any
Subsequent Transfer Agreement) which the Seller is causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Custodian on
behalf of the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04, 3.05 and 3.06), together with the related Mortgage Loan documents
and the Seller's and the Depositor's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicers); (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein; and (d)
certain rights of the Seller under the Transfer Agreements that are being
assigned to the Trust hereunder ((a)-(d) above shall be collectively referred to
herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or 8.08
hereof.
"Accrual Period": With respect to the Group I Certificates and any Payment
Date, the calendar month immediately preceding the month in which the Payment
Date occurs; a "calendar month" shall be deemed to be 30 days. With respect to
the Group II Certificates and any Payment Date, the period commencing on the
preceding Payment Date (or on the Closing Date in the case of the first Payment
Date) and ending on the day immediately preceding the current Payment Date. All
calculations of interest on the Group I Certificates will be made on the basis
of a 360-day year assumed to consist of twelve 30 day months and calculations of
interest on the Group II Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust for inclusion in Group I or Group II pursuant to Section 3.07
hereof, notice given in accordance with Section 3.07(b)(i) regarding the
Depositor's designation of Subsequent Mortgage Loans to be sold to the Trust for
inclusion in Group I or Group II and the aggregate Loan Balance of such
Subsequent Mortgage Loans with respect to each such Group.
"Advanta": Advanta Mortgage Corp. USA, a Delaware corporation.
"Advanta Loans": The Mortgage Loans serviced by Advanta.
"Advisor": As defined in Section 9.02(a) hereof.
"Aggregate Certificate Principal Balance": As of any date of determination
thereof, the sum of the then outstanding Certificate Principal Balance of the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates.
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Ameriquest": Ameriquest Mortgage Company, a Delaware corporation.
"Ameriquest Loans": The Mortgage Loans serviced by Ameriquest.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof and as to the related Mortgage Loan Servicing Group, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the Realized Losses that occurred in such Mortgage Loan Servicing Group during
the twelve immediately preceding Remittance Periods and the denominator of which
is the Loan Balances of the
2
<PAGE>
Mortgage Loans in the related Mortgage Loan Servicing Group as of the last day
of each of the twelve Remittance Periods preceding such date.
"Applied Realized Loss Amount": The Group I Applied Realized Loss Amount or
the Group II Applied Realized Loss Amount, as applicable.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, if such
sales price is less than such appraised value.
"ARMC": AMRESCO Residential Mortgage Corporation, a Delaware corporation.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"Balloon Loan": A Mortgage Loan with respect to which the principal balance
by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to a
Balloon Loan.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the States of California and
Pennsylvania, The City of New York, or in the city in which the Corporate Trust
Office is located, are authorized or obligated by law or executive order to be
closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(b) hereof and maintained by the
Trustee. Funds on deposit in the Capitalized Interest Account shall be invested
in a trust deposit with the Trustee from the day following the Startup Day until
the end of each Funding Period.
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B Certificates, the Class C Certificates, the Class S
Certificates or the Class R Certificates, each representing the interests and
the rights described in this Agreement.
"Certificate Account": The certificate account established in accordance
with Section 7.02(a) hereof and maintained in the corporate trust department of
the Trustee; provided that the funds in such account shall not be commingled
with other funds held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of the
following Classes of Certificates, the Certificate Principal Balances thereof,
as follows:
Class A-1 Certificates - $48,800,000
Class A-2 Certificates - $44,500,000
Class A-3 Certificates - $68,100,000
Class A-4 Certificates - $27,900,000
Class A-5 Certificates - $21,300,000
Class A-6 Certificates - $14,900,000
3
<PAGE>
Class A-7 Certificates - $36,975,000
Class A-8 Certificates - $28,900,000
Class A-9 Certificates - $334,757,000
Class M-1F Certificates - $12,487,000
Class M-1A Certificates - $25,438,000
Class M-2F Certificates - $18,315,000
Class M-2A Certificates - $24,420,000
Class B-1F Certificates - $10,823,000
Class B-1A Certificates - $22,383,000
The Class S Certificates, the Class C Certificates and the Class R
Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, any Class of the Mezzanine
Certificates, either class of the Class B Certificates, the Class S
Certificates, the Class C Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates and Class A-9 Certificates.
"Class A Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A
Certificates less any amounts actually distributed on such Class A Certificates
with respect to the Class A Principal Distribution Amount pursuant to Section
7.03(f) and 7.03(g) hereof with respect to principal thereon on all prior
Payment Dates plus any Preference Amount previously distributed with respect to
principal.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount, the Class A-8
Distribution Amount and the Class A-9 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-1 Certificate, substantially in the form annexed hereto as
Exhibit A-1, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-1
Certificates less any amounts actually distributed to the Owners of the Class
A-1 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-1
Certificates with respect to principal.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-1 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-1
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-1
Certificates as it relates to interest previously paid on the Class A-1
Certificates.
4
<PAGE>
"Class A-1 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(f) hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": On any Payment Date, the lesser of (x) 6.80%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-2 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-2 Certificate, substantially in the form annexed hereto as
Exhibit A-2, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-2
Certificates less any amounts actually distributed to the Owners of the Class
A-2 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-2
Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-2 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-2
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-2
Certificates as it relates to interest previously paid on the Class A-2
Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of Class A-2 Certificates pursuant to Section 7.03(f) hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": On any Payment Date, the lesser of (x) 6.70%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-3 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-3 Certificate, substantially in the form annexed hereto as
Exhibit A-3, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
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"Class A-3 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-3
Certificates less any amounts actually distributed to the Owners of the Class
A-3 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-3
Certificates with respect to principal.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-3 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-3
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-3
Certificates as it relates to interest previously paid on the Class A-3
Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-3 Certificates pursuant to Section 7.03(f) hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.795% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-4 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-4 Certificate, substantially in the form annexed hereto as
Exhibit A-4, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-4
Certificates less any amounts actually distributed to the Owners of the Class
A-4 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-4
Certificates with respect to principal.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-4 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-4
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-4
Certificates as it relates to interest previously paid on the Class A-4
Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-4 Certificates pursuant to Section 7.03(f) hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding
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Payment Date and (B) any unpaid Class A-4 Interest Carry Forward Amount from all
previous Payment Dates exceeds (ii) the amount of the actual distribution with
respect to interest made to the Owners of the Class A-4 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-4 Pass-Through Rate.
"Class A-4 Pass-Through Rate": On any Payment Date, the lesser of (x) 6.93%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-5 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-5 Certificate, substantially in the form annexed hereto as
Exhibit A-5, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-5
Certificates less any amounts actually distributed to the Owners of the Class
A-5 Certificates pursuant to Section 7.03(f) hereof thereon on all prior Payment
Dates plus any Preference Amount previously distributed to the Owners of Class
A-5 Certificates with respect to principal.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-5 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-5
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-5
Certificates as it relates to interest previously paid on the Class A-5
Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-5 Certificates pursuant to Section 7.03(f) hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date, the lesser of (x) 7.10%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-6 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-6 Certificate, substantially in the form annexed hereto as
Exhibit A-6, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-6
Certificates less any amounts actually distributed to the Owners of the Class
A-6 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-6
Certificates with respect to principal.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
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"Class A-6 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-6 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-6
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-6
Certificates as it relates to interest previously paid on the Class A-6
Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-6 Current Interest, (y) the Class A-6 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(f) hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Pass-Through Rate": On any Payment Date, the lesser of (x) 7.21%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-7 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-7 Certificate, substantially in the form annexed hereto as
Exhibit A-7, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-7 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-7
Certificates less any amounts actually distributed to the Owners of the Class
A-7 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-7
Certificates with respect to principal.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-7 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-7
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-7
Certificates as it relates to interest previously paid on the Class A-7
Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-7 Certificates pursuant to Section 7.03(f) hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Pass-Through Rate": On any Payment Date, the lesser of (x) 7.57%
per annum and (y) the Group I Net Weighted Average Coupon Rate.
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"Class A-8 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-8 Certificate, substantially in the form annexed hereto as
Exhibit A-8, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-8 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-8
Certificates less any amounts actually distributed to the Owners of the Class
A-8 Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-8
Certificates with respect to principal.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-8 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-8
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-8
Certificates as it relates to interest previously paid on the Class A-8
Certificates.
"Class A-8 Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class A-8 Current Interest, (x) the Class A-8 Interest Carry Forward
Amount, (y) the Class A-8 Lockout Distribution Amount payable to the Owners of
the Class A-8 Certificates pursuant to Section 7.03(f) and (z) the Group I Class
A Principal Distribution Amount payable to the Owners of the Class A-8
Certificates pursuant to Section 7.03(f) hereof.
"Class A-8 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"Class A-8 Lockout Distribution Amount": For any Payment Date, the product
of (i) the applicable Class A-8 Lockout Percentage for such Payment Date and
(ii) the Class A-8 Lockout Pro Rata Distribution Amount for such Payment Date.
"Class A-8 Lockout Percentage": For each Payment Date, the percentage set
forth below:
Class A-8
---------
Payment Dates Lockout Percentage
------------- -------------------
July 1997 - June 2000 0%
July 2000 - June 2002 45%
July 2002 - June 2003 80%
July 2003 - June 2004 100%
July 2004 and thereafter 300%
"Class A-8 Lockout Pro Rata Distribution Amount": For any Payment Date, an
amount equal to the product of (x) a fraction, the numerator of which is the
Class A-8 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Class A Certificates relating to Group I immediately prior to such Payment
Date and (y) the Group I Class A Principal Distribution Amount for such Payment
Date.
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"Class A-8 Pass-Through Rate": On any Payment Date, the lesser of (x)
7.175% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-9 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-9 Certificate, substantially in the form annexed hereto as
Exhibit A-9, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A-9 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-9
Certificates less any amounts actually distributed to the Owners of the Class
A-9 Certificate pursuant to Section 7.03(g) hereof on all prior Payment Dates
plus any Preference Amount previously distributed to the Owners of the Class A-9
Certificates with respect to principal.
"Class A-9 Certificate Termination Date": The Payment Date on which the
Class A-9 Certificate Principal Balance is reduced to zero.
"Class A-9 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-9 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-9
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-9
Certificates as it relates to interest previously paid on the Class A-9
Certificates.
"Class A-9 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-9 Current Interest, (y) the Class A-9 Interest Carry Forward
Amount and (z) the Group II Class A Principal Distribution Amount payable to the
Owners of the Class A-9 Certificates pursuant to Section 7.03(g) hereof.
"Class A-9 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-9 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-9 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-9 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-9
Pass-Through Rate.
"Class A-9 Pass-Through Rate": With respect to the Payment Date in July
1997, 5.8975% per annum. Thereafter, on any Payment Date on or prior to the Step
Up Date, the lesser of (x) One-Month LIBOR plus 0.21% per annum and (y) the
Group II Available Funds Cap Rate for such Payment Date and on any Payment Date
after the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.42% per annum
and (y) the Group II Available Funds Cap Rate.
"Class B Certificates": Any one of the Class B-1F Certificates or Class
B-1A Certificates.
"Class B-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group II Applied Realized
Loss Amount as of such Payment Date.
"Class B-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class B- 1A Certificate, substantially in the form annexed
hereto as Exhibit B-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
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"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1A
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1A Certificates with
respect to principal.
"Class B-1A Certificate Termination Date": The Payment Date on which the
Class B-1A Certificate Principal Balance is reduced to zero.
"Class B-1A Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class B-1A Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class B-1A
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
B-1A Certificates as it relates to interest previously paid on the Class B-1A
Certificates.
"Class B-1A Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class B-1A Current Interest, (x) the Class B-1A Principal
Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward Amount,
if any, and (z) the Class B-1A Realized Loss Amortization Amount, if any.
"Class B-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1A
Pass-Through Rate.
"Class B-1A Pass-Through Rate": With respect to the Payment Date in July
1997, 6.6575% per annum. Thereafter, on any Payment Date on or prior to the Step
Up Date, the lesser of (x) One-Month LIBOR plus 0.97% per annum and (y) the
Group II Available Funds Cap Rate for such Payment Date and on any Payment Date
after the Step Up Date, the lesser of (x) One-Month LIBOR plus 1.455% per annum
and (y) the Group II Available Funds Cap Rate.
"Class B-1A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group II Certificates (after taking into account the payment of the Group II
Class A Principal Distribution Amount, the Class M-1A Principal Distribution
Amount and the Class M-2A Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) 92.50% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $3,052,500.
"Class B-1A Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount relating to Class B-1A as of such
Payment Date and (y) the excess of (i) the Group II Monthly Excess Cashflow
Amount over (ii) the sum of the Group II Extra Principal Distribution Amount,
the Class M-1A Realized Loss Amortization Amount, the Class M-2A Realized Loss
Amortization Amount, the Class M-1A Interest Carry Forward Amount, the Class
M-2A Interest Carry Forward Amount and the Class B-1A Interest Carry Forward
Amount in each case for such Payment Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal
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Distribution Amount on such Payment Date, but prior to the application of the
Class B-1F Applied Realized Loss Amount, if any, on such Payment Date) and (y)
the Group I Applied Realized Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class B- 1F Certificate, substantially in the form annexed
hereto as Exhibit B-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class B-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1F Certificates with
respect to principal.
"Class B-1F Certificate Termination Date": The Payment Date on which the
Class B-1F Certificate Principal Balance is reduced to zero.
"Class B-1F Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class B-1F Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class B-1F
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
B-1F Certificates as it relates to interest previously paid on the Class B-1F
Certificates.
"Class B-1F Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class B-1F Current Interest, (x) the Class B-1F Principal
Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward Amount,
if any, and (z) the Class B-1F Realized Loss Amortization Amount, if any.
"Class B-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1F
Pass-Through Rate.
"Class B-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.975% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-1F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group I Certificates (after taking into account the payment of the Group I Class
A Principal Distribution Amount, the Class M-1F Principal Distribution Amount
and the Class M- 2F Principal Distribution Amount on such Payment Date) over (y)
the lesser of (A) the product of (i) 94.50% and (ii) the outstanding aggregate
Loan Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period minus
$1,665,000.
"Class B-1F Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount as of relating to Class B-1F such
Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount, the
Class M-1F Realized Loss Amortization Amount, the Class M-2F Realized Loss
Amortization
12
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Amount, the Class M-1F Interest Carry Forward Amount, the Class M-2F Interest
Carry Forward Amount and the Class B-1F Interest Carry Forward Amount in each
case for such Payment Date.
"Class C Carry Forward Amount": With respect to any Payment Date the sum of
the amount, if any, by which (x) the Class C Distribution Amount as of the
immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to Owners of the Class C Certificates on such immediately
preceding Payment Date.
"Class C Certificate": Any one of the Certificates designated on the face
thereof as a Class C Certificate, substantially in the form annexed hereto as
Exhibit B-7, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class C Distribution Amount": With respect to any Payment Date, the sum
of:
(1) with respect to Mortgage Loans in Group I, one-twelfth of the
product of (x) the sum of the aggregate Loan Balances of such Mortgage
Loans on the immediately preceding Payment Date and (y) the excess, if
greater than zero, of (I) the weighted average of the Coupon Rates of such
Mortgage Loans over (II) the sum of the following payments allocable to
Group I on or in respect of the related Payment Date (in each case
expressed as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial Servicing Fee
Rate), (B) the Trustee Fee and (C) the Class B-1F Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-twelfth of the
product of (x) the sum of the aggregate Loan Balances of such Mortgage
Loans on the immediately preceding Payment Date and (y) the excess, if
greater than zero, of (I) the weighted average of the Coupon Rates of such
Mortgage Loans on such immediately preceding Payment Date (weighted on the
basis of the Loan Balances as of such Payment Date) over (II) the sum of
the following payments allocable to Group II on or in respect of the
related Payment Date (in each case expressed as an annual rate based on
such aggregate outstanding Loan Balance): (A) the Servicing Fee (calculated
at the initial Servicing Fee Rate), (B) the Trustee Fee and (C) the Class
B-1A Pass-Through Rate; and
(3) the Class C Carry Forward Amount.
"Class M-1 Certificate": Any one of the Class M-1F Certificates or the
Class M-1A Certificates.
"Class M-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2A Applied Realized Loss Amount and the Class B-1A Applied Realized Loss
Amount, in each case as of such Payment Date.
"Class M-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 1A Certificate, substantially in the form annexed
hereto as Exhibit B-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class M-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1A Certificates less the sum of (x) any amounts distributed to the
Owners of the Class M-1A Certificates pursuant to Section 7.03(g) hereof on all
prior Payment Dates and (y) the aggregate, cumulative amount of Class M-1A
Applied Realized Loss Amounts on
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all prior Payment Dates and (z) any Preference Amount previously distributed to
the Owners of the Class M-1A Certificates with respect to principal.
"Class M-1A Certificate Termination Date": The Payment Date on which the
Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class M-1A Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class M-1A
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
M-1A Certificates as it relates to interest previously paid on the Class M-1A
Certificates.
"Class M-1A Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class M-1A Current Interest, (x) the Class M-1A Principal
Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward Amount,
if any, and (z) the Class M-1A Realized Loss Amortization Amount, if any.
"Class M-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1A
Pass-Through Rate.
"Class M-1A Pass-Through Rate": With respect to the Payment Date in July
1997, 6.0575% per annum. Thereafter, on any Payment Date on or prior to the Step
Up Date, the lesser of (x) One-Month LIBOR plus 0.37% per annum and (y) the
Group II Available Funds Cap Rate for such Payment Date and on any Payment Date
after the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.555% per annum
and (y) the Group II Available Funds Cap Rate.
"Class M-1A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the sum of (i) the Class A-9 Certificate Principal
Balance (after taking into account the payment of the Group II Class A Principal
Distribution Amount on such Payment Date) and (ii) the Class M-1A Certificate
Principal Balance immediately prior to such Payment Date over (y) the lesser of
(A) the product of (i) 69.49997174% and (ii) the outstanding Loan Balance of the
Mortgage Loans in Group II as of the last day of the related Remittance Period
and (B) the aggregate outstanding Loan Balance of the Mortgage Loans in Group II
as of the last day of the related Remittance Period minus $3,052,500.
"Class M-1A Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount relating to Class M-1A as of such
Payment Date and (y) the excess of (i) the Group II Monthly Excess Cashflow
Amount over (ii) the sum of the Group II Extra Principal Distribution Amount and
the Class M-1A Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2F Applied Realized Loss Amount and the Class B-1F Applied Realized Loss
Amount, in each case as of such Payment Date.
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"Class M-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 1F Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class M-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, and (y) the aggregate, cumulative amount of Class M-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class M-1F Certificates with
respect to principal.
"Class M-1F Certificate Termination Date": The Payment Date on which the
Class M-1F Certificate Principal Balance is reduced to zero.
"Class M-1F Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class M-1F Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class M-1F
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
M-1F Certificates as it relates to interest previously paid on the Class M-1F
Certificates.
"Class M-1F Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class M-1F Current Interest, (x) the Class M-1F Principal
Distribution Amount, if any, (y) the Class M-1F Interest Carry Forward Amount
and (z) the Class M-1F Realized Loss Amortization Amount.
"Class M-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1F
Pass-Through Rate.
"Class M-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.430% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-1F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date) and (ii) the Class M-1F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (A) the product of (i)
76.99969970% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $1,665,000.
"Class M-1F Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount relating to Class M-1F as of such
Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount and
the Class M-1F Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-2 Certificate": Any one of the Class M-2F Certificates or the
Class M-2A Certificates.
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"Class M-2A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1A
Applied Realized Loss Amount as of such Payment Date.
"Class M-2A Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 2A Certificate, substantially in the form annexed
hereto as Exhibit B-4, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates, pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of Class M-2A
Applied Realized Loss Amounts on all prior Payment Dates, and (z) any Preference
Amount previously distributed to the Owners of the Class M-2A Certificates with
respect to principal.
"Class M-2A Certificate Termination Date": The Payment Date on which the
Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class M-2A Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class M-2A
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
M-2A Certificates as it relates to interest previously paid on the Class M-2A
Certificates.
"Class M-2A Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class M-2A Current Interest, (x) the Class M-2A Principal
Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward Amount,
if any, and (z) the Class M-2A Realized Loss Amortization Amount, if any.
"Class M-2A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2A
Pass-Through Rate.
"Class M-2A Pass-Through Rate": With respect to the Payment Date in July
1997, 6.2675% per annum. Thereafter, on any Payment Date on or prior to the Step
Up Date, the lesser of (x) One-Month LIBOR plus 0.58% per annum and (y) the
Group II Available Funds Cap Rate for such Payment Date and on any Payment Date
after the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.87% per annum
and (y) the Group II Available Funds Cap Rate.
"Class M-2A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the sum of (i) the Class A-9 Certificate Principal
Balance (after taking into account the payment of the Group II Class A Principal
Distribution Amount on such Payment Date), (ii) the Class M-1A Certificate
Principal Balance (after taking into account the payment of the Class M-1A
Principal Distribution Amount on such Payment Date) and (iii) the Class M-2A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser
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of (A) the product of (i) 81.49998649% and (ii) the outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period and (B) the aggregate outstanding Loan Balance of the Mortgage Loans in
Group II as of the last day of the related Remittance Period minus $3,052,500.
"Class M-2A Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount relating to Class M-2A as of such
Payment Date and (y) the excess of (i) the Group II Monthly Excess Cashflow
Amount over (ii) the sum of the Group II Extra Principal Distribution Amount,
the Class M-1A Realized Loss Amortization Amount, the Class M-1A Interest Carry
Forward Amount and the Class M-2A Interest Carry Forward Amount, in each case
for such Payment Date.
"Class M-2F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1F
Applied Realized Loss Amount as of such Payment Date.
"Class M-2F Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 2F Certificate, substantially in the form annexed
hereto as Exhibit B-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class M-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates and (y) the aggregate, cumulative amount of Class M-2F
Applied Realized Loss Amounts on all prior Payment Dates plus any Preference
Amount previously distributed to the Owners of the Class M-2F Certificates with
respect to principal.
"Class M-2F Certificate Termination Date": The Payment Date on which the
Class M-2F Certificate Principal Balance is reduced to zero.
"Class M-2F Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class M-2F Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class M-2F
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class
M-2F Certificates as it relates to interest previously paid on the Class M-2F
Certificates.
"Class M-2F Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class M-2F Current Interest, (x) the Class M-2F Principal
Distribution Amount, if any, (y) the Class M-2F Interest Carry Forward Amount,
if any, and (z) the Class M-2F Realized Loss Amortization Amount, if any.
"Class M-2F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2F
Pass-Through Rate.
"Class M-2F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.665% per annum and (y) the Group I Net Weighted Average Coupon Rate.
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"Class M-2F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date), (ii) the Class M-1F Certificate Principal Balance (after taking
into account the payment of the Class M-1F Principal Distribution Amount on such
Payment Date) and (iii) the Class M-2F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (A) the product of (i)
87.99969970% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $1,665,000.
"Class M-2F Realized Loss Amortization Amount": As of any Payment Date, the
lesser of (x) the Unpaid Realized Loss Amount relating to Class M-2F as of such
Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount, the
Class M-1F Realized Loss Amortization Amount, the Class M-1F Interest Carry
Forward Amount and the Class M-2F Interest Carry Forward Amount, in each case
for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the face
thereof as a Class R Certificate, substantially in the form annexed hereto as
Exhibit B-8, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in the REMIC for the purposes of the REMIC Provisions.
"Class S Certificate": Any one of the Certificates designated on the face
thereof as a Class S Certificate, substantially in the form annexed hereto as
Exhibit B-9, authenticated and delivered by the Trustee representing the right
to distributions as set forth herein. The Class S Certificates are a "regular
interest" in the REMIC.
"Class S Distribution Amount": With respect to any Payment Date, the sum of
(a) the product of (x) the outstanding Loan Balance of each Advanta Loan as of
such Payment Date and (y) one-twelfth of the difference between the Aggregate
Servicing Fee Rate and the Servicing Fee Rate for such Mortgage Loans, and (b)
any unpaid Preference Amount, if any, for the Class S Certificates. The Class S
Distribution Amount shall be calculated on a loan-by-loan basis.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at The Bank of New York, 101 Barclay Street, New York, NY 10286, Attn.:
Structured Finance/MBS or any other address that the Trustee advises the parties
hereto is its principal corporate trust office.
"Coupon Rate": The rate of interest borne by each Note from time to time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
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"Cumulative Loss Percentage": As of any date of determination thereof, the
Cumulative Realized Losses as a percentage of the Maximum Collateral Amount (and
with respect to the Servicer Loss Test the aggregate portion thereof applicable
to the related Servicer as set forth in the definition of Maximum Collateral
Amount).
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans in the
related Group (and with respect to the Servicer Loss Test with respect to the
Mortgage Loans in the related Mortgage Loan Servicing Group) since the Cut-Off
Date.
"Current Interest": With respect to any Payment Date, the sum of the Class
A-1 Current Interest, the Class A-2 Current Interest, the Class A-3 Current
Interest, the Class A-4 Current Interest, the Class A-5 Current Interest, the
Class A-6 Current Interest, the Class A-7 Current Interest, the Class A-8
Current Interest, the Class A-9 Current Interest, the Class M-1F Current
Interest, the Class M-1A Current Interest, the Class M-2F Current Interest, the
Class M-2A Current Interest, the Class B-1F Current Interest, the Class B-1A
Current Interest and the Class S Distribution Amount for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of June 1, 1997
among the Custodian, the Trustee, the Depositor, the Seller and the Servicers.
"Custodian": Bankers Trust Company of California, N.A.
"Cut-Off Date": As of the close of business on June 1, 1997.
"DCR": Duff & Phelps Credit Ratings Co.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon is
not made by the close of business on the corresponding day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Seller to the Trustee on the Startup Day pursuant to
Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New York, New
York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each Principal and
Interest Account, a trust account maintained by The Bank of New York, as long as
it remains the Trustee, or by the trust department of a federal or state
chartered depository institution acting in its fiduciary capacity, having
combined capital and surplus of at least $50,000,000; provided, however, that if
a Principal and Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A2" by Moody's and,
if rated by Fitch or DCR, at least "A" by Fitch and DCR and (ii) the Servicers
shall provide the Trustee
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and the Owners with a statement identifying the location of the related
Principal and Interest Account when moved.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or other
financial institution for which the Depository holds Offered Certificates from
time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in the
definition thereof at Section 860E(e)(5) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to Section
7.07 hereof.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian on behalf of the Trustee
pursuant to Section 3.05(b) hereof pertaining to a particular Mortgage Loan and
any additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of the Offered Certificates
is as set out in Section 2.08(a).
"Fitch": Fitch Investors Service, L.P.
"Formula Certificates": With respect to any Payment Date, each Class of
Group II Certificates that has a Formula Rate less than the Group II Weighted
Average Coupon Rate.
"Formula Rate": With respect to any Payment Date and a Class of Group II
Certificates, the rate determined in accordance with clause (x) of the
definition of "Pass-Through Rate" for such Class.
"Funding Period": With respect to each of Group I and Group II, the
respective period commencing on the Startup Day and ending on the earliest to
occur of (i) the date on which the amount on deposit in the Pre-Funding Account
with respect to such Group (exclusive of any investment earnings) is less than
$100,000 and (ii) September 3, 1997.
"Group I": The pool of Mortgage Loans identified in the related Schedule of
Mortgage Loans as having been assigned to Group I in Schedule I-A hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group I Applied Realized Loss Amount": As of any Payment Date, the excess
of (x) the aggregate Certificate Principal Balance of the Group I Certificates
on such Payment Date, after taking into account the distribution of the Group I
Principal Distribution Amount on such Payment Date but prior to the application
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of the Group I Applied Realized Loss Amount, if any, on such Payment Date over
(y) the aggregate outstanding Loan Balance of the Mortgage Loans in Group I as
of the last day of the related Remittance Period.
"Group I Auction Sale Bid Date": The first Monthly Remittance Date on which
the aggregate outstanding Certificate Principal Balance of the Group I
Certificates has declined to less than $33,300,000.
"Group I Capitalized Interest Requirement": With respect to the Payment
Dates in July and August 1997 and the Pre-Funding Payment Date the excess, if
any, of (x) the interest on the Group I Certificates on such Payment Date
calculated at the Group I Weighted Average Pass-Through Rate over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans in
Group I as of the close of business on the last day of the immediately preceding
Remittance Period calculated at a rate equal to 1/12 of the weighted average of
the Coupon Rates of the Mortgage Loans in Group I less the applicable Servicing
Fee Rate as of such Payment Date (or Pre-Funding Payment Date) and (ii) any
Group I Pre-Funding Account Earnings to be transferred to the Capitalized
Interest Account on such Payment Date (or Pre-Funding Payment Date) pursuant to
Section 7.04(d) hereof.
"Group I Certificates": The Class A Certificates (other than the Class A-9
Certificates), the Class M-1F Certificates, the Class M-2F Certificates and the
Class B-1F Certificates.
"Group I Class A Principal Distribution Amount": As of any Payment Date (a)
prior to the Group I Stepdown Date or with respect to which a Group I Trigger
Event is in effect, 100% of the Group I Principal Distribution Amount and (b) on
or after the Group I Stepdown Date or as to which a Group I Trigger Event is not
in effect, the excess of (x) the aggregate Certificate Principal Balance of the
Class A Certificates relating to Group I immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) 69.5% and (ii) the outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period and (B) the outstanding aggregate Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period minus
$1,665,000.
"Group I Extra Principal Distribution Amount": As of any Payment Date, the
lesser of (x) the Group I Monthly Excess Interest Amount for such Payment Date
and (y) the Group I Overcollateralization Deficiency for such Payment Date.
"Group I Interest Amount Available": As of any Payment Date, the Group I
Interest Remittance Amount less the portion of the Trustee Fee related to Group
I.
"Group I Interest Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest collected or required to be
advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group I (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group I, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group I,
(iv) any amounts related to Group I required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group I.
"Group I Monthly Excess Cashflow Amount": For any Payment Date, the sum of
(x) the Group I Monthly Excess Interest Amount (plus any interest on the Group I
Overcollateralization Amount) and (y) the Group I Overcollateralization Release
Amount for such Payment Date.
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"Group I Monthly Excess Interest Amount": With respect to any Payment Date,
the excess, if any, of (i) the Group I Interest Amount Available for the related
Remittance Period over (ii) the sum of (x) the Current Interest on the Group I
Certificates on such Payment Date and (y) the Interest Carry Forward Amount with
respect to the Class A Certificates related to Group I.
"Group I Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group I
(weighted by the Loan Balances of the Mortgage Loans in Group I), less 0.50% per
annum.
"Group I Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group I as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group I and
(y) the aggregate Certificate Principal Balance of the Group I Certificates
(after taking into account all distributions of principal on such Group I
Certificates as of such Payment Date).
"Group I Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group I Targeted Overcollateralization Amount for
such Payment Date over (y) the Group I Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group I Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group I
Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any Payment Date, the
lesser of (x) the Group I Principal Remittance Amount for such Payment Date and
(y) the excess, if any, of (i) the Group I Overcollateralization Amount for such
Payment Date, assuming that 100% of the Group I Principal Remittance Amount is
applied on such Payment Date to the payment of principal on the Group I
Certificates and (ii) the Group I Targeted Overcollateralization Amount for such
Payment Date, provided that if a Subordinated Trigger Event is in effect, the
Group I Overcollateralization Release Amount shall be zero.
"Group I Pre-Funding Account Earnings": With respect to the July 25, 1997
Payment Date, the actual investment earnings earned during the period from the
Startup Day through July 24, 1997 (inclusive) on the portion of the Pre-Funded
Amount remaining and allocable to Group I during such period as calculated by
the Trustee pursuant to Section 3.07(d) hereof; with respect to the August 25,
1997 Payment Date, the actual investment earnings earned during the period from
July 25, 1997 through August 24, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof; and, with respect
to the Pre-Funding Payment Date, the actual investment earnings earned during
the period from August 25, 1997 through September 10, 1997 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group I during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": As of any Payment Date, the sum of
(i) the Group I Principal Remittance Amount (minus, for Payment Dates occurring
on and after the Group I Stepdown Date and with respect to which a Trigger Event
is not in effect, the Group I Overcollateralization Release Amount, if any) and
(ii) the Group I Extra Principal Distribution Amount, if any.
"Group I Principal Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) the principal collected or required to be
advanced by the Servicers with respect to Mortgage Loans in Group I with respect
to the related Remittance Period, (ii) the Loan Balance of each Mortgage Loan in
Group I that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent
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such Loan Balance was actually deposited in the Principal and Interest Account,
(iii) any Substitution Amounts relating to principal delivered to the Trust in
connection with a substitution of a Mortgage Loan in Group I to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, and (iv) all Net
Liquidation Proceeds actually collected by the Servicers with respect to the
Mortgage Loans in Group I during the related Remittance Period (to the extent
such Net Liquidation Proceeds related to principal).
"Group I Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group I and (ii)
the Group I Overcollateralization Amount, in each case after taking into account
the distribution of the Group I Principal Distribution Amount on such Payment
Date, by (y) the Loan Balance of the Mortgage Loans in Group I as of the last
day of the related Remittance Period.
"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means 30.50%.
"Group I Servicer Clean-Up Call Date": The First Monthly Remittance Date on
which the outstanding Certificate Principal Balance of the Group I Certificates
has declined to $16,650,000.
"Group I Stepdown Date": The later to occur of (x) the Payment Date in July
2000 and (y) the first Group I Payment Date on which the Group I Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group I on such Payment Date) is equal to or greater than the
Group I Senior Specified Enhancement Percentage.
"Group I Subordinated Trigger Event": A Group I Subordinated Trigger Event
has occurred with respect to a Payment Date if both of the following tests are
failed on such Payment Date:
A Group I Cumulative Loss Test is failed with respect to a Payment Date if
the amount of the Cumulative Loss Percentage with respect to Group I equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
July 1999 - June 2000 1.80%
July 2000 - June 2001 3.00%
July 2001 - June 2002 4.00%
July 2002 - June 2003 4.25%
July 2003 - June 2004 4.75%
July 2004 - June 2005 5.00%
A Group I Delinquency Test is failed with respect to a Payment Date if the
amount of 60+ Day Delinquent Loans, with respect to Group I as a percentage of
the aggregate outstanding Loan Balance of Group I equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquent Percentage
------------- -----------------------------
July 1999 - June 2001 5.50%
July 2001 - June 2003 7.33%
July 2003 - June 2005 11.00%
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"Group I Targeted Overcollateralization Amount": On any Payment Date (x)
prior to the Group I Stepdown Date, 2.75% of the aggregate Certificate Principal
Balance of the Group I Certificates as of the Startup Day and (y) on or after
the Group I Stepdown Date, the greater of (A) 5.50% of the aggregate outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period and (B) $1,665,000.
"Group I Trigger Event": A Group I Trigger Event has occurred with respect
to a Payment Date if the percentage obtained by dividing (x) the principal
amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the
immediately preceding Remittance Period equals or exceeds 50% of the Group I
Senior Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group I Weighted Average Pass-Through Rate": As to any Payment Date, the
weighted average of the Class A-1 Pass-Through Rate, the Class A-2 Pass-Through
Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through Rate, the
Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate, the Class A-7
Pass-Through Rate, the Class A-8 Pass-Through Rate, the Class M-1F Pass-Through
Rate, the Class M-2F Pass-Through Rate and the Class B-1F Pass-Through Rate
(such rate calculated for this purpose on the basis of 360-day year assumed to
consist of twelve 30 day months) weighted by the respective Certificate
Principal Balance of the related Class as of such Payment Date before taking
into account any distributions to be made on such Payment Date.
"Group II": The pool of Mortgage Loans identified in the related Schedule
of Mortgage Loans as having been assigned to Group II in Schedule I-B hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group II Applied Realized Loss Amount": As of any Payment Date, the excess
of (x) the aggregate Certificate Principal Balance of the Group II Certificates
on such Payment Date, after taking into account the distribution of the Group II
Principal Distribution Amount on such Payment Date but prior to the application
of the Group II Applied Realized Loss Amount, if any, on such Payment Date over
(y) the aggregate outstanding Loan Balance of the Mortgage Loans in Group II as
of the last day of the related Remittance Period.
"Group II Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate Certificate Principal Balance of the Group II Certificates
has declined to less than $40,700,000.
"Group II Available Escalation Amount": With respect to any Payment Date,
an amount (but not less than zero) equal to the sum of, with respect to each
Class of Formula Certificates, the product of (i) a rate equal to the Group II
Net Weighted Average Coupon Rate minus the Formula Rate for such Class and (ii)
the Certificate Principal Balance of such Class.
"Group II Available Funds Cap Rate": With respect to Group II, on any
Payment Date, a rate equal to the sum of (i) the Group II Net Weighted Average
Coupon Rate and (ii) the percentage equivalent of a fraction, the numerator of
which is the Group II Available Escalation Amount and the denominator of which
is the sum of the Certificate Principal Balances for each Class of the Group II
Capped Certificates.
"Group II Available Funds Cap Shortfall Amortization Amount": As of any
Payment Date, any amount distributed from the Group II Available Funds Cap
Shortfall Amount Account on such Payment Date.
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"Group II Available Funds Cap Shortfall Amount": As of any Payment Date,
the excess, if any, of (x) the excess, if any, of (a) the aggregate amount of
interest due on the Group II Capped Certificates on all prior Payment Dates,
calculated at the related Formula Rate applicable to each such Payment Date over
(b) the aggregate amount of interest due on the Group II Capped Certificates on
all prior Payment Dates, calculated at the related Pass-Through Rates applicable
to each such Payment Date over (y) all Group II Available Funds Cap Shortfall
Amortization Amounts actually funded on all prior Payment Dates.
"Group II Capped Certificates": With respect to any Payment Date, each
Class of Group II Certificates that has a Formula Rate greater than the Group II
Net Weighted Average Coupon Rate.
"Group II Capitalized Interest Requirement": With respect to the Payment
Dates in July and August 1997 and the Pre-Funding Payment Date, the excess, if
any, of (x) the interest on the Group II Certificates on such Payment Date
calculated at the Group II Weighted Average Pass-Through Rate over (y) the sum
of (i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans
in Group II as of the close of business on the last day of the immediately
preceding Remittance Period calculated at a rate equal to 1/12 of the weighted
average of the Coupon Rates of the Mortgage Loans in Group II less the
applicable Servicing Fee Rate as of such Payment Date (or Pre-Funding Payment
Date) and (ii) any Group II Pre-Funding Account Earnings to be transferred to
the Capitalized Interest Account on such Payment Date (or Pre-Funding Payment
Date) pursuant to Section 7.04(d) hereof.
"Group II Certificates": The Class A-9 Certificates, the Class M-1A
Certificates, the Class M-2A Certificates and the Class B-1A Certificates.
"Group II Class A Principal Distribution Amount": As of any Payment Date
(a) prior to the Group II Stepdown Date or with respect to which a Group II
Trigger Event is in effect, 100% of the Group II Principal Distribution Amount
and (b) on or after the Group II Stepdown Date or as to which a Group II Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Class A-9 Certificates immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) 56.99971069% and (ii) the
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the outstanding aggregate Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $3,052,500.
"Group II Extra Principal Distribution Amount": As of any Payment Date, the
lesser of (x) the Group II Monthly Excess Interest Amount for such Payment Date
and (y) the Group II Overcollateralization Deficiency for such Payment Date.
"Group II Interest Amount Available": As of any Payment Date, the Group II
Interest Remittance Amount less the portion of the Trustee Fee related to Group
II.
"Group II Interest Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest collected or required to be
advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group II (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group II, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group II,
(iv) any amounts related to Group II required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group II.
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<PAGE>
"Group II Monthly Excess Cashflow Amount": For any Payment Date, the sum of
(x) the Group II Monthly Excess Interest Amount (plus any interest on the Group
II Overcollateralization Amount) and (y) the Group II Overcollateralization
Release Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group II Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group II Certificates on such Payment Date and (y) the Class A-9 Interest Carry
Forward Amount.
"Group II Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group II
(weighted by the Loan Balances of the Mortgage Loans in Group II), less 0.50%
per annum.
"Group II Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group II as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group II and
(y) the aggregate Certificate Principal Balance of the Group II Certificates
(after taking into account all distributions of principal on such Group II
Certificates as of such Payment Date).
"Group II Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group II Targeted Overcollateralization Amount for
such Payment Date over (y) the Group II Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group II Certificates resulting from the distribution of the Group II
Principal Remittance Amount (but not the Group II Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group II
Applied Realized Loss Amount on such Payment Date.
"Group II Overcollateralization Release Amount": As of any Payment Date,
the lesser of (x) the Group II Principal Remittance Amount for such Payment Date
and (y) the excess, if any, of (i) the Group II Overcollateralization Amount for
such Payment Date, assuming that 100% of the Group II Principal Remittance
Amount is applied on such Payment Date to the payment of principal on the Group
II Certificates over (ii) the Group II Targeted Overcollateralization Amount for
such Payment Date; provided, that if a Subordinated trigger event is in effect,
the Group II Overcollateralization Release Amount shall be zero.
"Group II Pre-Funding Account Earnings": With respect to the July 25, 1997
Payment Date, the actual investment earnings earned during the period from the
Startup Day through July 24, 1997 (inclusive) on the portion of the Pre-Funded
Amount remaining and allocable to Group II during such period as calculated by
the Trustee pursuant to Section 3.07(d) hereof; with respect to the August 25,
1997 Payment Date, the actual investment earnings earned during the period from
July 25, 1997 through August 24, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof; and, with respect
to the Pre-Funding Payment Date, the actual investment earnings earned during
the period from August 25, 1997 through September 10, 1997 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group II during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group II Principal Distribution Amount": As of any Payment Date, the sum
of (i) the Group II Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group II Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group II Overcollateralization Release
Amount, if any) and (ii) the Group II Extra Principal Distribution Amount, if
any.
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<PAGE>
"Group II Principal Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) the principal collected or required to be
advanced by the Servicers with respect to Mortgage Loans in Group II with
respect to the related Remittance Period, (ii) the Loan Balance of each Mortgage
Loan in Group II that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such Loan Balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group II to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, and (iv) all Net Liquidation Proceeds actually collected by the Servicers
with respect to the Mortgage Loans in Group II during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal).
"Group II Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group II and (ii)
the Group II Overcollateralization Amount, in each case after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period.
"Group II Senior Specified Enhancement Percentage": On any date of
determination thereof means 43%.
"Group II Servicer Clean-Up Call Date": The first Monthly Remittance Date
on which the outstanding Certificate Principal Balance of the Group II
Certificates has declined to $20,350,000.
"Group II Stepdown Date": The later to occur of (x) the Payment Date in
July 2000 and (y) the first Group II Payment Date on which the Group II Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group II on such Payment Date) is equal to or greater than the
Group II Senior Specified Enhancement Percentage.
"Group II Subordinated Trigger Event": A Group II Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group II Cumulative Loss Test is failed with respect to a Payment Date if
the Cumulative Loss Percentage with respect to Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
July 1999 - June 2000 2.50%
July 2000 - June 2001 4.00%
July 2001 - June 2002 5.00%
July 2002 - June 2003 5.75%
July 2003 - June 2004 6.00%
July 2004 - June 2005 6.25%
A Group II Delinquency Test is failed with respect to a Payment Date if the
amount of 60+ Day Delinquent Loans, with respect to Group II as a percentage of
the aggregate outstanding Loan Balance of Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquency Percentage
------------- ------------------------------
July 1999 - June 2001 7.50%
July 2001 - June 2003 10.00%
July 2003 - June 2005 15.00%
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<PAGE>
"Group II Targeted Overcollateralization Amount": On any Payment Date (x)
prior to the Group II Stepdown Date, 3.75% of the aggregate Certificate
Principal Balance of the Group II Certificates as of the Startup Day and (y) on
or after the Group II Stepdown Date, the greater of (A) 7.50% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) $3,052,500.
"Group II Trigger Event": A Group II Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the immediately preceding Remittance Period equals or exceeds 40% of the Group
II Senior Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any Payment Date, the
weighted average of the Class A-9 Pass-Through Rate, the Class M-1A Pass-Through
Rate, the Class M-2A Pass-Through Rate and the Class B-1A Pass-Through Rate
weighted by the respective Certificate Principal Balance of the related Class as
of such Payment Date before taking into account any distributions to be made on
such Payment Date.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the Trust by
the Depositor on the Startup Day.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Mortgage Loan, provided that any amount remitted under
Section 8.11 hereof shall be considered a payment under an Insurance Policy.
"Interest Remittance Amount": The sum of the Group I Interest Remittance
Amount and the Group II Interest Remittance Amount.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds, which
are incurred by a Servicer in connection with the liquidation of any defaulted
Mortgage Loan, such expenses, including, without limitation, legal fees and
expenses and accrued but unpaid Servicing Fees, and any unreimbursed Servicing
Advances expended by that Servicer pursuant to Section 8.09(b) with respect to
the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by a Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise and Section 8.13(a).
"Loan Balance": With respect to each Mortgage Loan and as of any date of
determination, the outstanding principal balance thereof, on the Cut-Off Date
with respect to the Initial Mortgage Loans or relevant Subsequent Cut-Off Date
with respect to the Subsequent Mortgage Loans, less the sum of (i) any
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<PAGE>
principal payments relating to such Mortgage Loan (whether received from the
related Mortgagor or advanced by the related Servicer) included in previous
Monthly Remittance Amounts, and (ii) any Cram Down Losses relating to such
Mortgage Loan; provided, however, that the Loan Balance for any Mortgage Loan
that has become a Liquidated Loan shall be zero as of the first day of the
Remittance Period following the Remittance Period in which such Mortgage Loan
becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from the
Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04, 3.05,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Mortgage Loan as of the date of purchase (assuming that the related Delinquency
Advance has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, (ii) the interest
portion of any Delinquency Advances which the related Servicer has theretofore
failed to remit with respect to such Mortgage Loan as required by this Agreement
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the percentage obtained
by dividing the Appraised Value into the original principal balance of the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Maximum Collateral Amount": As to Group I, $333,000,000; and as to Group
II, $407,000,000; provided that for purposes of calculating the Servicer Loss
Test with respect to each Servicer and each Mortgage Loan Group, the Seller will
provide the related Maximum Collateral Amounts per Servicer and Mortgage Loan
Group to the Trustee, each Servicer and the Depositor within 10 days after the
end of the Funding Period for such Mortgage Loan Group.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and the
Class M-2 Certificates.
"Monthly Remittance Amount": The sum of the Interest Remittance Amount and
the Principal Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if such day is not
a Business Day, the Business Day succeeding such day, commencing in July 1997.
"Monthly Servicing Report": Any report provided by a Servicer pursuant to
Section 8.29 hereof.
"Moody's": Moody's Investors Service Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case may be.
References herein to the related Class of Offered Certificates, when used with
respect to a Mortgage Loan Group, shall mean (A) in the case of Group I, the
Group I Certificates and (B) in the case of Group II, the Group II Certificates.
"Mortgage Loan Servicing Group": Advanta Loans, Ameriquest Loans or Option
One Loans, as applicable.
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<PAGE>
"Mortgage Loans": Such of the mortgage loans (including Initial Mortgage
Loans and Subsequent Mortgage Loans) transferred and assigned to the Trust
pursuant to Section 3.05(a) and 3.07(a) hereof, together with any Qualified
Replacement Mortgages substituted therefor in accordance with this Agreement, as
from time to time are held as a part of the Trust Estate, the Mortgage Loans
originally so held being identified in the Schedules of Mortgage Loans. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Property which is REO Property prior to such
Property's disposition by the Trust. Any mortgage loan which, although intended
by the parties hereto to have been, and which purportedly was, transferred and
assigned to the Trust by the Depositor, in fact was not transferred and assigned
to the Trust for any reason whatsoever, including, without limitation, the
incorrectness of the statement in a Transfer Agreement concerning the transfer
of title to the transferee with respect to such mortgage loan, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of Liquidation Expenses, unreimbursed Delinquency Advances, unreimbursed
Servicing Advances and accrued Servicing Fees relating to such Mortgage Loan. In
no event shall Net Liquidation Proceeds with respect to any Liquidated Loan be
less than zero.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, the Mortgage Loan related to each REO Property and each Mortgage Loan
with respect to which any portion of a Scheduled Payment is, as of the last day
of the prior Remittance Period, 90 days or more Delinquent (including any
Mortgage Loans which have gone into foreclosure or have been discharged by
reason of bankruptcy).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to each
Mortgage Loan Servicing Group and any date of determination thereof, the average
of the percentage equivalents of the fractions determined for each of the three
immediately preceding Remittance Periods the numerator of each of which is equal
to the aggregate Loan Balance of 90+ Day Delinquent Loans in the related
Mortgage Loan Servicing Group as of such date of determination and the
denominator of which is the aggregate Loan Balance of all of the Mortgage Loans
in the related Mortgage Loan Servicing Group as of such date of determination.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for the Group II
Certificates, the rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference
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<PAGE>
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the quotations
(rounded upwards if necessary to the nearest whole multiple of 1/16%). If fewer
than two quotations are provided as requested, the rate for that date will be
the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Trustee, at approximately 11:00 a.m. (New York City time) on
such date for one-month U.S. dollar loans to leading European banks.
"One-Month LIBOR Determination Date": For the initial Accrual Period for
the Group II Certificates, the second London Business Day prior to the Closing
Date. With respect to any Accrual Period thereafter for the Group II
Certificates, the second London Business Day preceding the commencement of such
Accrual Period.
"Operative Documents": Collectively, this Agreement, the Transfer
Agreements, the Subsequent Transfer Agreements and the Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be counsel to
the Depositor, Seller, any Servicer or the Trustee, which counsel shall be
reasonably acceptable to the Trustee.
"Option One": Option One Mortgage Corporation, a California corporation.
"Option One Loans": The Mortgage Loans serviced by Option One.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $594,120,713.82.
"Original Group I Pre-Funding Amount": $55,551,803.47
"Original Group II Pre-Funding Amount": $90,327,482.71
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $145,879,286.18.
"Originator": Each of the companies identified as an "Originator" on
Schedule IV hereto.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final payment
of money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.05 hereof; and
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(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"Overcollateralization Release Amount": For any Payment Date, the sum of
the Group I Overcollateralization Release Amount and the Group II
Overcollateralization Release Amount.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the sum, if any, of (x) with respect to the Group I Certificates, the
excess of (i) interest that would accrue from the related Subsequent Cut-Off
Date through September 10, 1997 on the aggregate Loan Balances of the Subsequent
Mortgage Loans acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (I) the Group I Weighted Average
Pass-Through Rate and (II) the Trustee Fee allocable to Group I (such fees
calculated as an annual rate based on the aggregate Loan Balances of the
Mortgage Loans in Group I), over (ii) interest that would accrue from the
Subsequent Cut-Off Date through September 10, 1997 on the aggregate Loan
Balances of the Subsequent Mortgage Loans related to Group I acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date and
(y) with respect to the Group II Certificates the excess of (i) interest that
would accrue from the related Subsequent Cut-Off Date through September 10, 1997
on the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the
Trust on such Subsequent Transfer Date, calculated at a rate equal to the sum of
(I) the Group II Weighted Average Pass-Through Rate and (II) the Trustee Fee
allocable to Group II (such fees calculated as an annual rate based on the
aggregate Loan Balances of the Mortgage Loans in Group II), over (ii) interest
that would accrue from the Subsequent Cut-Off Date through September 10, 1997 on
the aggregate Loan Balances of the Subsequent Mortgage Loans related to Group II
acquired by the Trust on such Subsequent Transfer Date, calculated at the rate
at which Pre-Funding Account moneys are invested as of such Subsequent Transfer
Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by the Seller or any affiliate
thereof, the Seller or such affiliate shall not be considered an Owner.
"PAG": The Seller's "Performance Assumption Groupings" as described in the
Prospectus Supplement.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 11.15 hereof and is authorized by the Trustee and the Depositor to
make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs.
"Percentage Interest": With respect to an Offered Certificate a fraction,
expressed as a decimal, the numerator of which is the initial Certificate
Principal Balance represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance represented by all the
Certificates of the same Class. With respect to a Class S Certificate, a Class C
Certificate or a Class R Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate,
all of which shall total 100% with respect to the related Class.
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"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Offered Certificates and the Class
S Certificates, as the case may be, means, any amounts of Current Interest and
principal included in previous distributions to the Owners of such Certificates
which are recovered from such Owners as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction and which
have not theretofore been repaid to such Owners.
"Pre-Funded Amount": With respect to the July and August 1997 Payment Dates
and the Pre- Funding Date, the amount remaining on deposit in the Pre-Funding
Account.
"Pre-Funding Account": The Pre-Funding Account established in accordance
with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Determination Date": September 3, 1997.
"Pre-Funding Payment Date": September 10, 1997.
"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received by the related Servicer prior
to the scheduled due date for such installment, intended by the Mortgagor as an
early payment thereof and not as a Prepayment with respect to such Mortgage
Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is received
by a Servicer in advance of the scheduled due date for the payment of such
principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by a Servicer in connection with
a foreclosed Mortgage Loan prior to the liquidation thereof, including, without
limitation, expenditures for real estate property taxes, hazard insurance
premiums, property restoration or preservation.
"Principal and Interest Account": Each principal and interest account
established by a Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the sum
of the Group I Principal Remittance Amount and the Group II Principal Remittance
Amount.
"Prohibited Transaction": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated July 28, 1996 constituting part of the
Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1997-2 Prospectus Supplement dated June 5, 1997 to the
Prospectus.
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"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a Coupon
Rate not less than and not more than 1% greater than the Coupon Rate of the
Mortgage Loan being replaced, (ii) is of the same property type (i.e., single
family, condominium, PUD unit, etc.) or is a single family dwelling and the same
occupancy status as the replaced Mortgage Loan or is a primary residence, (iii)
shall mature no later than June 1, 2027, (iv) has a Loan-to-Value Ratio as of
the Subsequent Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Mortgage Loan at such time, (v) shall be of the same or higher credit
quality classification (determined in accordance with the related Originator's
credit underwriting guidelines set forth in the related Originator's
underwriting manual) as the Mortgage Loan which such Qualified Subsequent
Mortgage replaces, (vi) has a Loan Balance as of the related Subsequent Cut-Off
Date not greater than and not substantially less than the Loan Balance of the
replaced Mortgage Loan as of such Subsequent Cut-Off Date, (vii) shall not
provide for a Balloon Payment if the related Mortgage Loan did not provide for a
Balloon Payment (and if such related Mortgage Loan provided for a Balloon
Payment, such Qualified Replacement Mortgage shall have an original maturity of
not less than the original maturity of such related Mortgage Loan), (viii) shall
be a fixed rate first lien Mortgage Loan if the Mortgage Loan being replaced is
a fixed rate Mortgage Loan or an adjustable rate Mortgage Loan if the Mortgage
Loan being replaced is an adjustable rate Mortgage Loan, (ix) if such Mortgage
Loan being replaced is in Group II, (a) has the index of the replaced Mortgage
Loan, (b) has the same amount of time between rate adjustment dates as the
replaced Mortgage Loan and (c) has a margin no less than the replaced Mortgage
Loan and (x) satisfies the criteria set forth from time to time in the
definition thereof at Section 860G(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's, DCR and Fitch or any successors
thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by which
(x) the Loan Balance thereof plus any accrued and unpaid interest thereon as of
the date of liquidation exceeds (y) Net Liquidation Proceeds realized thereon
applied in reduction of such Loan Balance and accrued and unpaid interest. As to
any Mortgage Loan as to which there has been a Cram Down Loss, the amount of
such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and each Payment
Date, the last day of the calendar month immediately preceding the calendar
month in which such Payment Date occurs and with respect to the Group II
Certificates and each Payment Date, the day immediately preceding such Payment
Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by the Trustee which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, (ii) not controlling, under the control of or under common
control with the Seller or any affiliate thereof, (iii) whose quotations appear
on Telerate Page 3750 on the relevant One-Month LIBOR Determination Date and
(iv) which have been designated as such by the Trustee.
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"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the Depositor
with the Securities and Exchange Commission (Registration Number 333-8687),
including all amendments thereto and including the Prospectus Supplement
relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Estate": The segregated pool of assets referred to as the Trust
Estate (other than the Pre-Funding Account and the Capitalized Interest
Account).
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"Remittance Period": The calendar month immediately preceding the month in
which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Reporting Date": The date each Servicer will provide the Monthly Servicing
Report described in Section 8.29 hereof to the Trustee, which day shall be the
20th day of each calendar month (or if such day is not a Business Day, the next
succeeding Business Day).
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Retained Certificates": Collectively, the Class C Certificates and the
Class R Certificates.
"Schedule of Mortgage Loans": Each of the schedules of Mortgage Loans,
segregated by Mortgage Loan Group, with respect to the Initial Mortgage Loans
listing each Initial Mortgage Loan in the related Group to be conveyed on the
Startup Day and with respect to Subsequent Mortgage Loans listing each
Subsequent Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the related Servicer.
Such Schedules of Mortgage Loans shall identify each Mortgage Loan by (1) the
Servicer's loan number, (2) the related Servicing Fee, (3) borrower's name, (4)
address (including the state) of the Property, (5) the lien status thereof, (6)
the Loan-to-Value Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof, (9) the paid-through date for such Mortgage Loan and (10)
with respect to only the Advanta Loans, whether the Mortgage Loan is located in
an area identified in the Federal Registrar by the Federal Emergency Management
Agency as having special flood hazards.
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"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or, in
the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Servicers" or "Servicer": Advanta, Ameriquest and Option One and their
permitted successors and assigns. Any reference to Servicers or Servicer shall
mean the related Servicer with respect to any Mortgage Loan or Mortgage Loan
Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Loss Test": The Servicer Loss Test for each Servicer and with
respect to its related Mortgage Loan Servicing Group for any period set out
below is satisfied if the Cumulative Loss Percentage as it relates to such
Mortgage Loan Servicing Group and such period does not exceed the percentage set
out for such period below (provided, that for purposes of the calculation of the
Servicer Loss Test, Realized Losses attributable solely to Cram Down Losses
shall be excluded from the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
------ ----------
June 2, 1997 - June 1, 1998 0.75%
June 2, 1998 - June 1, 1999 1.25%
June 2, 1999 - June 1, 2000 1.80%
June 2, 2000 - June 1, 2001 2.25%
June 2, 2001 and thereafter 2.75%
"Servicer Termination Event": As defined in Section 8.20(d) hereof.
"Servicer Termination Test": The Servicer Termination Test for each
Servicer and with respect to the related Mortgage Loan Servicing Group is
satisfied for any date of determination thereof, if (x) the 90+ Delinquency
Percentage (Rolling Three Month) with respect to the related Mortgage Loan
Servicing Group is less than 13.0%, (y) the Servicer Loss Test is satisfied and
(z) the Annual Loss Percentage (Rolling Twelve Month) as it relates to such
Mortgage Loan Servicing Group for the twelve month period immediately preceding
the date of determination thereof is not greater than 2.25%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount retained by
the related Servicer as compensation for servicing and administration duties
relating to such Mortgage Loan pursuant to Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters between the
Seller and the related Servicer, setting forth the Servicing Fee Rate and other
servicing compensation applicable to such Servicer.
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"Servicing Fee Rate": The rate per annum set forth in the related Servicing
Fee Letter.
"60+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the prior Remittance
Period, 60 days or more Delinquent (without giving effect to any grace period).
"60+ Day Delinquency Percentage": As of any date of determination thereof,
and as to the related Mortgage Loan Group, a fraction, expressed as a
percentage, the numerator of which is the amount of 60+ Day Delinquent Loans
with respect to such Mortgage Loan Group and the denominator of which is the
outstanding aggregate Loan Balance of the Mortgage Loans in such Mortgage Loan
Group.
"Startup Day": June 12, 1997.
"Step Up Date": Provided that the auction sale described in Section 9.02(a)
hereof with respect to Group II has not occurred, the date that is 90 days after
the Group II Auction Sale Bid Date.
"Subordinate Certificate": With respect to either Group, collectively, the
Mezzanine Certificates and the Class B Certificate related to such Group.
"Subordinated Trigger Event": A Group I Subordinated Trigger Event or a
Group II Subordinated Trigger Event, as the case may be.
"Subsequent Cut-Off Date": The close of business on the first day of the
month in which a Qualified Replacement Mortgage or a Subsequent Mortgage Loan is
transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust after the
Startup Day pursuant to a fixed price contract for inclusion in Group I or Group
II pursuant to Section 3.07 hereof, which shall be listed on the Schedule of
Mortgage Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Trustee, the Depositor and the
Seller substantially in the form of Exhibit C hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent Mortgage Loans, the
date specified in each Subsequent Transfer Agreement, and with respect to a
Qualified Replacement Mortgage, the date upon which a conveyance of such
Qualified Replacement Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and any
Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate, initially issued to The
Bank of New York as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
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"Tax Matters Person Residual Interest": The 0.001% interest in the Class R
Certificates, which shall be issued to and held by The Bank of New York
throughout the term hereof unless another Person shall accept an assignment of
such interest and the designation of Tax Matters Person pursuant to Section
11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)(i) the
Group I Weighted Average Pass-Through Rate in the case of Mortgage Loans in
Group I or (ii) the Group II Weighted Average Pass-Through Rate in the case of
Mortgage Loans in Group II, plus (b) any portion of the Trustee Fee (calculated
as an annual rate based on the outstanding principal amount of the related
Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": As defined in Section 9.02(b) hereof.
"Transfer Agreements": The agreements listed on Schedule III hereto as such
agreements are at any time amended, modified and supplemented and in effect at
such time.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this Agreement.
"Trustee": The Bank of New York, a New York banking corporation, the
Corporate Trust Office of which is located on the date of execution of this
Agreement at 101 Barclay Street, New York, New York 10286, Attn: Structured
Finance/MBS, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"Trustee Fee": The fee, if any, set out in a side letter between the Seller
and the Trustee.
"Underwriters": Prudential Securities Incorporated, Credit Suisse First
Boston and Morgan Stanley & Co. Incorporated.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
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Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1997-2".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to 101
Barclay Street, New York, New York 10286, Attention: Structured Finance/MBS, or
at such other address as the Trustee may designate by notice to the Depositor,
the Seller, the Servicers and the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning,
holding and disposing of Mortgage Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the REMIC Estate's status as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust effective
as of the Startup Day, to have all the rights, powers and duties set forth
herein. The Trustee hereby acknowledges and accepts such appointment, represents
and warrants its eligibility as of the Startup Day to serve as Trustee pursuant
to Section 10.08 hereof and declares that it will hold the Trust Estate in trust
upon and subject to the conditions set forth herein for the benefit of the
Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee and (ii)
any reasonable expenses of the Trustee that are "unanticipated expenses of the
REMIC" within the meaning of Treasury Regulations Section 1.860G-1(b)(3), shall
be paid pursuant to Section 7.03(c) and (d). The Seller shall pay directly the
reasonable fees and expenses of counsel to the Trustee pursuant to a fee letter
between the Seller and the Trustee. The reasonable fees and expenses of the
Trustee's counsel in connection with the review and delivery of this Agreement
and related documentation shall be paid by the Seller on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
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It is the intention of the parties hereto that the situs of the Trust shall
be in the State of New York; provided that it is understood that the Files may
be held by the Custodian on behalf of the Trustee outside the State of New York.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the REMIC Estate shall be
evidenced by the interests having the characteristics and terms as follows,
including for federal income tax purposes the month in which the Final Scheduled
Payment Dates occur:
Month and Year of
Initial Final Scheduled
Class Designation Balance Payment Dates
- ----------------- ------- -------------
Class A-1 $48,800,000 September 2008
Class A-2 45,500,000 May 2013
Class A-3 68,100,000 December 2020
Class A-4 27,900,000 March 2023
Class A-5 21,300,000 July 2024
Class A-6 14,900,000 June 2025
Class A-7 36,975,000 July 2027
Class A-8 28,900,000 July 2027
Class A-9 334,757,000 July 2027
Class M-1F 12,487,000 July 2027
Class M-1A 25,438,000 July 2027
Class M-2F 18,315,000 July 2027
Class M-2A 24,420,000 July 2027
Class B-1F 10,823,000 July 2027
Class B-1A 22,385,000 July 2027
Class C (1) July 2027
Class R (1) July 2027
Class S (1) July 2027
- ----------
(1) No Certificate Principal Balance.
(b) The Depositor hereby designates the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1F,
Class M-1A, Class M-2F, Class M-2A, Class B-1F, Class B-1A, Class C and Class S
Certificates as "regular interests," and the Class R Certificates as the single
class of "residual interests" in the REMIC Estate for purposes of the REMIC
Provisions.
(c) The Startup Day is hereby designated as the "startup day" of the REMIC
Estate within the meaning of Section 860G(a)(9) of the Code.
(d) The Owner of the Tax Matters Person Residual Interest in the REMIC
Estate is hereby designated as Tax Matters Person with respect to the REMIC
Estate.
(e) The Trust and the REMIC Estate shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
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(f) The Trustee shall cause the REMIC Estate to elect to be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of the Trust shall be resolved in a manner
that preserves the validity of such election to be treated as a REMIC.
(g) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to the REMIC Estate. Such information will be
provided in the manner described in Treasury Regulation Section 1.860E-2(a)(5),
or any successor regulation thereto.
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee, the
Seller, the Servicers and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery by the Depositor and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
constitutes a valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms hereof and thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the Operative Documents to which the Depositor
is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(f) No certificate of an officer, statement furnished in writing or report
delivered, or to be delivered, pursuant to the terms hereof by the Depositor
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement which describe
the Depositor or matters or activities for which the Depositor is responsible in
accordance with the Operative Documents or which are attributable to the
Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to the Depositor that materially adversely affects or in the
future may (so far as the Depositor can now reasonably foresee) materially
adversely affect the Depositor or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the acquisition by the
Depositor of the Mortgage Loans, the conveyance by the Depositor of the Mortgage
Loans, the purchase and sale of the Certificates and the execution, delivery and
performance by the Depositor of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the Depositor of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(i) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the Mortgages
by the Depositor hereunder are not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
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Section 3.02 Representations and Warranties of the Servicers.
(i) Each Servicer hereby represents and warrants to the Trustee, the
Depositor, the Seller and the Owners, as to itself and its Mortgage Loan
Servicing Group only, that as of the Startup Day:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its business, or
the properties owned or leased by it make such qualification necessary. Such
Servicer has all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under the Operative
Documents to which it is a party.
(b) The execution and delivery of the Operative Documents to which
such Servicer is a party by such Servicer and its performance and compliance
with the terms thereof have been duly authorized by all necessary corporate
action on the part of such Servicer and will not violate such Servicer's
articles or certificate of incorporation or bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which such Servicer is a party or by which such Servicer is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over such
Servicer or any of its properties.
(c) Each Operative Document to which such Servicer is a party,
assuming due authorization, execution and delivery by the other parties thereto,
constitutes a valid, legal and binding obligation of such Servicer, enforceable
against it in accordance with the terms thereof, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) Such Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which would materially and adversely affect
the condition (financial or otherwise) or operations of such Servicer or its
properties or would materially and adversely affect its performance hereunder.
(e) No litigation is pending with respect to which such Servicer has
received service of process or, to the best of such Servicer's knowledge,
threatened against such Servicer which litigation would prohibit its entering
into the Operative Documents to which such Servicer is a party or would
materially and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which such Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by such Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc.
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under any state securities laws, real estate syndication or "Blue Sky" statutes,
as to which such Servicer makes no such representation or warranty), that are
necessary or advisable in connection with the execution, delivery and
performance by such Servicer of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by such Operative
Documents on the part of such Servicer and the performance by such Servicer of
its obligations under such Operative Documents to which it is a party.
(h) The collection practices used by such Servicer with respect to the
Mortgage Loans serviced by it have been, in all material respects, legal,
proper, prudent and customary in the mortgage servicing business.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of such Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Mortgage Loans to the
Trustee.
(ii) Upon discovery by any of the Seller, a Servicer, the Depositor or the
Trustee (each, for purposes of this paragraph, a "party") of a breach of any of
the representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties
(provided that one Servicer need not give such notice to the other Servicers).
Within 60 days of its discovery or its receipt of notice of such breach, the
related Servicer shall (A) cure such breach in all material respects, (B) to the
extent such breach can only be cured through repurchase or substitution of one
or more Mortgage Loans, the Servicer (other than Advanta) may so repurchase or
substitute in the manner set forth in Section 3.04(b), and (C) to the extent
that such breach is not cured in accordance with clause (A) or (B) above, the
related Servicer may thereafter be removed pursuant to Section 8.20(a)(iv)
hereof; provided, however, that if such Servicer can establish to the reasonable
satisfaction of the Seller that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of the Seller, which
such written approval shall not be unreasonably withheld.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee, the
Depositor, the Servicers and the Owners as of the Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's certificate of incorporation or bylaws or
constitute a
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default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in a breach of, any material contract,
agreement or other instrument to which the Seller is a party or by which the
Seller is bound or violate any statute or any order, rule or regulation of any
court, governmental agency or body or other tribunal having jurisdiction over
the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
constitutes a valid, legal and binding obligation of the Seller, enforceable
against it in accordance with the terms hereof and thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has received
service of process or, to the best of the Seller's knowledge, threatened against
the Seller, which litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance under
the Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered or to be delivered pursuant to the terms hereof by the Seller contains
or will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the certificate, statement or report
not misleading.
(g) The statements contained in the Registration Statement which describe
the Seller or matters or activities for which the Seller is responsible in
accordance with the Operative Documents or which are attributable to the Seller
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Seller required to be stated therein or necessary to make the statements
contained therein with respect to the Seller, in light of the circumstances
under which they were made, not misleading. There is no fact known to the Seller
that materially adversely affects or in the future may (so far as the Seller can
now reasonably foresee) materially adversely affect the Seller or the Mortgage
Loans or the ownership interests therein represented by the Certificates that
has not been set forth in the Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the related Note) and
other items of the Trust Estate by the Trustee under this Agreement, the Trust
will have good title to such Mortgage Loan (including the related Note) and such
other items of the Trust Estate free and clear of any lien, charge, mortgage,
encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any
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federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution, delivery and
performance by the Seller of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the other
Operative Documents on the part of the Seller and the performance by the Seller
of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(j) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is the Seller aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the Mortgages
by the Seller hereunder are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(m) The Seller is not aware of a default by an Originator under any
Operative Document or that any Mortgage Loan breaches any representation or
warranty in a Transfer Agreement that as of the Startup Date is not subject to
cure.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the Seller or the
Trustee (each, for purposes of this paragraph, a "party") of a breach of any of
the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties.
The Seller hereby covenants and agrees that within 60 days of its discovery or
its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, it shall itself, or
if the related Originator or other party to the related Transfer Agreement
causes such breach, such party shall on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) within two years of the
Startup Day, substitute in lieu of any Mortgage Loan not in compliance with
clause (h) a Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the applicable Subsequent
Cut-Off Date is less than the Loan Balance of such Mortgage Loan as of such
Subsequent Cut-Off Date, deliver an amount equal to such difference together
with the aggregate amount of (A) all unreimbursed Delinquency Advances and
Servicing Advances theretofore made with respect to such Mortgage Loan and (B)
the interest portion of any Delinquency Advances which the related Servicer has
theretofore failed to remit with respect to such Mortgage Loan (a "Substitution
Amount") to the related Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Mortgage Loan from the Trust at the Loan Purchase
Price, which purchase price shall be delivered to the related Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Mortgage Loan which is not
in default or as
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to which no default is imminent, no repurchase or substitution pursuant hereto
shall be made unless the related Originator or the Seller obtains for the
Trustee an opinion of counsel experienced in federal income tax matters to the
effect that such a repurchase or substitution would not constitute a Prohibited
Transaction for the REMIC Estate or otherwise subject the REMIC Estate to tax
and would not jeopardize the status of the REMIC Estate as a REMIC (a "REMIC
Opinion") addressed to the Servicers and the Trustee and acceptable to the
Servicers and the Trustee. Any Mortgage Loan as to which repurchase or
substitution was delayed pursuant to this Section because of the inability to
deliver a REMIC Opinion shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Mortgage Loan and (b) receipt by the Trustee of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to
the Mortgage Loans In Certain Situations.
(a) Other than the Seller's right to recapture any premium paid by it in
connection with its purchase of Mortgage Loans, the Seller hereby assigns to the
Depositor, who assigns to the Trustee for the benefit of the Owners all of its
right, title and interest under each Transfer Agreement applicable to the
Mortgage Loans but none of its obligations thereunder. Insofar as such Transfer
Agreement provides for representations and warranties made by the related
Originator or another party who has sold loans to the Seller in respect of a
Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
against such Originator directly by the Seller, the Depositor, the related
Servicer or the Trustee on behalf of the Owners; provided, that the Trustee must
enforce such remedies if such other parties do not so enforce such remedies.
Upon the discovery by the Seller, the Depositor, a Servicer or the Trustee of a
breach of any of the representations and warranties made in a Transfer Agreement
in respect of any Mortgage Loan, without regard to any limitation set forth in
such representation or warranty concerning the knowledge of the related
Originator or another party who has sold loans to the Seller as to the facts
stated therein, which materially and adversely affects the interests of the
Owners in such Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties.
A breach of any representation or warranty (x) relating to marketability of
title sufficient to transfer unencumbered title to a Mortgage Loan set forth in
each Transfer Agreement, (y) relating to enforceability of the Mortgage Loan
against the related Mortgagor or Property set forth in each Transfer Agreement
or (z) the status of such Mortgage Loan as a "qualified mortgage" under Section
860G(a)(3) of the Code, is a priori the breach of a representation or warranty
which "materially and adversely affects the interests of the Owners" in such
Mortgage Loan; provided that the related Originator shall nevertheless have the
opportunity to cure, substitute or repurchase in accordance with the applicable
Transfer Agreement and this Agreement.
(b) Upon the earliest to occur of the Seller's discovery, its receipt of
notice of breach of a representation and warranty given by an Originator from
any one of the other parties hereto or such time as a breach of any
representation and warranty materially and adversely affects the interests of
the Owners as set forth above, the Seller hereby covenants and warrants that it
shall promptly request that the related Originator cure such breach in all
material respects or, if such breach is not cured, the Seller shall request that
the related Originator, subject to the further requirements of this paragraph
and within the time period specified in the related Transfer Agreement (but in
any case for a Mortgage Loan that is not a "qualified mortgage", within 90 days
of discovery thereof) (i) within two years of the Startup Day, substitute in
lieu of each Mortgage Loan which has given rise to the requirement for action a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, to the related Servicer for deposit
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related Principal and Interest Account or (ii) purchase such Mortgage Loan from
the Trust at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the related Servicer for deposit in the
related Principal and Interest Account by the related Originator. In connection
with any such proposed purchase or substitution, the Seller may request the
Originator at such party's expense to cause to be delivered to the Trustee or
may itself deliver to the related Servicer and the Trustee an opinion of counsel
experienced in federal income tax matters stating whether or not such a proposed
purchase or substitution would constitute a Prohibited Transaction for the Trust
or would jeopardize the status of the Trust as a REMIC, and the related
Originator shall only be required to take either such action to the extent such
action would not constitute a Prohibited Transaction for the Trust or would not
jeopardize the status of the Trust as a REMIC. Any required purchase or
substitution, if delayed by the absence of such opinion, shall nonetheless occur
upon the earlier of (i) the occurrence of a default or imminent default with
respect to the Mortgage Loan or (ii) the delivery of such opinion by the Seller
at the related Originator's expense or by the related Originator. Any repurchase
or substitution shall occur prior to the related Monthly Remittance Date and the
related Originator shall provide the related Servicer with written notice no
less than five Business Days in advance of such repurchase or substitution. It
is understood and agreed that the obligation of the related Originator to cure
the defect, or substitute for or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect and has not been
remedied shall constitute the sole remedy available to the Owners, the Seller,
the Depositor and the Trustee.
(c) In the event that any Qualified Replacement Mortgage is delivered by an
Originator to the Trust pursuant to this Section 3.04 or Section 3.06 hereof,
the Seller shall cause the related Originator to take the actions described in
Section 3.04(b) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the Seller, a Servicer or the Trustee that the
representations and warranties set forth in the related Transfer Agreement or in
Section 3.03 above, are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust such that the interests
of the Owners in the related Qualified Replacement Mortgage are materially and
adversely affected; provided, however, that for the purposes of this subsection
(c) the representations and warranties in the related Transfer Agreement or as
set forth in Section 3.3 above referring to items "as of the Cut-Off Date" or
"as of the Startup Day" shall be deemed to refer to such items as of the related
Subsequent Cut-Off Date.
(d) Any of the foregoing obligations set forth in subsection (b) or (c)
applicable to any Originator (other than Option One and Ameriquest) will be
required to be performed by the Seller if the related Originator defaults in
performing the obligation and such default remains unremedied for 30 days.
(e) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee and the Servicers (in their capacities as Servicers) shall
have no duty to conduct any affirmative investigation other than as specifically
set forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this Section or the
eligibility of any Mortgage Loan for purposes of this Agreement.
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage Loans
and Qualified Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners, all of
their respective right, title and interest in and to the Trust Estate; provided,
however, that the Seller reserves and retains all of its right, title and
interest in and to principal (including Prepayments collected) and interest due
on each Initial Mortgage Loan on or prior to the Cut-Off Date. The transfer by
the Depositor of the Initial Mortgage Loans set forth on the
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Schedule of Mortgage Loans to the Trustee is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance herein
contemplated constitute a sale of the Initial Mortgage Loans conveying good
title thereto free and clear of any liens and encumbrances from the Seller to
the Depositor and from the Depositor to the Trust and that the Initial Mortgage
Loans not be part of the Depositor's or the Seller's estate in the event of
insolvency. In the event that either such conveyance or a conveyance of a
Qualified Replacement Mortgage or a conveyance pursuant to Section 3.07 and any
Subsequent Transfer Agreement is deemed to be a loan, the parties intend that
the Seller shall be deemed to have granted to the Depositor and the Depositor
shall be deemed to have granted to the Trustee a security interest in the Trust
Estate, and that this Agreement shall constitute a security agreement under
applicable law.
In connection with such sale, transfer, assignment, and conveyance from the
Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans and the other property (including any
Qualified Replacement Mortgage) described above as collateral and on or prior to
each Subsequent Transfer Date the Seller will file in such offices a UCC-1
financing statement listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Seller as a debtor and the Depositor as
the secured party on such financing statements is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the parties
that this transaction be treated as a sale of the Seller's entire right, title
and interest in the Trust Estate. In connection with such filing, the Seller
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's and the Owners' interest
in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance, from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Initial Mortgage Loans and the other property (including any
Qualified Replacement Mortgage) described above as collateral and on or prior to
each Subsequent Transfer Date the Depositor will file in such offices a similar
UCC-1 financing statement listing the Subsequent Mortgage Loans so transferred
as collateral. The characterization of the Depositor as a debtor and the Trustee
as the secured party in such financing statements is solely for protective
purposes and shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale of the Depositor's entire
right, title and interest in the Trust Estate. In connection with such filing,
the Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's and the
Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial Mortgage
Loans and prior to each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Initial Mortgage Loan or
on each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgage or Subsequent Mortgage Loans, (A) the original Notes endorsed in
blank or to the order of the Trustee, (B) the original title insurance
policy or any one of an original title binder, an original preliminary
title report or an original title commitment or a copy of any of the
foregoing certified by the issuer of the title insurance policy, or the
attorney's opinion of title, (C) originals or certified copies of all
intervening recorded assignments, showing a complete chain of title from
origination to the Trustee, if any, with evidence of recording thereon, (D)
originals of all
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assumption, modification, written assurance or substitution agreements, if
any and (E) either: (1) the original Mortgage, with evidence of recording
thereon, (2) a certified copy if such original Mortgage has not been
returned by the applicable recording office, or (3) a copy of the Mortgage
certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(ii) cause the Custodian on behalf of the Trustee, within 60 days
following the Startup Day with respect to the Initial Mortgage Loans or on
each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages or Subsequent Mortgage Loans to complete the assignments of the
Mortgages to "The Bank of New York, as Trustee of AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1997-2 under the Pooling and
Servicing Agreement dated as of June 1, 1997" to be submitted to the Seller
for recording in the appropriate jurisdictions (unless the Originator is
either Ameriquest or Option One, in which case either Long Beach or Option
One shall so submit such assignments) for recording in the appropriate
jurisdictions; provided, however, that the Depositor shall not be required
to cause the Custodian to complete and cause the related Originator (if the
Originator is either Ameriquest or Option One) or the Seller to record an
assignment for any Mortgage with respect to a Property located in
California or with respect to which the original recording information is
lacking;
(iii) if not delivered on the Startup Day, deliver the title insurance
policy or title searches, the original Mortgages and such recorded
assignments, together with originals or duly certified copies of any and
all prior assignments, to the Custodian on behalf of the Trustee within 15
days of receipt thereof by the Depositor (but in any event, with respect to
any Mortgage as to which original recording information has been made
available to the Depositor, within one year after the Startup Day with
respect to the Initial Mortgage Loans or on each Subsequent Transfer Date
with respect to the Qualified Replacement Mortgages or Subsequent Mortgage
Loans); and
(iv) furnish to the Trustee at the Depositor's expense, an opinion of
counsel with respect to the sale and perfection of the Subsequent Mortgage
Loans delivered to the Trust, corporate and enforceability matters and an
opinion of counsel as to the tax consequences to the Trust, if any,
resulting from the conveyance of Subsequent Mortgage Loans, each in form
and substance satisfactory to the Trustee.
Notwithstanding anything to the contrary contained in this Section 3.05, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor shall be deemed to have satisfied its
obligations hereunder upon delivery to the Custodian on behalf of the Trustee of
a copy of such Mortgage, such assignment or assignments of Mortgage certified by
the public recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be accomplished
at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) The Seller shall cause the related Originator, to transfer, assign, set
over and otherwise convey without recourse, to the Trustee all right, title and
interest of such party in and to any Qualified
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Replacement Mortgage delivered to the Trustee on behalf of the Trust by such
party pursuant to Section 3.03, 3.04 or 3.06 hereof and all such party's right,
title and interest to principal and interest due on such Qualified Replacement
Mortgage after the applicable Subsequent Cut-Off Date; provided, however, that
such party shall reserve and retain all right, title and interest in and to
payments of principal and interest due on such Qualified Replacement Mortgage on
or prior to the applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Subsequent Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such released Mortgage Loan
on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt thereof by the Seller (but
in any event within 120 days after the date of conveyance of such Qualified
Replacement Mortgage), (iv) deliver the title insurance policy, or where no such
policy is required to be provided under Section 3.05(b)(i)(B), the other
evidence of title in same required in Section 3.05(b)(i)(B) and (v) originals of
all assumption, modification, written assurance or substitution agreements, if
any.
(g) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage the Trustee shall cause the
Custodian on behalf of the Trustee to deliver on the date of conveyance of such
Qualified Replacement Mortgage to the party providing such Qualified Replacement
Mortgage (i) the original Note relating thereto, endorsed without recourse or
representation, to the Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording, or is
returned from the recorder's office unrecorded due to a defect therein, the
Seller shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and deliver on
the Trustee's behalf on the Startup Day an acknowledgment of receipt of the
items delivered by the Seller or the Depositor in the form attached as Exhibit E
hereto, and declares that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners. The Trustee agrees to cause the Custodian on the
Trustee's behalf to review, for the benefit of the Owners, such items within 45
days after the Startup Day (or, with respect to any document delivered after the
Startup Day, within 45 days of receipt and with respect to any Subsequent
Mortgage Loan or Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and
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to deliver to the Depositor, the Seller and the related Servicer a certification
in the form attached hereto as Exhibit F (a "Pool Certification") to the effect
that, as to each Mortgage Loan listed in the Schedule of Mortgage Loans (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically identified
in such Pool Certification as not covered by such Pool Certification), (i) all
documents required to be delivered to it pursuant to Section 3.05(b)(i) of this
Agreement are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged or torn and relate to such Mortgage Loan
and (iii) based on its examination and only as to the foregoing documents, the
information set forth on items (1), (3) and (4) of the Schedule of Mortgage
Loans accurately reflects the information set forth in the File. Neither the
Trustee nor the Custodian shall have any responsibility for reviewing any File
except as expressly provided in this subsection 3.06(a). Without limiting the
effect of the preceding sentence, in reviewing any File, neither the Trustee nor
the Custodian shall have any responsibility for determining whether any document
is valid and binding, whether the text of any assignment is in proper form
(except to determine if the Trustee is the assignee), whether any document
(other than the assignments) has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. Neither
the Trustee nor the Custodian shall be under any duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall either the Trustee or the Custodian be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Mortgage Loan.
(b) If the Trustee or the Custodian on behalf of the Trustee during such
45-day period finds any document constituting a part of a File which is not
executed, has not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform to the description thereof as set forth in the Schedule of Mortgage
Loans, the Trustee shall promptly so notify the Depositor, the Seller, the
related Servicer and the related Originator. In performing any such review, the
Trustee and the Custodian on behalf of the Trustee may conclusively rely on the
Seller as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trustee's and the Custodian's on
behalf of the Trustee review of the items delivered by the Seller pursuant to
Section 3.05(b)(i) is limited solely to confirming that the documents listed in
Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Mortgage Loans and conform to the description
thereof in the Schedule of Mortgage Loans. The Seller agrees to request that the
related Originator use reasonable efforts to remedy a material defect in a
document constituting part of a File of which it is so notified by the Trustee.
If, however, within the time period specified in the related Transfer Agreement
after the Trustee's notice to the related Originator respecting such defect the
related Originator has not remedied the defect and the defect materially and
adversely affects the interest in the related Mortgage Loan of the Owners, the
Seller will request the related Originator to, within the time period set forth
in the related Transfer Agreement, (i) substitute in lieu of such Mortgage Loan
a Qualified Replacement Mortgage and deliver the Substitution Amount to the
applicable Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the applicable Servicer for
deposit in the related Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to cause the
Custodian to provide an updated report during the 12th month after the Startup
Day indicating the current status of the exceptions previously indicated on the
Pool Certification (the "Final Certification"). After delivery of the Final
Certification, the Trustee shall provide to the Servicers no less frequently
than monthly updated certifications indicating the then current status of
exceptions, until all such exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Mortgage Loans.
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(a) Subject to the satisfaction of the conditions set forth in Section 3.05
and paragraphs (b) and (c) below in consideration of the Trustee's delivery on
the relevant Subsequent Transfer Dates to or upon the order of the Depositor of
all or a portion of the balance of funds in the Pre-Funding Account, the
Depositor shall on each Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee, all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from the Subsequent Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the relevant Subsequent Cut-Off
Date) which the Depositor will cause to be delivered to the Trustee therewith
(and all substitutions therefor as provided by Sections 3.03, 3.04 and 3.06),
together with the related Subsequent Mortgage Loan documents and the Depositor's
interest in any Property and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing and proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Subsequent Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on the Schedule of
Mortgage Loans by the Seller to the Depositor and by the Depositor to the Trust
shall be absolute and shall be intended by the Owners and all parties hereto to
be treated as a sale by the Seller to the Depositor and by the Depositor to the
Trust. Any Subsequent Mortgage Loan so transferred will be included in the
related Mortgage Loan Group. The amount released from the Pre-Funding Account
shall be one-hundred percent (100%) of the aggregate principal balances of the
Subsequent Mortgage Loans so transferred. Upon the transfer by the Depositor of
the Subsequent Mortgage Loans hereunder, such Subsequent Mortgage Loans (and all
principal (including Prepayments collected) and interest due thereon subsequent
to the Subsequent Cut-Off Date) and all other rights and interests with respect
to such Subsequent Mortgage Loans transferred pursuant to a Subsequent Transfer
Agreement shall be deemed for all purposes hereunder to be part of the Trust
Estate. The Seller hereby covenants and agrees to use its best efforts to ensure
that a sufficient amount of Subsequent Mortgage Loans will be transferred to the
Depositor during the Funding Period to enable the Depositor to reduce the
Pre-Funded Amount with respect to each Group to less than $100,000. The
Depositor hereby covenants and agrees to use its best efforts to ensure that a
sufficient amount of Subsequent Mortgage Loans will be transferred to the Trust
during the Funding Period to reduce the Pre-Funded Amount with respect to each
Group to less than $100,000.
(b) The obligation of the Trustee to accept the transfer of the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee with an Addition
Notice not less than ten (10) calendar days prior to the proposed
Subsequent Transfer Date (unless the Trustee agrees to a shorter time
period) and shall have provided any information reasonably requested by any
of the foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a duly executed
written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit C, which shall include a Schedule of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
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(iii) the Depositor shall have deposited in the applicable Principal
and Interest Account all principal collected and interest accruing in
respect of such Subsequent Mortgage Loans on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Depositor nor
the Seller was insolvent, nor will either of them be made insolvent by such
transfer, nor is either of them aware of any pending insolvency;
(v) the Funding Period for the related Group shall not have ended;
(vi) the Depositor shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and in the related Subsequent Transfer
Agreement; and
(vii) such sale will not result in a materially adverse tax
consequence to the Trust as evidenced by an Opinion of Counsel delivered to
the Trustee by the Depositor at its own expense.
(c) The obligation of the Trust to purchase Subsequent Mortgage Loans on a
Subsequent Transfer Date is subject to the following requirements, among others:
(i) the ratings on the Offered Certificates shall not have been downgraded by
any Rating Agency; (ii) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (iii) the
remaining term to maturity of such Subsequent Mortgage Loan may not exceed 360
months; and (iv) following the purchase of all of the Subsequent Mortgage Loans
by the Trust, the Subsequent Mortgage Loans, as a whole, (a) will have a
weighted average Loan-to-Value Ratio of not more than 72% for Group I and 74%
for Group II; (b) will have a weighted average gross margin for Group II that is
not more than 25 basis points less than the weighted average gross margin for
Group II as of the Cut-Off Date; (c) will have no more than 10% in the case of
Group I and 15% in the case of Group II of such Subsequent Mortgage Loans with
Loan-to-Value Ratios in excess of 80%; (d) will have no more than 70% in the
case of Group I and 50% in the case of Group II with cash out refinancings; (e)
in the case of Group II only, will not be comprised of more than 70% in the
aggregate of 2/28 Loans and 3/27 Loans; (f) will have weighted average PAG codes
of less than 2.5 in the case of the Group I and less than 2.7 in the case of
Group II; (g) will include Subsequent Mortgage Loans classified as PAG IV or PAG
V comprising not more than 16% of Group I and 19% of Group II; and (h) will have
not more than 10.5% of Group I and 8% of Group II that are secured by non-owner
occupied properties.
(d) In connection with each Subsequent Transfer Date and on the Payment
Dates occurring in July and August 1997 and on the Pre-Funding Payment Date, the
Trustee shall determine: (i) the amount and correct dispositions of each of the
Group I and Group II Capitalized Interest Requirements, Overfunded Interest
Amounts, Pre-Funding Account Earnings and the Pre-Funded Amount and (ii) any
other necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. In the event that any amounts
are released as a result of an error in calculation to the Owners or Depositor
from the Pre-Funding Account or from the Capitalized Interest Account, such
Owners or the Depositor shall immediately repay such amounts to the Trustee.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 10 a.m., eastern time on the Startup Day (the "Closing"), at the offices
of Arter & Hadden, 1801 K Street, N.W., Suite 400K, Washington, D.C. (or at such
other location acceptable to the Seller), the Seller will sell and convey the
Initial Mortgage Loans and the money, instruments and other property related
thereto to the Depositor and the Depositor will sell and convey the Initial
Mortgage Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Offered
Certificates with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co., or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, (ii) to the initial purchasers
thereof, Class S Certificates with a cumulative Percentage Interest equal to
100%, and (iii) to the respective registered owners thereof, a Class C
Certificate with a Percentage Interest equal to 100% and a Class R Certificate
with a Percentage Interest equal to 99.999%, registered in the names designated
by the Depositor and the Tax Matters Person Residual Interest to the Trustee.
The Depositor shall deliver to the Trustee on the Startup Day the letters
required to be delivered by transferees of Class C, Class S and Class R
Certificates pursuant to Section 5.08(b) and (c) hereof with respect to the
initial purchasers of such Certificates.
Upon the Trustee's receipt of the entire net proceeds of the sale of the
Certificates the Depositor shall instruct the Trustee to deposit (a) an amount
equal to the Original Pre-Funded Amount in the Pre-Funding Account and (b) an
amount equal to $1,463,353.46 to the Capitalized Interest Account contributed by
the Depositor out of such proceeds or otherwise. The Trustee shall then remit
the entire balance of such net proceeds to the Depositor in accordance with
instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law). The Certificates are payable
solely from payments received on or with respect to the Mortgage Loans (other
than the Servicing Fees), money in the Principal and Interest Account, except as
otherwise provided herein, money in the Pre-Funding Account and the Capitalized
Interest Account, earnings and the proceeds of property held as a part of the
Trust Estate. Each Certificate entitles the Owner thereof to receive monthly on
each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Mortgage Loans, pro rata in accordance with such
Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee any
Certificate prior to receiving the final distribution due thereon. Any such
Certificate as to which the Trustee has made the final distribution thereon
shall be deemed cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9 Certificates, the Class M-1F Certificates, the Class M-1A
Certificates, the Class M-2F Certificates, the Class M-2A Certificates, the
Class B-1F Certificates, the Class B-1A Certificates, the Class C Certificates,
the Class R Certificates and the Class S Certificates shall be in substantially
the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9,
B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8 and B-9 hereof, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement or as may in the Depositor's judgment be
necessary, appropriate or convenient to comply, or facilitate compliance, with
applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any applicable securities laws or as may,
consistently herewith, be determined by the Authorized Officer of the Depositor
executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Depositor shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
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The initial Certificates shall be dated as of the Startup Day and delivered
at the Closing to the parties specified in Section 4.02 hereof. Subsequently
issued Certificates will be dated as of the issuance of the Certificate.
No Certificate shall be valid until executed and authenticated as set forth
above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners and the Trustee shall have the right to inspect the
Register during the Trustee's normal hours and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Registrar by an Authorized Officer thereof as to the names and addresses of
the Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the Owners
of a majority of the aggregate Percentage Interests represented by the Offered
Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates, the Trustee will give the Owners prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Owner
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
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(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Offered Certificate of such Class. Upon initial issuance, the ownership of each
such Offered Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Offered Certificates shall be issued in
denominations of less than $1,000 except that one certificate in each class may
be in an amount less than $1,000. The Class C Certificates, the Class R
Certificates and Class S Certificates (other than the Tax Matters Person
Residual Interest) will be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicers,
the Seller and the Trustee shall have no responsibility or obligation to Direct
or Indirect Participants or beneficial owners for which the Depository holds
Offered Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Servicers, the Seller and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the Register,
of any notice with respect to the Offered Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or names registered Owners of Offered Certificates
transferring Offered Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Offered Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal
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or interest on such Offered Certificates and all notices with respect to such
Offered Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee harmless, then, in the absence of notice to the Trustee or the
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Registrar
or Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose name
any Certificate is registered as the Owner of such Certificate for the purpose
of receiving distributions with respect to such Certificate and for all other
purposes whatsoever, and neither the Trustee nor any agent of the Trustee shall
be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or assignment of
an interest in a Class R Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise) shall
be made to a Disqualified Organization or an agent of a Disqualified
Organization. The transfer, sale or other disposition of a Class R Certificate
(whether pursuant to a purchase,
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a transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Class R Certificate. Furthermore, in no event shall the
Trustee accept surrender for transfer, registration of transfer, or register the
transfer, of any Class R Certificate nor authenticate and make available any new
Class R Certificate unless the Trustee has received an affidavit from the
proposed transferee in the form attached hereto as Exhibit I. Each holder of a
Class R Certificate by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership of a
Class C Certificate, a Class R Certificate, or a Class S Certificate shall be
made unless such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws or is made in accordance with said Securities Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Depositor shall require a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Depositor in
the event that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Securities Act and
laws or is being made pursuant to said Securities Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee, the Trust Estate or the
Servicers and (ii) the Trustee shall require the transferee to execute an
investment letter in substantially the form of Exhibit J hereto acceptable to
and in form and substance satisfactory to the Seller certifying to the Trustee
and the Seller the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee, the Trust Estate or the Seller. The
Owner of a Class C Certificate, Class R Certificate or Class S Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Servicers, the Depositor and the Seller against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
(c) No transfer of a Class C Certificate or Class R Certificate shall be
made unless the Trustee shall have received a representation letter in
substantially the form of Exhibit J hereto from the transferee of such Class C
Certificate or Class R 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 Employee Retirement Income
Security Act ("ERISA") nor a plan or other arrangement subject to Section 406 of
ERISA nor a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan"), nor is acting on behalf of any Plan nor using the
assets of any Plan to effect such transfer. Notwithstanding anything else to the
contrary herein, any purported transfer of a Class C Certificate or Class R
Certificate to or on behalf of any Plan shall be null and void and of no effect.
(d) No sale or other transfer of any Offered Certificate may be made to the
Depositor or the Seller or any Originator. No sale or other transfer of any
Offered Certificate may be made to a Seller affiliate unless the Trustee shall
have been furnished with an Opinion of Counsel acceptable to the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. No sale or other transfer of the Class R
Certificate issued to the Tax Matters Person appointed on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
(e) No transfer of a Class A Certificate or any interest therein shall be
made to any Plan or to any entity using the assets of any Plan to effect such
transfer prior to the time that the balance of the related Pre-Funding Account
is reduced to zero.
Section 5.09 Assignment of Rights.
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An Owner may pledge, encumber, hypothecate or assign all or any part of its
right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the related
Account(s) and make the distributions with respect to the Certificates in
accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate having an original
principal balance of not less than $1,000,000 or (B) a Class C, a Class R or
Class S Certificate having a Percentage Interest of not less than 10% in writing
not later than five Business Days prior to the applicable Record Date (which
request does not have to be repeated unless it has been withdrawn), to such
Owner by wire transfer to an account within the United States designated no
later than five Business Days prior to the related Record Date, made on each
Payment Date, in each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any Certificate
that are to be made from amounts withdrawn from the Certificate Account shall be
made by and on behalf of the Trustee, and no amounts so withdrawn from the
Certificate Account for payments of Certificates except as provided in this
Section.
(b) Whenever the Depositor has appointed one or more Paying Agents pursuant
to Section 11.15 hereof, the Trustee will, on the Business Day immediately
preceding each Payment Date, deposit with such Paying Agents in immediately
available funds an aggregate sum sufficient to pay the amounts then becoming due
(to the extent funds are then available for such purpose in the Certificate
Account for the Class to which such amounts are due) such sum to be held in
trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the Trustee on
behalf of the Trust, to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and Class S
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Offered
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent before being required to make any such payment, may
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which shall be not fewer than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the
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Class R Certificates. The Trustee shall, at the direction of the Depositor, also
adopt and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of the
Owners and, at the request of the Depositor, will from time to time execute and
deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the interests of the Owners represented thereby, in such
Trust Estate against the contrary claims of all Persons and parties.
The Trustee shall send copies of any request received from the Depositor to
take any action pursuant to this Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the Owners, by
action, suit or proceeding at law or equity; provided, however, that nothing in
this Section shall require any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by this Agreement, have been requested by the Owners of a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding or, if there are no longer any Offered Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from any
of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g).
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Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the distributions
payable in respect of, the Certificates (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Owner by reason of the payment of any taxes levied or
assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person except
pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity or
transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the Depositor and
the Trustee of such Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding or, if there
are no Offered Certificates then Outstanding, by such percentage of
the Percentage Interests represented by the Class C Certificates and
the Class R Certificates, shall have made written request to the
Trustee to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such proceeding;
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(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Owners of a majority of
the Percentage Interests represented by the Offered Certificates or,
if there are no Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class C
Certificates and the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee or to the Owners is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
Except as otherwise provided herein, the assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Seller or any Owner of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein. Every right
and remedy given by this Article VI or by law to the Trustee or to the Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
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(3) the Trustee may take any other action deemed proper by the Trustee, as
the case may be, which is not inconsistent with such direction;
provided, however, that the Seller or the Trustee, as the case may be,
need not take any action which it determines might involve it in
liability or may be unjustly prejudicial to the Owners not so
directing.
Section 6.12 Access to Owners of Certificates' Names and Addresses. (a) If
any Owner (for purposes of this Section 6.12, an "Applicant") applies in writing
to the Trustee, and such application states that the Applicant desires to
communicate with other Owners with respect to their rights under this Agreement
or under the Certificates and is accompanied by a copy of the communication
which such Applicant proposes to transmit, then the Trustee shall, at the
expense of such Applicant, within ten (10) Business Days after the receipt of
such application, furnish or cause to be furnished to such Applicant a list of
the names and addresses of the Owners of record as of the most recent Payment
Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Trustee by the related
Servicer or by any Subservicer. The Trustee shall hold all such money and
property received by it, other than pursuant to or as contemplated by Section
6.02(e) hereof, as part of the Trust Estate and shall apply it as provided in
this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and the
Trustee shall maintain at the Corporate Trust Office as a segregated trust
account, the Certificate Account, to be held by the Trustee on behalf of the
Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office two segregated trust accounts, referred
to herein as the "Pre-Funding Account" and the "Capitalized Interest Account" to
be held by the Trustee in the name of the Trust for the benefit of the Owners.
For federal income tax purposes, the Depositor shall be the owner of such
accounts.
Section 7.03 Flow of Funds.
(a) With respect to Group I, the Servicers shall remit and the Trustee
shall deposit to the Certificate Account, without duplication, (i) the proceeds
of any liquidation of the assets of the Trust insofar as such proceeds relate to
Group I, (ii) all remittances made to the Trustee pursuant to Section 8.09
insofar as such remittances relate to Group I, (iii) each portion of the Monthly
Remittance Amount relating to Group I remitted by the related Servicer, (iv) on
the Payment Dates during the Funding Period and the Pre-Funding Payment Date,
the Group I Capitalized Interest Requirement and the Group I Pre-Funding Account
Earnings to be transferred on such Payment Date (or Pre-Funding Payment Date)
from the Capitalized Interest Account, pursuant to Section 7.04(e) hereof and
(v) on the Payment Dates during the Funding Period and the Pre-Funding Payment
Date the amount, if any, to be transferred on such Payment Date (or Pre-Funding
Payment Date) from the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(b) With respect to Group II, the Servicers shall remit and the Trustee
shall deposit to the Certificate Account without duplication, (i) the proceeds
of any liquidation of the assets of the Trust insofar as such proceeds relate to
Group II, (ii) all remittances made to the Trustee pursuant to Section 8.09
insofar as such remittances relate to Group II, (iii) each portion of the
Monthly Remittance Amount relating to Group II remitted by the related Servicer,
(iv) on the Payment Dates during the Funding Period and the Pre-Funding Payment
Date, the Group II Capitalized Interest Requirement and the Group II Pre-Funding
Account Earnings to be transferred on such Payment Date (or Pre-Funding Payment
Date) from the Capitalized Interest Account, pursuant to Section 7.04(e) hereof
and (v) on the Payment Dates during the Funding Period and the Pre-Funding
Payment Date, the amount, if any, to be transferred on such Payment Date (or
Pre-Funding Payment Date) from the Pre-Funding Account pursuant to Section
7.04(c) hereof.
(c) With respect to the Certificate Account, on each Payment Date, the
Trustee shall make the following disbursements from the Group I Interest
Remittance Amount transferred thereto pursuant to
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subsection (a), in the following order of priority, and each such disbursement
shall be treated as having occurred only after all preceding disbursements have
occurred:
(i) First, to the Trustee, the portion of the Trustee Fee and reasonable
expenses incurred by the Trustee relating to Group I;
(ii) Second, to the Owners of the Class A Certificates related to Group I,
the related Class A Current Interest plus the related Class A Interest
Carry Forward Amount with respect to each such Class of Class A
Certificates without any priority among such Class A Certificates;
provided, that if the Group I Interest Amount Available is not
sufficient to make a full distribution of interest with respect to all
Classes of the Class A Certificates related to Group I, the Group I
Interest Amount Available will be distributed among the outstanding
Classes of Class A Certificates related to Group I pro rata based on
the aggregate amount of interest due on each such Class, and the
amount of the shortfall will be carried forward;
(iii)Third, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class M-1F Certificates, the Class
M-1F Current Interest;
(iv) Fourth, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class M-2F Certificates, the Class
M-2F Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class B-1F Certificates, the Class
B-1F Current Interest; and
(vi) Sixth, the Group I Monthly Excess Interest Amount shall be applied or
distributed as provided in subsection (h) of this Section 7.03.
(d) With respect to the Certificate Account on each Payment Date, the
Trustee shall make the following disbursements from the Group II Interest
Remittance Amount transferred thereto pursuant to subsection (b), in the
following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee and reasonable
expenses incurred by the Trustee relating to Group II;
(ii) Second, to the Owners of the Class A-9 Certificates, the Class A-9
Current Interest plus the Class A-9 Interest Carry Forward Amount;
(iii)Third, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class M-1A Certificates, the Class
M-1A Current Interest;
(iv) Fourth, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class M-2A Certificates, the Class
M-2A Current Interest;
(v) Fifth, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class B-1A Certificates, the Class
B-1A Current Interest; and
(vi) Sixth, the Group II Monthly Excess Interest Amount shall be applied or
distributed as provided in subsection (i) of this Section 7.03.
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(e) On each Payment Date, the Trustee shall distribute to the Owners of the
Class S Certificates, the Class S Distribution Amount.
(f) With respect to the Certificate Account and Group I on each Payment
Date, the Trustee shall make the following disbursements from amounts relating
to principal transferred thereto, in the following order of priority and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) On each Payment Date (a) before the Group I Stepdown Date or (b) with
respect to which a Group I Trigger Event is in effect, Owners of the
Class A Certificates related to Group I will be entitled to receive
payment of 100% of the Group I Principal Distribution Amount as
follows: (I) to the Owners of the Class A-8 Certificates, the Class
A-8 Lockout Distribution Amount and (II) to the Owners of the Class A
Certificates related to Group I, as follows: first, to the Owners of
the Class A-1 Certificates, until the Class A-1 Certificate Principal
Balance is reduced to zero; second, to the Owners of the Class A-2
Certificates, until the Class A-2 Certificate Principal Balance is
reduced to zero; third, to the Owners of the Class A-3 Certificates,
until the Class A-3 Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates, until the Class
A-4 Certificate Principal Balance is reduced to zero; fifth, to the
Owners of the Class A-5 Certificates, until the Class A-5 Certificate
Principal Balance is reduced to zero; sixth, to the Owners of the
Class A-6 Certificates, until the Class A-6 Certificate Principal
Balance is reduced to zero; seventh, to the Owners of the Class A-7
Certificates, until the Class A-7 Certificate Principal Balance is
reduced to zero; and, eighth to the Owners of the Class A-8
Certificates, until the Class A- 8 Certificate Principal Balance is
reduced to zero; provided, however, that on any Payment Date on which
the sum of the Certificate Principal Balance of the Subordinate
Certificates related to Group I and the Group I Overcollateralization
Amount is zero, any amounts of principal payable to the Owners of the
Class A Certificates related to Group I on such Payment Date shall be
distributed pro rata and not sequentially.
(ii) Notwithstanding the provisions of Section 7.03(f)(i) if the
Certificate Principal Balance of the Class A Certificates related to
Group I is reduced to zero prior to the Group I Stepdown Date, the
Owners of the Subordinate Certificates relating to Group I will be
entitled to receive payment of 100% of the Group I Principal
Distribution Amount as follows:
(a) to the Class M-1F Certificates until the Class M-1F Certificate
Termination Date;
(b) to the Class M-2F Certificates until the Class M-2F Certificate
Termination Date; and
(c) to the Class B-1F Certificate, until the Class B-1F Certificate
Termination Date.
(iii)On each Payment Date (a) on or after the Group I Stepdown Date and (b)
as long as a Group I Trigger Event is not in effect, the Owners of the
Group I Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts
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set forth below and to the extent of the Group I Principal
Distribution Amount as follows:
(A) First, the lesser of (x) the Group I Principal Distribution
Amount and (y) the Group I Class A Principal Distribution Amount
shall be distributed (I) to the Owners of the Class A-8
Certificates, in an amount equal to the Class A-8 Lockout
Distribution Amount and (II) the remainder paid to the Owners of
the Class A Certificates related to Group I as follows: first, to
the Owners of the Class A-1 Certificates, until the Class A-1
Certificate Principal Balance is reduced to zero; second, to the
Owners of the Class A-2 Certificates, until the Class A-2
Certificate Principal Balance is reduced to zero; third, to the
Owners of the Class A-3 Certificates, until the Class A-3
Certificate Principal Balance is reduced to zero; fourth, to the
Owners of the Class A-4 Certificates, until the Class A-4
Certificate Principal Balance is reduced to zero; fifth, to the
Owners of the Class A-5 Certificates, until the Class A-5
Certificate Principal Balance is reduced to zero; sixth, to the
Owners of the Class A-6 Certificates, until the Class A-6
Certificate Principal Balance is reduced to zero; seventh, to the
Owners of the Class A-7 Certificates, until the Class A-7
Certificate Principal Balance is reduced to zero; and, eighth to
the Owners of the Class A-8 Certificates, until the Class A-8
Certificate Principal Balance is reduced to zero; provided,
however, that on any Payment Date on which the sum of the
Certificate Principal Balance of the Subordinate Certificates
related to Group I and the Group I Overcollateralization Amount
is zero, any amounts of principal payable to the Owners of the
Class A Certificates related to Group I on such Payment Date
shall be distributed pro rata and not sequentially;
(B) Second, the lesser of (x) the excess of (i) the Group I Principal
Distribution Amount over (ii) the amount distributed to the
Owners of the Class A Certificates related to Group I in clause
(A) above and (y) the Class M-1F Principal Distribution Amount
shall be distributed to the Owners of the Class M-1F
Certificates, until the Class M-1F Certificate Principal Balance
has been reduced to zero;
(C) Third, the lesser of (x) the excess of (i) the Group I Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates related to Group I in
clause (A) above and the amount distributed to the Owners of the
Class M-1F Certificates in clause (B) above and (y) the Class
M-2F Principal Distribution Amount shall be distributed to the
Owners of the Class M-2F Certificates, until the Class M-2F
Certificate Principal Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i) the Group I Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates related to Group I
pursuant to clause (A) above, the amount distributed to the
Owners of the Class M-1F Certificates pursuant to clause (B)
above and the amount distributed to the Owners of the Class M-2F
Certificates pursuant to clause (C) above and (y) the Class B-1F
Principal Distribution Amount shall be delivered to the Owners of
the Class B-1F
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Certificates, until the Class B-1F Certificate Principal Balance
has been reduced to zero; and
(E) Fifth, any portion of the Group I Principal Remittance Amount
remaining after making all of the distributions in clauses (A),
(B), (C) and (D) above shall be distributed as provided in
subsection (h) of this Section 7.03.
(g) With respect to the Certificate Account and Group II on each Payment
Date, the Trustee shall make the following disbursements from amounts relating
to principal transferred thereto, in the following order of priority and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) On each Payment Date (a) before the Group II Stepdown Date or (b) with
respect to which a Group II Trigger Event is in effect, Owners of the
Class A-9 Certificates will be entitled to receive payment of 100% of
the Group II Principal Distribution Amount, until the Class A-9
Certificate Principal Balance has been reduced to zero.
(ii) Notwithstanding the provisions of Section 7.03(3)(i) if the Class A-9
Certificate Principal Balance is reduced to zero prior to the Group II
Stepdown Date, the Owners of the Subordinate Certificates relating to
Group II will be entitled to receive payment of 100% of the Group II
Principal Distribution Amount as follows:
(a) to the Class M-1A Certificates until the Class M-1A Certificate
Termination Date;
(b) to the Class M-2A Certificates until the Class M-2A Certificate
Termination Date; and
(c) to the Class B-1A Certificate; until the Class B-1A Certificate
Termination Date.
(iii)On each Payment Date (a) on or after the Group II Stepdown Date and
(b) as long as a Group II Trigger Event is not in effect, the Owners
of the Group II Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts set forth below
and to the extent of the Group II Principal Distribution Amount as
follows:
(A) First, the lesser of (x) the Group II Principal Distribution
Amount and (y) the Group II Class A Principal Distribution Amount
shall be distributed to the Owners of the Class A-9 Certificates,
until the Class A-9 Certificate Principal Balance has been
reduced to zero;
(B) Second, the lesser of (x) the excess of (i) the Group II
Principal Distribution Amount over (ii) the amount distributed to
the Owners of the Class A-9 Certificates in clause (A) above and
(y) the Class M-1A Principal Distribution Amount shall be
distributed to the Owners of the Class M-1A Certificates, until
the Class M-1A Certificate Principal Balance has been reduced to
zero;
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(C) Third, the lesser of (x) the excess of (i) the Group II Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Owners of the Class A-9 Certificates in clause (A) above
and the amount distributed to the Owners of the Class M-1A
Certificates in clause (B) above and (y) the Class M-2A Principal
Distribution Amount shall be distributed to the Owners of the
Class M-2A Certificates, until the Class M-2A Certificate
Principal Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i) the Group II
Principal Distribution Amount over (ii) the sum of the amount
distributed to the Owners of the Class A-9 Certificates pursuant
to clause (A) above, the amount distributed to the Owners of the
Class M-1A Certificates pursuant to clause (B) above and the
amount distributed to the Owners of the Class M-2A Certificates
pursuant to clause (C) above and (y) the Class B-1A Principal
Distribution Amount shall be delivered to the Owners of the Class
B-1A Certificates, until the Class B-1A Certificate Principal
Balance has been reduced to zero; and
(E) Fifth, any portion of the Group II Principal Remittance Amount
remaining after making all of the distributions in clauses (A),
(B), (C) and (D) above shall be distributed as provided in
subsection (i) of this Section 7.03.
(h) On any Payment Date, the Group I Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund the Class A Interest Carry Forward Amount, if any, with
respect to Group I;
(2) to fund the Group I Extra Principal Distribution Amount for such
Payment Date;
(3) to fund the Class M-1F Interest Carry Forward Amount, if any;
(4) to fund the Class M-1F Realized Loss Amortization Amount for such
Payment Date;
(5) to fund the Class M-2F Interest Carry Forward Amount, if any;
(6) to fund the Class M-2F Realized Loss Amortization Amount for such
Payment Date;
(7) to fund the Class B-1F Interest Carry Forward Amount, if any;
(8) to fund the Class B-1F Realized Loss Amortization Amount for such
Payment Date;
(9) to fund any amounts listed in clauses (1) through (8) of Section
7.03(i) to the extent such amounts have not been funded in full
through the application of Group II Monthly Excess Cashflow Amounts;
and
(10) as provided in Section 7.03(j) hereof.
(i) On any Payment Date, the Group II Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
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(1) to fund the Class A Interest Carry Forward Amount, if any, with
respect to Group II;
(2) to fund the Group II Extra Principal Distribution Amount for such
Payment Date;
(3) to fund the Class M-1A Interest Carry Forward Amount, if any;
(4) to fund the Class M-1A Realized Loss Amortization Amount for such
Payment Date;
(5) to fund the Class M-2A Interest Carry Forward Amount, if any;
(6) to fund the Class M-2A Realized Loss Amortization Amount for such
Payment Date;
(7) to fund the Class B-1A Interest Carry Forward Amount, if any;
(8) to fund the Class B-1A Realized Loss Amortization Amount for such
Payment Date;
(9) to fund any amounts listed in clauses (1) through (8) of Section
7.03(h) to the extent such amounts have not been funded in full
through the application of Group I Monthly Excess Cashflow Amounts;
and
(10) as provided in Section 7.03(j) hereof.
(j) On any Payment Date, any Group I Monthly Excess Cashflow Amount
remaining after the application of Section 7.03(h)(1)-(9) and any Group II
Monthly Excess Cashflow Amount remaining after the application of Section
7.03(i)(1)-(9) shall be distributed as follows:
(1) to the Servicer to the extent of any unreimbursed Delinquency Advances
or Servicing Advances, including such Delinquency Advances and
Servicing Advances deemed by the related Servicer to be
nonrecoverable;
(2) An amount equal to the lesser of (i) any portion of the Group II
Monthly Excess Cashflow Amount remaining after the distribution
described in clause (1) above and (ii) the Group II Available Funds
Cap Shortfall Amount for such Payment Date distributed to the Owners
of the related Class or Classes of the Group II Certificates;
(3) to fund a distribution to Owners of the Class C Certificates, the
lesser of (x) the amount of the Monthly Excess Cashflow Amount then
remaining and (y) the sum of (i) the Class C Distribution Amount and
(ii) the Overcollateralization Release Amount; provided, however, that
if the Overcollateralization Release Amount is zero solely due to the
existence of a Subordinated Trigger Event, then the amount which
otherwise would constitute the related Overcollateralization Release
Amount shall be distributed as a reduction of the Certificate
Principal Balance of the Subordinate Certificates as follows: first,
to the Owners of the related Class B-1 Certificates until the related
Class B-1 Certificate Termination Date, second, to the Owners of the
related Class M-2 Certificates, until the related Class M-2
Certificate Termination Date, and third, to the Owners of the related
Class M-1 Certificates until the related Class M-1 Certificate
Termination Date;
(4) to fund a distribution to the Owners of the Class R Certificates, the
remainder.
(k) On each Payment Date, the Trustee shall allocate the Group I Applied
Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group I in the following order of priority:
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(i) to the Class B-1F Certificates until the Class B-1F Certificate
Principal Balance is reduced to zero;
(ii) to the Class M-2F Certificates until the Class M-2F Certificate
Principal Balance is reduced to zero; and
(iii) to the Class M-1F Certificates until the Class M-1F Certificate
Principal Balance is reduced to zero.
(l) On each Payment Date, the Trustee shall allocate the excess of the
Group II Applied Realized Loss Amount to reduce the Certificate Principal
Balances of the Subordinate Certificates related to Group II in the following
order of priority:
(i) to the Class B-1A Certificates until the Class B-1A Certificate
Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the Class M-2A Certificate
Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the Class M-1A Certificate
Principal Balance is reduced to zero.
(m) Notwithstanding the foregoing, in the event that the Certificate
Principal Balances of all of the Class A Certificates relating to a Group have
been reduced to zero, all amounts of principal that would have been distributed
to such Class A Certificates will be distributed to the related Subordinate
Certificates of such Group sequentially in the following order: Class M-1, Class
M-2 and Class B. Similarly, if the Certificate Principal Balance of the Class
M-1 Certificates has been reduced to zero, all amounts of principal that would
have been distributed to such Class M-1 Certificates will be distributed to the
related Class M-2 and Class B Certificates in that order. Finally, if the
Certificate Principal Balance of the Class M-2 Certificates has been reduced to
zero, all amounts of principal that would have been distributed on such Class
M-2 Certificates will be distributed to the related Class B Certificates.
(n) Notwithstanding anything above, the aggregate amounts distributed on
all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clauses (f) and (g) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(o) The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class C Certificates and the Class R Certificates to
receive distributions in respect of the Class C Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class C
Certificates and the Class R Certificates, in and to such distributions, shall
be subject and subordinate to the preferential rights of the Owners of the
Offered Certificates and Class S Certificates to receive distributions thereon
and the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Owners
of the Class C Certificates and the Class R Certificates in amounts deposited in
the Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the Class C Certificates and the Class R Certificates
in accordance with the terms of this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, the Owners of the Class C
Certificates and the Class R Certificates shall not be required to refund any
amount properly distributed on the Class C Certificates and the Class R
Certificates pursuant to this Section 7.03.
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Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Depositor will deposit in the Pre-Funding
Account, on behalf of the Owners of the Offered Certificates, from the proceeds
of the sale of the Offered Certificates, the Original Pre-Funded Amount.
(b) On any Subsequent Transfer Date, the Seller shall instruct the Trustee
to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instruction
the Depositor shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Depositor be permitted to instruct the Trustee to release from the
Pre-Funding Account to the Certificate Account with respect to Subsequent
Mortgage Loans to be transferred to a Group an amount in excess of the Original
Pre-Funded Amount with respect to such Group.
(c) If the Pre-Funded Amount with respect to a Mortgage Loan Group has been
reduced to $100,000 or less on or before July 31, 1997, then the Depositor shall
instruct the Trustee to withdraw from the Pre-Funding Account the amount
(exclusive of any related Pre-Funding Account Earnings still on deposit therein)
remaining in the Pre-Funding Account with respect to such Group of Mortgage
Loans and deposit such amount to the Certificate Account, on the August 1997
Monthly Remittance Date. If the Pre-Funded Amount with respect to a Mortgage
Loan Group has not been reduced to zero by July 31, 1997, then the Trustee shall
withdraw on the Pre-Funding Determination Date from the Pre-Funding Account the
amount (exclusive of any related Pre-Funding Account Earnings still on deposit
therein) remaining in the Pre-Funding Account and deposit on such date such
amount to the Certificate Account, which will be distributed to the related
Owners of the Offered Certificates on the Pre-Funding Payment Date.
(d) On the Payment Dates in July and August 1997 and on the Pre-Funding
Payment Date the Trustee shall transfer from the Pre-Funding Account to the
Capitalized Interest Account, (i) with respect to Group I, the Group I
Pre-Funding Account Earnings and (ii) with respect to Group II, the Group II
Pre-Funding Account Earnings, if any, applicable to such Payment Date (or
Pre-Funding Payment Date).
(e) On the Payment Dates in July and August 1997 and on the Pre-Funding
Payment Date the Trustee shall transfer from the Capitalized Interest Account to
the Certificate Account, for the benefit of the Owners of the related
Certificates, the Group I or Group II Capitalized Interest Requirement for such
Payment Date (or Pre-Funding Payment Date).
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount (calculated by the Trustee on the day prior to such
Subsequent Transfer Date) from the Capitalized Interest Account to the Seller
and on the Pre-Funding Payment Date, the Trustee shall distribute to the Seller
any amounts remaining in the Capitalized Interest Account after taking into
account the transfers on such Payment Date described in clause (e) above. The
Capitalized Interest Account shall be closed at the end of the Funding Period.
All amounts, if any, remaining in the Capitalized Interest Account on such day
shall be transferred to the Seller.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the Code,
all or a portion of any Account held by the Trustee for the benefit of the
Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from
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such investment, which shall be the Depositor in the case of the Pre-Funding
Account and the Capitalized Interest Account and the related Servicer in the
case of the related Principal and Interest Account, in one or more Eligible
Investments bearing interest or sold at a discount. The earnings on each
Principal and Interest Account are payable to the related Servicer. Earnings on
the Certificate Account are payable to the Trustee. The bank serving as Trustee
or any affiliate thereof may be the obligor on any investment which otherwise
qualifies as an Eligible Investment. No investment in any Account shall mature
later than the Business Day immediately preceding the next Payment Date.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest the funds in such Accounts in money market
funds described in Section 7.07(k) to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(c) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account immediately on receipt (other than
the Principal and Interest Accounts, which income or other gains shall be
retained by the related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss resulting from such
investments shall be charged to such Account, provided that the related Servicer
and the Trustee shall each contribute funds in an amount equal to such loss in
the case of the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and unconditionally
guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, Federal Housing
Administration debentures, FHLMC senior debt obligations, and FannieMae senior
debt obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) Federal Housing Administration debentures; provided, that any such
investment shall be rated in one of the two highest ratings categories by each
Rating Agency.
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FannieMae mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch and P-1 by Moody's;
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(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Fitch) which has
combined capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the FDIC;
(h) Investment agreements provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2 or
better by Moody's and AA or better by Fitch, or is the lead bank of a
parent bank holding company with an uninsured, unsecured and unguaranteed
senior debt obligation meeting such rating requirements, and
2. Moneys invested thereunder may be withdrawn without any penalty,
premium or charge upon not more than one day's notice (provided such notice
may be amended or canceled at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other obligations of such
insurance company or bank, and
4. The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel (at the expense of the
party requesting the investment) that such agreement is an enforceable
obligation of such insurance company or bank;
(i) Repurchase agreements collateralized by securities described in (a),
(c), or (e) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Fitch, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
b. The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the Trustee, and
such third party is (a) a Federal Reserve Bank or (b) a bank which is a
member of the FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, and the Trustee shall have received
written confirmation from such third party that it holds such securities,
free and clear of any lien, as agent for the Trustee, and
c. A perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 CFR 306.1 et seq. or 31 CFR
350.0 et seq., in such securities is created for the benefit of the
Trustee, and
d. The repurchase agreement has a term of thirty days or less and the
Trustee will value the collateral securities no less frequently than
monthly and will liquidate the collateral securities if any deficiency in
the required collateral percentage is not restored within two business days
of such valuation, and
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e. The fair market value of the collateral securities in relation to
the amount of the repurchase obligation, including principal and interest,
is equal to at least 106%.
(j) Commercial paper (having original maturities of not more than 270 days)
rated in the highest short-term rating categories of Fitch and Moody's; and
(k) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the Securities
Act and rated Aaa by Moody's and AAA, if rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) On or before the Business Day preceding each Payment Date, the Trustee
shall notify (subject to the terms of Section 10.03(j)) hereof the Depositor and
the Seller of the following information with respect to the next Payment Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate Account;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes of the Class A Certificates in the aggregate,
on the next Payment Date, the related Class M-1 Distribution Amount, the
related Class M-2 Distribution Amount, the related Class B Distribution
Amount and the Class S Distribution Amount;
(3) The application of the amounts described in clause (1) above to
the allocation and distribution of the related Class A Distribution Amount,
the related Class M-1 Distribution Amount, the related Class M-2
Distribution Amount and the related Class B Distribution Amount on such
Payment Date in accordance with Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the Offered
Certificates, the aggregate amount of the principal of each Class of the
Offered Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance of each Class of the Offered Certificates
following any such payment;
(5) The amount, if any, of any Realized Losses relating to each Group
for the related Remittance Period and the amount of Cumulative Realized
Losses relating to each Group as of the last day of the related Remittance
Period;
(6) For the Payment Dates during the Funding Period, and as to each
Group and in the aggregate (A) the related Pre-Funded Amount previously
used to purchase Subsequent Mortgage Loans, (B) the related Pre-Funded
Amount distributed as part of the related Principal Distribution
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Amount, (C) the related Pre-Funding Account Earnings transferred to the
Capitalized Interest Account, and (D) the amounts transferred from the
Capitalized Interest Account to the Certificate Account and the Overfunded
Interest Amount to the Seller, if any;
(7) The amount of the Class C Distribution Amount; and
(8) the amount of 60+ Day Delinquent Loans relating to each Group.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor (and shall be made available in electronic format), each Owner, the
Underwriters and their designees (designated in writing to the Trustee) and the
Rating Agencies;
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) (a) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
or other recoveries of principal included therein and (b) with respect to
each Group, any Pre-Funded Amounts distributed as a Prepayment (based on a
Certificate in the original principal amount of $1,000);
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of $1,000);
(iv) the Interest Carry-Forward Amount for each Class;
(v) the principal amount of each Class of Offered Certificate which
will be Outstanding and the aggregate Loan Balance of each Group and in the
aggregate, in each case after giving effect to any payment of principal on
such Payment Date;
(vi) the aggregate Loan Balance of the Mortgage Loans in each Group
and in the aggregate after giving effect to any payment of principal on
such Payment Date;
(vii) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Owners in computing their
market discount;
(viii) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to each Group and
in the aggregate;
(ix) the weighted average Coupon Rate of the Mortgage Loans with
respect to each Group and in the aggregate;
(x) for the Payment Dates during the Funding Period, the remaining
Pre-Funded Amount for each Group and in the aggregate;
(xi) the Servicing Fees allocable to each Group and in the aggregate;
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(xii) One-Month LIBOR on the most recent One-Month LIBOR Determination
Date;
(xiii) the amount of any Group I Extra Principal Distribution Amount
or any Group II Extra Principal Distribution Amount;
(xiv) the Group I Senior Enhancement Percentage and the Group II
Senior Enhancement Percentage and whether a Group I Trigger Event or Group
II Trigger Event has occurred as shown by the percentage of 60+ Day
Delinquent Loans;
(xv) the Group I Overcollateralization Amount, the Group II
Overcollateralization Amount and the Certificate Principal Balance of each
Class of the Offered Certificates then outstanding after giving effect to
any payment of principal on such Payment Date; and
(xvi) the amount of any Group I or Group II Applied Realized Loss
Amount, Group I or Group II Realized Loss Amortization Amount and the
Unpaid Realized Loss Amount for each Class of Subordinated Certificates as
of the close of such Payment Date.
Each Servicer shall provide to the Trustee the information required by
Section 8.29 with respect to the Mortgage Loans serviced by it to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vi), (viii), (ix), (xiii), (xiv), (xv) and (xvi) above shall be based solely
upon information contained in the Monthly Servicing Report provided by a
Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to the
Depositor, each Owner, the Underwriters and the Rating Agencies, together with
the information described in Subsection (a) preceding, the following information
with respect to each Mortgage Loan Group which information is hereby required to
be prepared in hard copy or tape format by the related Servicers (other than the
information in clause (i)) and furnished to the Trustee to the extent provided
for in Section 8.29 for such purpose on the Reporting Date:
(i) the related Certificate Principal Balance of each Class of the
Offered Certificates, as of such Payment Date;
(ii) the number and aggregate principal balances of Mortgage Loans in
each Group (a) 30-59 days Delinquent, (b) 60-89 days Delinquent, and (c) 90
or more days Delinquent, as of the close of business on the last Business
Day of the prior Remittance Period.
(iii) the numbers and aggregate Loan Balances of all Mortgage Loans in
each Group as of such Payment Date and the percentage that each of the
amounts represented by clauses (a), (b) and (c) of paragraph (ii) above
represent as a percentage of the respective amounts in this paragraph
(iii);
(iv) the status and the number and dollar amounts of all Mortgage
Loans in each Group in foreclosure proceedings as of the close of business
on the related Determination Date, separately stating, for this purpose,
all Mortgage Loans in each Group with respect to which foreclosure
proceedings were commenced during the prior Remittance Period;
(v) the number of Mortgagors and the Loan Balances of Mortgage Loans
in each Group of the related Mortgages involved in bankruptcy proceedings
as of the close of business on the last day of the related Remittance
Period;
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(vi) the existence and status of any REO Properties in each Group, as
of the close of business on the last day of the related Remittance Period;
(vii) the book value of any REO Property in each Group as of the close
of business on the last day of the related Remittance Period;
(viii) the amount of Cumulative Realized Losses for each Group, each
Mortgage Loan Servicing Group and in the aggregate, the current period
Realized Losses and the Annual Loss Percentage for such Group and each
Mortgage Loan Servicing Group and in the aggregate, in each case as of the
last day of the related Remittance Period; and
(ix) the aggregate Loan Balance of 60+ Day Delinquent Loans with
respect to each Group, the 90+ Delinquency Percentage and the number and
amount by principal balance of 90 Day Delinquent Loans in each Group and
each Mortgage Loan Servicing Group, in each case as of the last day of the
related Remittance Period.
(c) Each Servicer shall furnish to the Trustee, during the term of this
Agreement, such periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans serviced by it,
as may be necessary, reasonable, or appropriate with respect to the Trustee or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions as the Trustee may reasonably require; provided,
that the related Servicer shall be entitled to be reimbursed by the requesting
party, for the fees and actual expenses associated with providing such reports,
if such reports are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
The Trustee shall report to the Depositor, the Seller, the Underwriters and
each Owner, with respect to the amount on deposit in the Certificate Account,
the amount therein relating to each Group and the identity of the investments
included therein, as the Depositor or the Seller may from time to time request.
Without limiting the generality of the foregoing, the Trustee shall, at the
request of the Depositor or the Seller, transmit promptly to the Depositor and
the Seller copies of all accountings of receipts in respect of the Mortgage
Loans furnished to it by the related Servicer and shall notify the Seller if any
Monthly Remittance Amount has not been received by the Trustee when due.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting directly or through one
or more subservicers as provided in Section 8.03, each Servicer, as servicer,
shall service and administer the Mortgage Loans identified on the Schedule of
Mortgage Loans as being serviced by it as described below and with reasonable
care, and using that degree of skill and attention that such Servicer exercises
with respect to comparable mortgage loans that it services for itself or others,
and shall have full power and authority, acting alone, to do or cause to be done
any and all things in connection with such servicing and administration which it
may deem necessary or desirable. In performing such servicing functions such
Servicer shall (i) take into account the mortgagor non-conforming credit quality
of the Mortgage Loans, (ii) follow the policies and procedures that it would
apply to similar loans held for its own account, unless such policies and
procedures are not generally in accordance with standard industry practices, in
which case the Servicer shall service the loans generally in accordance with
standard industry practices applicable to servicing similar loans, (iii) comply
with all applicable laws and follow collection practices with respect to the
related Mortgage Loans that are in all material respects legal, proper and
prudent, and (iv) subject to its obligation to comply with clauses (i), (ii) and
(iii): (A) with regard to Advanta and Long Beach, will not materially change its
collection and servicing practices that are in existence as of the Startup Day
without the consent of the Seller (such consent not to be unreasonably withheld)
and (B) with regard to Option One will comply with reasonable requests of the
Seller including accelerated collection and foreclosure procedures.
(b) The duties of each Servicer shall include the collecting and posting of
all payments, responding to inquiries of Mortgagors or by federal, state or
local government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections, furnishing monthly
statements to the Trustee and the Seller with respect to remittances on the
Mortgage Loans, advising the Trustee or the Seller of the amount of Compensating
Interest and Delinquency Advances due as of any Monthly Remittance Date with
respect to the Mortgage Loans serviced by it and funding such Compensating
Interest and Delinquency Advances, to the extent set forth in this Agreement.
Each Servicer shall reasonably cooperate with the Trustee and furnish upon
reasonable request to the Trustee with reasonable promptness information in its
possession as may be necessary or appropriate to enable the Trustee to perform
its tax reporting duties hereunder.
(c) The Seller and the Depositor intend that the REMIC Estate shall
constitute and that the affairs of REMIC Estate shall be conducted so as to
qualify it as a REMIC. In furtherance of such intention, each Servicer covenants
and agrees that it shall not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of the
REMIC Estate or that would subject the REMIC Estate to tax.
(d) Each Servicer may, and is hereby authorized to, perform any of its
servicing responsibilities with respect to all or certain of the Mortgage Loans
through a subservicer as it may from time to time designate in accordance with
Section 8.03 but no such designation of a subservicer shall serve to release
such Servicer from any of its obligations under this Agreement. Such subservicer
shall have all the rights and powers of the relevant Servicer with respect to
such Mortgage Loans under this Agreement.
(e) Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, each Servicer in its own name or in the name of a
subservicer is hereby authorized and empowered and this subsection shall
constitute a power of attorney to carry out its servicing and administrative
duties hereunder, on behalf of itself, the Owners and the Trust or any of them;
to institute foreclosure proceedings or obtain a
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deed in lieu of foreclosure so as to effect ownership of any Property on behalf
of the Trust and to hold title to any Property upon such foreclosure or deed in
lieu of foreclosure on behalf of the Trust; provided, however, that Section
8.14(a) and (c) shall constitute a power of attorney from the Trustee to each
Servicer with respect to the matters described therein and in accordance with
the terms thereof. Subject to Sections 8.13 and 8.14, the Trustee shall furnish
any Servicer or any Subservicer with any additional powers of attorney and other
documents as such Servicer shall reasonably request to enable such Servicer or
any Subservicer to carry out its respective servicing and administrative duties
hereunder.
(f) Each Servicer shall give prompt notice to the Trustee and the Seller of
any action, of which a responsible officer of such Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert control over
the Trust or the Trust Estate.
(g) Servicing Advances incurred by any Servicer in connection with the
servicing of the Mortgage Loans (including any penalties in connection with the
payment of any taxes and assessments or other charges) on any Property shall be
recoverable by such Servicer to the extent described in Section 8.09 and in
Section 7.03(j) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a) Each
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance Policies,
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Mortgage
Loans; provided that such Servicer shall always at least follow collection
procedures that are consistent with Section 8.01(a) hereof. Consistent with the
foregoing, each Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for insufficient funds or
other fees which may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with such Servicer's general policies with
respect to comparable mortgage loans subject to such Act. No Servicer shall be
required to institute or join in litigation with respect to collection of any
payment (whether under a 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. Consistent with the terms of this Agreement, a Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor, provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in the judgment
of such Servicer, imminent and such Servicer has the consent of the Seller) such
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Coupon Rate (except for any change made pursuant to the
adjustment provisions of a Note evidencing an Adjustable Rate Loan), forgive the
payment of any principal or interest or prepayment penalties (unless the
Servicer with the written consent of the Seller believes that forgiving such
prepayment penalties will result in a financial benefit to the Trust), change
the outstanding principal amount, require any future advances, provide for the
substitution or release of any material portion of the collateral or extend the
final maturity date on such Mortgage Loan; provided further that no such
indulgence shall affect the Servicer's obligation to make Delinquency Advances
pursuant to Section 8.09.
(b) Each Servicer shall deposit into the related Principal and Interest
Account in accordance with Section 8.08(a) all Prepaid Installments received by
it, and shall apply such Prepaid Installments as directed by such Mortgagor and
as set forth in the related Note.
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Section 8.03 Subservicing Agreements Between Servicer and Subservicer. Each
Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is acceptable to the
Owners of a majority of the Percentage Interests of the Class R Certificates, as
indicated in writing, and which represents and warrants that it is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement. For this purpose, subservicing shall not be
deemed to include the use of a tax service, or services for reconveyance,
insurance or brokering REO Property. Each Servicer shall give prior notice to
the Seller and the Trustee of the appointment of any Subservicer and shall
furnish to the Seller a copy of such Subservicing Agreement. For purposes of
this Agreement, the relevant Servicer shall be deemed to have received payments
on Mortgage Loans when any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Subservicing Agreement shall provide that a successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall not be relieved of
their respective obligations under this Agreement notwithstanding any
Subservicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between such Servicer and a Subservicer or otherwise,
and such Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans as such terms and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of such Servicer by such Subservicer and nothing
contained in such Subservicing Agreement shall be deemed to limit or modify this
Agreement. The Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and Trustee or
the Owners. Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be deemed to be
between the Subservicer and the related Servicer alone and the Trustee and the
Owners shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Subservicer except as set
forth in Section 8.07 hereof or in the related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of each Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a Subservicer may be assumed or terminated by the
Trustee at its option. Each Servicer shall, upon request of the Trustee, but at
the expense of such Servicer, deliver to the Trustee documents and records
relating to each Subservicing Agreement and an accounting of amounts collected
and held by such Servicer and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Subservicing Agreement to the
Trustee.
Section 8.08 Principal and Interest Accounts; Escrow Accounts. (a) Each
Servicer shall establish in its name on behalf of the Trustee for the benefit of
the Owners of the Certificates and maintain or cause to be maintained at a
Designated Depository Institution a Principal and Interest Account to be held as
a trust account. The Principal and Interest Accounts shall be identified on the
records of the Designated Depository
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Institution as follows: [Name of Servicer] on behalf of The Bank of New York, as
Trustee under the Pooling and Servicing Agreement relating to the AMRESCO
Residential Securities Corporation Mortgage Loan Trust 1997-2 dated as of June
1, 1997. If the institution at any time holding a Principal and Interest Account
ceases to be eligible as a Designated Depository Institution hereunder, then the
related Servicer in the case of a Principal and Interest Account shall, within
30 days, be required to name a successor institution meeting the requirements
for a Designated Depository Institution hereunder. If such party fails to name
such a successor institution, then the Trustee shall cause such Account to be
held as a trust account with a qualifying Designated Depository Institution. The
related Servicer shall notify the Trustee, the Seller and the Depositor if there
is a change in the name, account number or institution holding a Principal and
Interest Account. Subject to Subsection (c) below, each Servicer shall deposit
all receipts related to the Mortgage Loans into the related Principal and
Interest Accounts on a daily basis (but no later than the second Business Day
after receipt).
(b) All funds in the Principal and Interest Accounts may only be held (i)
uninvested, up to the limits insured by the FDIC or (ii) invested in Eligible
Investments as selected by the related Servicer. The Principal and Interest
Accounts shall be held in trust in the name of the Trustee for the benefit of
the Owners of the Certificates (other than the earnings thereon which shall be
retained by the related Servicer). Any investments of funds in the Principal and
Interest Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Monthly Remittance Date. Any investment earnings on funds
held in a Principal and Interest Account shall be for the account of the related
Servicer and may only be withdrawn from the Principal and Interest Account by
such Servicer immediately following the remittance of the Monthly Remittance
Amount (and the Monthly Excess Interest Amount included therein) by such
Servicer. Any investment losses on funds held in the Principal and Interest
Account shall be for the account of such Servicer and promptly upon the
realization of such loss shall be contributed by such Servicer to the related
Principal and Interest Account. Any references herein to amounts on deposit in
the related Principal and Interest Account shall refer to amounts net of such
investment earnings.
(c) Subject to Section 8.09, each Servicer shall deposit on a daily basis
(except as described below), and in any case not later than two Business Days
following receipt, to the related Principal and Interest Account all scheduled
principal and interest payments on the Mortgage Loans serviced by it due after
the Cut-Off Date or Subsequent Cut-Off Date and all unscheduled principal and
interest collections received after the Cut-Off Date or Subsequent Cut-Off Date
including any Prepayments and Net Liquidation Proceeds, all Loan Purchase Prices
and Substitution Amounts received by such Servicer with respect to the Mortgage
Loans, other recoveries or amounts related to the Mortgage Loans received by
such Servicer after the Cut-Off Date, Compensating Interest (which shall be
deposited into the Certificate Account on or prior to each Monthly Remittance
Date) and Delinquency Advances (which shall be deposited no later than the
related Monthly Remittance Date) but net of (i) the related Servicing Fee with
respect to each Mortgage Loan and other servicing compensation to such Servicer
as permitted by Section 8.15 hereof, (ii) principal retained by the Depositor
(including Prepayments) and due on the related Mortgage Loans on or prior to the
Cut-Off Date, (iii) interest retained by the Depositor and accruing on the
related Mortgage Loans on or prior to the Cut-Off Date or Subsequent Cut-Off
Date, and (iv) reimbursements for unreimbursed and nonrecoverable Delinquency
Advances and Servicing Advances pursuant to Section 8.09.
(d) Each Servicer may each make withdrawals from the related Principal and
Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the Monthly
Remittance Amount due on each Monthly Remittance Date and to
effect the timely remittance to the Trustee on each Monthly
Remittance Date of any Compensating Interest;
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(B) to reimburse itself pursuant to Section 8.09 hereof for
unreimbursed Delinquency Advances and Servicing Advances and
unrecovered Delinquency Advances and Servicing Advances
determined by it to be nonrecoverable.
(C) to withdraw investment earnings on amounts on deposit in its
Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the related
Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25; and
(F) to clear and terminate the related Principal and Interest
Accounts following the termination of the Trust Estate pursuant
to Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall remit to the
Trustee by wire transfer in immediately available funds from the related
Principal and Interest Account for deposit to the Certificate Account, the
portion of the Monthly Remittance Amount remaining after the withdrawals
permitted by clauses (B)-(E) of Section 8.08(d) related to the Mortgage Loans
serviced by such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more custodial
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors, if any, received with respect to the Mortgage
Loans, or advances by such Servicer, for the payment of taxes, assessments,
hazard insurance premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing herein shall require
any Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums
or primary mortgage insurance policy premiums, condominium or PUD association
dues, or comparable items, to reimburse such Servicer, to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement. As part of
its servicing duties, such Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as Servicing
Advances) referred to in the preceding paragraph that are not timely paid by the
Mortgagors, including tax penalties, if any; provided, however, that such
Servicer shall be required to so advance only to the extent that such advances,
in the good faith business judgment of such Servicer, will be recoverable by
such Servicer out of Insurance Proceeds, Liquidation Proceeds or otherwise from
the related Mortgage Loan. Notwithstanding the previous sentence, a Servicer
shall be entitled to be reimbursed as provided in Section 8.09(b) hereof with
respect to any Servicing Advances deemed to be nonrecoverable.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) Each Servicer is required, not later than each Monthly Remittance Date,
to deposit into the related Principal and Interest Account an amount equal to
the sum of the interest (net of the Servicing Fee) and scheduled principal due
(except any Balloon Payment), but not collected, with respect to Delinquent
Mortgage Loans serviced by it during the related Remittance Period but only if,
in its good faith business judgment, such
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Servicer reasonably believes that such amount will ultimately be recovered from
the related Mortgage Loan. With respect to each Balloon Loan, the related
Servicer shall be required to advance an amount of principal and interest on an
assumed schedule based on the original principal amortization for the related
Balloon Loan (but only if, in its good faith business judgment, such Servicer
reasonably believes that such amount will ultimately be recovered from the
related Mortgage Loan). Any determination of nonrecoverability shall be
explained in a notice provided by such Servicer to the Trustee and the Seller.
Such amounts are "Delinquency Advances". Each Servicer shall be permitted to
fund its payment of Delinquency Advances from its own funds or from funds on
deposit in the related Principal and Interest Account that are not required to
be distributed on the related Payment Date. To the extent a Servicer uses funds
not required for distribution on a Payment Date to make Delinquency Advances
with respect to such Payment Date, it shall deposit into the related Principal
and Interest Account such amount prior to the next succeeding Monthly Remittance
Date. Each Servicer shall be entitled to reimbursement for Delinquency Advances
from late collections, Liquidation Proceeds or otherwise with respect to
collections on the Mortgage Loan (including Balloon Loans) with respect to which
such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer determines that
the aggregate unreimbursed Delinquency Advances exceed the expected Liquidation
Proceeds on a Mortgage Loan, such Servicer shall not be required to make any
future Delinquency Advances with respect to that Mortgage Loan, and shall be
entitled to reimbursement for such aggregate unreimbursed Delinquency Advances
from amounts in the related Principal and Interest Account. Such Servicer shall
give written notice of such determination of nonrecoverability to the Trustee
and the Seller, and the Trustee shall promptly furnish a copy of such notice to
the Owner of a majority of the Percentage Interests of the Class R Certificates;
provided, further, that such Servicer shall be entitled to recover any
unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds prior
to the payment of the Liquidation Proceeds to any other party to this Agreement.
(b) Each Servicer will pay all customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the escrow
expenditures required pursuant to Section 8.08(f) hereof (but is only required
to pay such costs and expenses to the extent such Servicer reasonably believes
that such amounts will ultimately be recovered from the related Mortgage Loan)
and (v) fees and expenses for opinions of counsel pursuant to Section 8.13. Each
such amount so paid will constitute a "Servicing Advance". Each Servicer may
recover Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, (y) from Liquidation Proceeds realized upon the liquidation
of the related Mortgage Loan, and (z) as provided in Section 7.03(j) hereof.
Except as provided in the previous sentence, and in Sections 7.03(j) and 8.13,
in no case may a Servicer recover Servicing Advances from principal and interest
payments on any Mortgage Loan or from any amounts relating to any other Mortgage
Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans. (a) On or
prior to each Monthly Remittance Date and with respect to Mortgage Loans
serviced by it, each Servicer shall deposit into the related Principal and
Interest Account with respect to any full Prepayment made by the Mortgagor
during the preceding Remittance Period, an amount equal to the excess, if any,
of (x) 30 days' interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first day of the
related Remittance Period over (y) to the extent not previously advanced, the
interest paid by the Mortgagor with respect to the Mortgage Loan for the related
Remittance Period (any such amount, "Compensating Interest"), which amount shall
be included in the Monthly Remittance Amount to be made available to the Trustee
on each Monthly Remittance Date; provided that the sum of all such deposits
shall not exceed the amounts set forth in the related Servicing Fee Letter.
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(b) Each Servicer with respect to Mortgage Loans serviced by it, may, but
is not obligated to, purchase for its own account (or, during the two year
period beginning on the Startup Day, substitute a Qualified Replacement Mortgage
for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which enforcement
proceedings have been brought by the related Servicer pursuant to Section 8.13.
Any such Mortgage Loan so purchased shall be purchased by such Servicer on a
Monthly Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the related Principal and
Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer shall cause to be
maintained with respect to each Mortgage Loan serviced by it a hazard insurance
policy with a generally acceptable carrier that provides for fire and extended
coverage, and which provides for a recovery by such Servicer on behalf of the
Trust of insurance proceeds relating to such Mortgage Loan in an amount not less
than the least of (i) the outstanding principal balance of the Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is located in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, as identified to the related Servicer by the
Originator in the related Mortgage Loan Schedule, and flood insurance has been
made available, the related Servicer will cause to be maintained with respect
thereto a flood insurance policy in a form meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides for a
recovery by such Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973.
(c) In the event that a Servicer shall obtain and maintain a blanket policy
insuring against fire, flood and hazards of extended coverage on all of the
Mortgage Loans, then, to the extent such policy names such Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance and otherwise complies with
the requirements of this Section 8.11, such Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case such Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with the preceding paragraphs of this Section 8.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the related Principal and Interest Account from such Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 8.11 and
the amount paid under such blanket policy. Upon the request of the Trustee, such
Servicer shall cause to be delivered an Officer's Certificate to the Trustee to
the effect that the Servicer maintains such policy.
(d) Each Servicer also shall maintain on related REO Property, fire and
hazard insurance with extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements which are a
part of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, liability insurance and, to
the extent required and available under the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be maintained any
insurance required by this Section 8.11, and there shall have been a loss which
would have been covered by such policy, the Servicer
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shall deposit in the related Principal and Interest Account from the Servicer's
own funds the amount, if any, that would have been payable under a policy
complying with the preceding paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Property has been or is about to be conveyed by the Mortgagor, the
related Servicer shall, to the extent a responsible officer thereof has actual
knowledge of such conveyance or prospective conveyance, exercise the rights of
the Trust to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Note; provided,
however, that such Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of such Servicer, is not
enforceable under applicable law or if such Servicer reasonably believes in good
faith it is not in the best interests of the Trust. In such event, such Servicer
is authorized to enter into an assumption and modification agreement with the
Person to whom such Property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage Documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, such Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent that any such substitution of liability agreement
would not otherwise have been delivered by such Servicer in its usual procedures
for mortgage loans held in its own portfolio, such Servicer shall prior to
executing and delivering such agreement, obtain the prior written consent of the
Seller. The Trustee shall execute any agreements required to effectuate the
foregoing. The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The related
Servicer of such Mortgage Loan shall notify the Trustee that any such assumption
or substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. Each Servicer shall be responsible for
recording any such assumption or substitution agreements relating to Mortgage
Loans serviced by it at the expense of the related Servicer. In connection with
any such assumption or substitution agreement, no material term of the Mortgage
Loan, including the required monthly payment on the related Mortgage Loan shall
be changed but all terms thereof shall remain as in effect as immediately prior
to the assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required monthly
payments of principal or interest be deferred or forgiven. Any fee collected by
any Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to such
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, no Servicer shall be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of any assumption of a Mortgage
Loan by operation of law or any assumption which such Servicer may be restricted
by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) Each Servicer,
with respect to Mortgage Loans serviced by it, shall foreclose upon or otherwise
comparably convert the ownership on behalf of the Trust of Properties relating
to defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments and which the related Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer of such defaulted Mortgage Loans shall exercise
such of the rights and powers vested in it hereunder, and use the same degree of
care and skill in its exercise or use as prudent mortgage lenders would exercise
or use under the circumstances in the conduct of their own affairs, including,
but not limited to, advancing funds deemed by such Servicer in its good faith
business judgment to be recoverable from the related Mortgage Loan for the
payment of taxes, amounts due with respect to senior liens and insurance
premiums. Any amounts so
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advanced shall constitute "Servicing Advances" within the meaning of Section
8.09(b) hereof. Each Servicer shall sell any REO Property managed by it within
23 months of its acquisition by the Trust, unless such Servicer obtains for the
Trustee an Opinion of Counsel (the cost of which shall be advanced by the
related Servicer as a Servicing Advance) experienced in federal income tax
matters and reasonably acceptable to the Depositor and the Trustee, addressed to
the Trustee and such Servicer, to the effect that the holding by the Trust of
such REO Property for any greater period will not result in the imposition of
taxes on "Prohibited Transactions" of the Trust as defined in Section 860F of
the Code or cause the Trust to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are outstanding, or the related
Servicer produces evidence that it has properly requested from the applicable
tax authorities at least 60 days before the day on which the two year grace
period would otherwise expire, an extension of the two year grace period, in
which case such Servicer shall sell any REO Property by the end of any extended
period specified in any such opinion or extension.
Notwithstanding the generality of the foregoing provisions, each Servicer
shall manage, conserve, protect and operate each REO Property managed by it
solely for the purpose of its prompt disposition and sale in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by the
Trust of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the related Servicer shall either itself or through an agent
selected by such Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Owners and after consultation with the holder of a majority in
interest of the Class R Certificates, rent the same, or any part thereof, as
such Servicer deems to be in the best interest of the Owners for the period
prior to the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, or exercising
control over the Mortgaged Property so that the Trust would be considered a
mortgagee-in-possession, owner or operator of the Mortgaged Property under the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended (42 U.S.C. ss.9601 et seq.) or a comparable law, in the event any
responsible officer of a Servicer has actual knowledge that a Property is in any
way affected by hazardous or toxic substances or wastes and determines that it
may be reasonable to convert such Property ownership to the Trust, or the holder
of a majority in interest of the Class R Certificates otherwise requests in
writing an environmental inspection to be conducted, such Servicer shall cause
an environmental inspection or review of such Property to be conducted by a
qualified inspector and shall be reimbursed for the amount of such environmental
inspection in the manner described herein for reimbursement of Servicing
Advances in the same manner as set forth in the immediately following paragraph.
Upon completion of the inspection, such Servicer shall promptly provide the
Owner of the majority of the Class R Certificates and the Trustee with a written
report of the environmental inspection. In the absence of such determination or
a written request from the Owner of the majority of the Class R Certificates for
an environmental inspection, neither the related Servicer nor the Trustee shall
be liable for any liability, cost or expense incurred by the Trust due to the
decision of such Servicer not to cause an environmental inspection of a
Property.
After reviewing the environmental inspection report, the Owner of the
majority of the Class R Certificates shall determine how the related Servicer
shall proceed with respect to the Property and shall notify such Servicer within
15 Business Days of receipt of the inspection report. In the event the
environmental inspection report indicates that the Property is in any way
affected by hazardous or toxic substances or wastes such Servicer shall only
foreclose or comparably convert such Property if the Owner of the majority of
the Class R Certificates directs such Servicer to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure. In the event the Owner of the
majority of the Class R Certificates requires such Servicer to foreclose or
accept a deed-in-lieu of
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foreclosure pursuant to this Section 8.13(a),(i) such Servicer (or the Trustee
and any other successor Servicer) shall be reimbursed for any related
environmental clean up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse
such Servicer (or the Trustee and any other successor Servicer), such Servicer
(or the Trustee and any other successor Servicer) shall be entitled to be
reimbursed from amounts in the related Principal and Interest Account, and (ii)
such Class R Owner hereby indemnifies the Trust, the Trustee and such Servicer
with respect to any costs, liabilities and expenses incurred by any such party
in connection with any such hazardous or toxic substances or wastes with respect
to such foreclosure or comparable conversion. In the event the Owner of the
majority of the Class R Certificates directs such Servicer not to proceed with
foreclosure or acceptance of a deed-in-lieu of foreclosure, such Servicer (or
the Trustee and any other successor Servicer) shall be reimbursed for all
Servicing Advances made with respect to the related Property from such Principal
and Interest Account pursuant to Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each defaulted Mortgage
Loan serviced by it, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan".
Upon such a determination, the related Servicer shall prepare and submit to
the Seller and the Trustee a Liquidation Report in substantially the form of
Exhibit K hereto.
Section 8.14 Trustee and Custodian to Cooperate; Release of Files. (a) Upon
the payment in full of any Mortgage Loan (including the repurchase of any
Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or
otherwise) or the receipt by the related Servicer of a notification that payment
in full will be escrowed in a manner customary for such purposes, such Servicer
shall deliver to the Custodian a Servicer's Trust Receipt in the form of Exhibit
H hereto. Upon receipt of such Servicer's Trust Receipt, the Custodian shall
promptly release the related File, in trust to (i) such Servicer, (ii) an escrow
agent or (iii) any employee, agent or attorney of the Trustee, in each case
pending its release by such Servicer, such escrow agent or such employee, agent
or attorney of the Trustee, as the case may be. Upon any such payment in full or
the receipt of such notification that such funds have been placed in escrow,
such Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the related Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, such Servicer may prepare and submit to the Trustee a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by such Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any Mortgage
Loan, including, without limitation, foreclosure or other comparable conversion
of a Mortgage Loan or collection under any applicable Insurance Policy, the
Trustee shall (except in the case of the payment or liquidation pursuant to
which the related File is released to an escrow agent or an employee, agent or
attorney of the Trustee), upon request of such Servicer and delivery to the
Custodian of a Servicer's Trust Receipt substantially in the form of Exhibit H
hereto, release the related File to such Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without
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recourse of the related Mortgage to such Servicer. The Custodian shall complete
in the name of the Trustee any endorsement in blank on any Note prior to
releasing such Note to such Servicer. Such receipt shall obligate such Servicer
to return the File to the Custodian when the need therefor by such Servicer no
longer exists unless the Mortgage Loan shall be liquidated in which case, upon
receipt of the liquidation information, in physical or electronic form, such
Servicer's Trust Receipt shall be released by the Custodian to such Servicer.
(c) Each Servicer shall have the right to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Originator certifies to such Servicer that the Loan-to-Value Ratio and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting guidelines for a
similar credit grade borrower; and (z) the lien priority of the related Mortgage
is not adversely affected. Upon receipt by the Trustee of an Officer's
Certificate executed on behalf of a Servicer setting forth the action proposed
to be taken in respect of a particular Mortgage Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to such Servicer the consent or partial
release so requested by such Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate delivered
by such Servicer pursuant to this paragraph.
(d) Costs associated with preparing assignments, satisfactions and releases
described in this Section 8.14 shall not be an expense of the Trust or the
Trustee, but rather shall be borne directly by the related Servicer; provided,
however, that the Custodian shall be liable for the cost associated with the
shipping of documents from the Custodian to the related Servicer pursuant to
this Section 8.14.
Section 8.15 Servicing Compensation. As compensation for their activities
hereunder, each Servicer shall be entitled to the Servicing Fee for each
Mortgage Loan that it services. Such Servicing Fee shall be payable on a monthly
basis out of interest payments on the related Mortgage Loans and shall equal
one-twelfth of the related Servicing Fee Rate multiplied by the outstanding
principal amount of such Mortgage Loan as of the prior Monthly Remittance Date.
Subject to the related Servicing Fee Letter, additional servicing compensation
in the form of release fees, bad check charges, assumption fees, late payment
charges, prepayment penalties, any other servicing-related fees, and similar
items may, to the extent collected from Mortgagors, be retained by the related
Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each Servicer, at its
own expense, will deliver to the Trustee, the Seller, the Depositor and the
Rating Agencies on or before April 15 of each year, commencing in 1998, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of such Servicer during such preceding calendar year and of
performance 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, such
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by such Servicer to remedy such
defaults.
(b) Each Servicer shall deliver to the Trustee, the Seller, the Depositor
and the Rating Agencies promptly after a responsible officer of the Servicer
obtains actual knowledge thereof but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which with the giving of notice or lapse of time, or both, such officer knows
would become an Event of Servicing Termination.
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Section 8.17 Annual Independent Certified Public Accountants' Reports. (a)
On or before April 15 of each year, commencing in 1998, each Servicer shall
cause to be delivered to the Trustee and the Rating Agencies a letter or letters
of a firm of independent, nationally- recognized certified public accountants
stating that such firm has, with respect to such Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
(b) Each Servicer will deliver to the Seller as soon as available and in
any event within 45 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of such Servicer, an unaudited
consolidated statement of operations and retained earnings and consolidated
statements of changes in financial position of such Servicer for such period and
each Servicer will deliver to the Seller as soon as available and in any event
within 90 days after the end of each fiscal year of such Servicer, audited
consolidated statements of income, retained earnings and changes in financial
position of such Servicer for the preceding fiscal year.
Section 8.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans. Each Servicer shall provide to the Trustee, the Seller, the FDIC
and the supervisory agents and examiners of each of the foregoing access to the
documentation and electronic data regarding the Mortgage Loans not in the
possession of the Trustee, such access being afforded without charge but only
upon prior written reasonable request and during normal business hours at the
offices of such Servicer designated by it.
Upon any change in the format of the computer tape by any Servicer in
respect of the Mortgage Loans, such Servicer shall deliver a copy of such
computer tape to the Trustee. In addition, each Servicer shall provide a copy of
such computer tape to the Trustee at such other times as the Trustee may
reasonably request upon reasonable notice to such Servicer and upon payment of
all reasonable expenses associated with such request by the Trustee. Nothing
contained herein shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to the Mortgage
Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller and the Trustee, which such consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.21(f) hereof for a successor Servicer.
Notice of any such assignment shall be given by such Servicer to the Trustee and
the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Trustee (acting upon
the request of the Owners of the majority of the Percentage Interests of the
Offered Certificates then Outstanding as a whole and not on a Class by Class
basis) or the Seller may immediately remove the related Servicer (including any
successor entity serving as the Servicer) upon the occurrence of any of the
following events and the expiration of the related cure period (provided, that
the occurrence of any such events with respect to one Servicer shall be cause to
remove only such Servicer):
(i) Such Servicer shall fail to deliver to the Trustee any proceeds or
required payment (including any Delinquency Advance or Compensating
Interest payment), which failure continues unremedied for two Business Days
following written notice to an Authorized Officer of such Servicer from the
Trustee or from any Owner;
(ii) Such Servicer shall (I) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in writing its inability to
pay its debts generally as they become due, (III) make a general assignment
for the benefit of creditors, (IV) be adjudicated a bankrupt or insolvent,
(V) commence a voluntary
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case under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding or (VI) take corporate action for the purpose of effecting any
of the foregoing;
(iii) If without the application, approval or consent of such
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of such Servicer an
order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator, custodian or similar entity with respect to such Servicer or of
all or any substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding is
being contested by such Servicer in good faith, the same shall (A) result
in the entry of an order for relief or any such adjudication or appointment
or (B) continue undismissed or pending and unstayed for any period of sixty
(60) consecutive days;
(iv) Such Servicer shall fail to perform any one or more of its
obligations hereunder (other than those specified in item (i) above) and
shall continue in default thereof for a period of forty-five (45) days
after the earlier of (x) notice by the Trustee of said failure or (y)
actual knowledge of a responsible officer of such Servicer;
(v) The failure of such Servicer to satisfy the Servicer Termination
Test; or
(vi) (a) In the case of Advanta, Advanta Mortgage Corp. USA
consolidated with Advanta Mortgage Holding Corp. shall fail to maintain a
net worth of at least $20 million; or (b) in the case of Ameriquest, it
shall fail to maintain a net worth of $30 million; or (c) in the case of
Option One, it shall fail to maintain a net worth of at least $20 million.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the related Remittance Period. Upon the
Trustee's determination that the Servicer Termination Test is not satisfied, or
that a payment of Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been made by the
relevant Servicer, the Trustee shall so notify in writing an Authorized Officer
of such Servicer and the Seller as soon as is reasonably practical.
(b) Any party exercising any termination rights under Subsection (a) above
shall give notice in writing to the relevant Servicer (and a copy to the
Trustee) of the termination of all of the rights and obligations of such
Servicer under this Agreement. The Trustee shall mail a copy of any notice given
by it hereunder to the Depositor, the Seller, the Owners and Rating Agencies. On
or after the receipt by such Servicer of such written notice, all authority and
power of such Servicer under this Agreement, whether with respect to the
Certificates or the Mortgage Loans or otherwise, shall without further action
pass to and be vested in the Trustee or such successor Servicer as may be
appointed hereunder, and, without limitation, the Trustee is hereby authorized
and empowered (which authority and power are coupled with an interest and are
irrevocable) to execute and deliver, on behalf of the predecessor 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 or termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer or the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement including the transfer to the
successor Servicer or to the Trustee for administration by it of all cash
accounts that shall at the time be held by the predecessor
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Servicer for deposit or shall thereafter be received with respect to a Mortgage
Loan. All reasonable costs and expenses incurred in connection with delivering
the Files to the successor Servicer or the Trustee shall be paid by the
predecessor Servicer.
(c) If any event described in subsection (a)(vi) above occurs and is
continuing, during a 30 day period following receipt of notice, the Trustee, the
affected Servicer and the Seller shall cooperate with each other to determine if
the occurrence of such event is likely to have a material adverse effect on such
Servicer's ability to perform its obligations under this Agreement. If the
Seller, in its reasonable discretion, concludes that the event is not likely to
have a material adverse effect on such Servicer's ability to perform hereunder,
then such Servicer shall be given a period of 90 days to cure such default. If
the Seller, in its reasonable discretion, concludes that the event is likely to
have a material adverse effect on such Servicer's ability to perform hereunder,
then such Servicer shall be given a period of 15 days to cure such default. If
the event is not cured by the end of the applicable period, no further extension
of the cure period is required, and such Servicer may be terminated as provided
in this section.
(d) The Seller and the Trustee agree to use their best efforts to inform
each other of any materially adverse information regarding each Servicer's
servicing activities that comes to the attention of such party from time to
time.
Section 8.21 Resignation of a Servicer and Appointment of Successor. (a)
Upon any Servicer's receipt of notice of termination pursuant to Section 8.20 or
such Servicer's resignation in accordance with the terms of this Section 8.21,
the predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date specified
in such termination notice or in accordance with Section 8.20(d), if applicable,
or, if no such date is specified in a notice of termination, until receipt of
such notice and, in the case of resignation, until the earlier of (x) the date
45 days from the delivery to the Seller, the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying opinion of counsel. All collections then being held
by the predecessor Servicer prior to its removal and any collections received by
such Servicer after removal or resignation shall be endorsed by it to the
Trustee and remitted directly and immediately to the Trustee or the successor
Servicer. In the event of any Servicer's resignation or termination hereunder,
the Trustee shall appoint a successor Servicer and the successor Servicer shall
accept its appointment by execution of a written assumption in form acceptable
to the Trustee and the Seller, with copies of such assumption to the Trustee and
the Rating Agencies, provided that as a condition precedent to the appointment
of a successor Servicer and the execution of the related written assumption,
such successor Servicer shall, if applicable, also execute either (i) a written
assumption or termination of any of the Subservicing Agreements or (ii)
appropriate amendments to each of any Subservicing Agreements.
(b) No Servicer shall resign from the obligations and duties hereby imposed
on it, except (i) upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of such Servicer so causing such a conflict being of a type and nature carried
on by such Servicer at the date of this Agreement or (ii) upon prior written
consent of the Seller and the Trustee and confirmation from the Rating Agencies
that the Offered Certificates are not reduced. Any such determination referred
to in clause (i) permitting the resignation of any Servicer shall be evidenced
by an Opinion of Counsel to such effect which shall be delivered to the Trustee
and the Seller.
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(c) No removal or resignation of any Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed such Servicer's
responsibilities and obligations in accordance with this Section. The removal or
resignation of one Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such Servicer also shall
promptly deliver or cause to be delivered to the successor Servicer or the
Trustee all the books and records (including, without limitation, records kept
in electronic form) that such Servicer has maintained for the Mortgage Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in such Servicer's
possession.
(e) Any collections received by any Servicer after removal or resignation
thereof shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(f) Upon removal or resignation of any Servicer, the Trustee, with the
cooperation of the Seller, (x) shall solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor Servicer as a
result of soliciting such bids, shall serve as Servicer of the Mortgage Loans
serviced by such predecessor Servicer. The Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Servicer, (I)
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
been designated as an approved servicer by FannieMae or FHLMC for first and
second mortgage loans and having equity of not less than $5,000,000 (or such
lower level as may be acceptable to the Owners of a majority of the Class R
Certificates) and is reasonably acceptable to the Seller and the Owners of the
Class R Certificates, as indicated in writing as the successor to such Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of such Servicer hereunder and (II) give notice thereof to the
Seller, the Owners and the Rating Agencies. The compensation of any successor
Servicer (including, without limitation, the Trustee) so appointed shall be the
amount agreed by the related Servicer and the Seller. Any existing Servicer may
bid to be a successor to any other Servicer. Any reasonable out of pocket set-up
costs or expenses incurred by the Trustee as interim successor Servicer as
specified in subclause (y) of this Section 8.21(f) shall be at the expense of
the Trust and shall be payable pursuant to Section 7.03(j).
(g) In the event that the Trustee is able to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify that the successor Servicer shall be
entitled to the servicing compensation agreed upon between the Trustee, the
successor Servicer and the Seller; provided, however, that no such fee shall
exceed the related Servicing Fee. Within thirty days after any such public
announcement, the Trustee, with the cooperation of the Seller, shall negotiate
in good faith and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid as to the price they will pay to obtain such servicing.
The Trustee upon receipt of the purchase price shall pay such purchase price to
the Servicer being so removed (except in the case of subsection (h) below, in
which case the Trustee shall pay such purchase price to the Seller), after
deducting from any sum received by the Trustee from the successor to such
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities reasonably incurred hereunder. After such
deductions, the remainder of such sum shall be paid by the Trustee to such
Servicer (other than Advanta) at the time of such sale.
(h) The Trustee and the successor Servicer shall take such action
consistent with this Agreement as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing if such notification is not done by such predecessor Servicer as
required by subsection
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(j) below. Each predecessor Servicer agrees to cooperate with the Trustee and
any successor Servicer in effecting the termination of such Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Trustee or
such successor Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume such Servicer's functions hereunder and
shall promptly also transfer to the Trustee or such successor Servicer, as
applicable, all amounts which then have been or should have been deposited in
the related Principal and Interest Account by such Servicer, or which are
thereafter received with respect to the Mortgage Loans. Neither the Trustee nor
any other successor Servicer shall be held liable by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
caused by (i) the failure of the predecessor Servicer to deliver, or any delay
in delivery, cash, documents or records to it or (ii) restrictions imposed by
any regulatory authority having jurisdiction over such Servicer.
(i) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall as soon as reasonably practicable pay all
Compensating Interest and, if applicable, Delinquency Advances which have
theretofore not been remitted to the extent required by this Agreement with
respect to the Mortgage Loans; provided, however, that if the Trustee is acting
as successor Servicer, the Trustee shall only be required to make such
Delinquency Advances if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related Mortgage
Loans. Any Delinquency Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall be recoverable
by it and paid to it by the successor Servicer to the extent such Delinquency
Advances, Servicing Advances and accrued and unpaid Servicing Fees would
otherwise have been recoverable had the predecessor Servicer not been
terminated.
(j) Any Servicer which is being removed or is resigning shall give notice
to the Mortgagors and to the Rating Agencies of the transfer of the servicing to
the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.26 and
shall be entitled to such fees as may be agreed upon between the Seller and such
successor Servicer (such amount not to exceed the Aggregate Servicing Fee Rate),
and all of the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement; provided, that if the Trustee shall be the
successor Servicer, the Trustee shall be entitled to the same fees as the
Servicer was entitled to at the time of succession. The appointment of a
successor Servicer (including the Trustee) shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer (including the Trustee) be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement.
(l) The Trustee and the Seller shall each give notice to the Rating
Agencies and the Owners or the Seller of the occurrence of any event specified
in Section 8.20 of which a Responsible Officer of the Trustee has actual
knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination. Subject to the
rights of the Trustee, the Owners and the Seller pursuant to Section 8.20 to
terminate all of the rights and obligations of any Servicer under this Agreement
or the Owners of at least 51% of the Percentage Interests of the Class R
Certificates may, on behalf of all Owners of Certificates, waive any default by
such Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising therefrom shall be
deemed to have been remedied
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for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement By the
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of any Servicer hereunder by
the Trustee pursuant to Section 8.21, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a subservicer shall be assumed simultaneously by the
Trustee without act or deed on part of the Trustee; provided, however, the
Trustee in its sole discretion may terminate any subservicer notwithstanding the
provisions of the related Subservicing Agreement.
Each Servicer shall, upon the reasonable request of the Trustee, but at the
expense of such Servicer, deliver to the assuming party documents and records
relating to each Subservicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts (through the
execution of any documents or otherwise) to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party and shall
cooperate with the Trustee in any other manner reasonably requested by the
Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor Servicer.
Following the termination of any Servicer hereunder and pending the appointment
of any other Person as successor Servicer, the Trustee is hereby empowered to
perform the duties of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any termination of
such Servicer pursuant to Section 8.21, such Servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee shall upon
termination or resignation of any Servicer, and pending the appointment of any
other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14
hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency Advances and to pay
Compensating Interest (and to be reimbursed therefor as provided herein).
Section 8.25 Liability of the Servicers. None of the Servicers nor any of
their directors, officers, employees or agents shall be under any liability on
any Certificate or otherwise to the Seller, the Trustee or any Owner for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or for errors in judgment except as required
hereunder; provided, however, that this provision shall not protect any
Servicer, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Each of the Servicers and any director, officer, employee or agent of each of
the Servicers 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. None of the Servicers shall be under any obligation to appear in,
prosecute or defend any
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legal action that is not incidental to its duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, that each
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 Owners 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, and
such Servicer shall be entitled to be reimbursed therefor out of the Principal
and Interest Account. The Servicers and any director, officer, employee or agent
of each of the Servicers shall be indemnified by the Trust and held harmless
against any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of negligent action, negligent failure to act, willful
misconduct in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time (but unless there is
a valid reason to do so, not more than once every six months) upon prior written
and reasonable notice, the Trustee, the Seller or any agents or representatives
thereof may inspect any Servicer's servicing operations and discuss the
servicing operations of such Servicer with a responsible officer designated by
the related Servicer. The reasonable costs and expenses incurred by such
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that meet the requirements of FannieMae or FHLMC on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and omissions insurance
shall be in the form of Mortgage Banker's Blanket bond and shall protect and
insure such Servicer against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such persons. Such fidelity
bond shall also protect and insure such Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by
FannieMae in the FannieMae Servicing Guide or by FHLMC in the FHLMC Sellers' and
Servicers' Guide. Upon the written request of the Seller, a Servicer shall cause
to be delivered to the Seller an Officer's Certificate as to the maintenance of
the fidelity bond and insurance policy that such fidelity bond and insurance
policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to Business of
Servicer. Any corporation into which any Servicer may be merged or converted or
with which it may be consolidated, or corporation resulting from any merger,
conversion or consolidation to which such Servicer shall be a party or any
corporation succeeding to all or substantially all of the business of such
Servicer shall be the successor of such Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any responsible officer of
the Servicer's actual knowledge thereof, such Servicer shall give prompt notice
to the Trustee, the Seller, and the Rating Agencies of the occurrence of any of
the following events:
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(a) Any default or any fact or event which such officer knows results, or
which with notice or the passage of time, or both, would result in the
occurrence of a default by such Servicer under any Operative Document or would
constitute a material breach of a representation, warranty or covenant under any
Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against such Servicer of
which it has knowledge, in any federal, state or local court or before any
governmental body or agency or before any arbitration board or any such
proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such Servicer's
ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings of which it has knowledge or has
received service of process by or against such Servicer under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of such Servicer's business that such Servicer is to
cease and desist, or to undertake any practice, program, procedure or policy
employed by such Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely affect the conduct
of such Servicer's business or its ability to perform under the Operative
Documents or materially and adversely affect the financial affairs of such
Servicer.
Section 8.29 Monthly Servicing Report and Servicing Certificate. (a) Each
Servicer with respect to the Mortgage Loans serviced by it shall deliver not
later than the Reporting Date, a Monthly Servicing Report (which shall be in a
format reasonably agreeable to both the Servicer and the Trustee and, with
respect to certain delinquency information, may be delivered by hard copy), to
the Trustee and, upon request, to the Seller. The Monthly Servicing Report shall
state as to the related Remittance Period for the Mortgage Loans serviced by
such Servicer:
(i) (a) scheduled interest due (net of the Servicing Fee); (b)
Compensating Interest paid; (c) scheduled principal due; (d) Prepayments;
(e) Loan Balance of Mortgage Loans repurchased; (f) Substitution Amounts;
and (g) Net Liquidation Proceeds (related to principal);
(ii) The Servicing Fee withheld by the related Servicer;
(iii) The principal and interest payments remitted by such Servicer to
its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the Mortgage
Loans that were not made by the related Mortgagors as of the last day of
the related Remittance Period;
(v) The number and aggregate Loan Balances (computed in accordance
with the terms of the Mortgage Loans) and the percentage of the total
number of Mortgage Loans and of the Loan Balance which they represent of
Delinquent Mortgage Loans, if any, (i) 30 to 59 days, (iii) 60 to 89 days
and (iii) 90 days or more, respectively, as of the last day of the related
Remittance Period;
(vi) The number and aggregate Loan Balances of Mortgage Loans, if any,
in foreclosure and the number and Book Value of any REO Properties as of
the last day of the related Remittance Period;
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(vii) The Loan Balances (immediately prior to being classified as
Liquidated Mortgage Loans) of Liquidated Mortgage Loans as of the last day
of the related Remittance Period;
(viii) Liquidation Proceeds received during the related Remittance
Period;
(ix) The amount of any Liquidation Expenses being deducted from
Liquidation Proceeds or otherwise being charged to the Principal and
Interest Account(s) with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related Remittance Period
which are not being deducted from Liquidation Proceeds or otherwise being
charged to the Principal and Interest Account with respect to such Monthly
Remittance Date;
(xi) Net Liquidation Proceeds as of the last day of the related
Remittance Period;
(xii) The scheduled principal balance of each Mortgage Loan as of the
first day of the related Remittance Period and the date through which
interest has been paid as of the last day of the related Remittance Period;
(xiii) The number and aggregate Loan Balances and Loan Purchase Prices
of Mortgage Loans required to be repurchased by each Originator as of the
related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by such Servicer
during the related Remittance Period and any unreimbursed Delinquency
Advances as of such Monthly Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage Loans;
(xvi) Any additional information reasonably requested by the Trustee;
(xvii) The number and aggregate Loan Balances of Mortgage Loans, if
any, currently in bankruptcy proceedings as of the last day of the related
Remittance Period and any Preference Amounts to the extent the related
Servicer has knowledge thereof; and
(xviii) The amount of unreimbursed Servicing Advances.
In addition to the reports and certificates described in this Section 8.29 to be
provided by such Servicer, information as the Trustee and such Servicer may
agree upon shall be provided by such Servicer to the Trustee or such other party
as may be requested by the Trustee by electronic transmission or hard copy.
(b) The Trustee shall, no later than the related Payment Date, provide to
the Underwriters, the Depositor, the Seller and the Rating Agencies a written
report setting forth the information required under Section 7.09(b) hereof,
based solely on information contained in the Monthly Servicing Certificate.
(c) Each Servicer with respect to the Mortgage Loans in Group II agrees
that, in addition to the reports and certificates described in Section 8.29(a)
hereof, it shall upon the reasonable request of the Seller, prepare reports
detailing the Mortgage Loans serviced by it by index and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to the Trustee on
the Startup Day in hard copy and on electronic tape in a form acceptable to the
Trustee (the "Tape") detailing the information required to be set forth on the
Schedules of Mortgage Loans as of the close of business on the Cut-Off Date.
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(e) Within two Business Days of receipt thereof, the Trustee shall review
the Monthly Servicing Reports against the information, as updated by the Trustee
on the basis of the current and all previous Monthly Servicing Reports received
by the Trustee. Within one Business Day following a determination by the Trustee
that inconsistencies between the Monthly Servicing Report and such information
are not reconcilable, the Trustee shall notify the related Servicer and the
Seller of any such material inconsistencies and related Servicer shall rectify
them.
Section 8.30 Indemnification by the Servicer. Each Servicer agrees to
indemnify and hold the Trustee, the Seller and the Depositor harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Seller, the Depositor and the Trustee may sustain in any way caused by or
arising out of the negligent failure of such Servicer, or Subservicer appointed
by it, to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement and which, in the case of the Seller or the
Depositor, materially and adversely affects such party. Each Servicer shall
immediately notify the Trustee, the Seller, the Depositor and the Rating
Agencies if a claim is made by a third party with respect to this Agreement, and
the relevant Servicer may assume (with the consent of the Trustee) the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Seller, the Trustee and the Depositor.
The Trustee shall reimburse such Servicer from amounts in the related Principal
and Interest Account for all amounts advanced by it pursuant to the preceding
sentence except when the claim relates directly to the failure of such Servicer
to service and administer the Mortgage Loans in compliance with the terms of
this Agreement.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall perform its servicing
functions with respect to the Mortgage Loans in the best interests of and for
the benefit of the Owners subject to the terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on such Servicer's behalf, to personally, by telephone or mail,
solicit the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan. Notwithstanding the
foregoing, it is understood and agreed that promotions undertaken by a Servicer
or any Affiliate thereof which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this paragraph, nor is a Servicer prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an agent
of a Mortgagor; provided further, that the Servicer may solicit any Mortgagor
(i) for whom the Servicer has received a request for verification of mortgage
from an originator of mortgage loan products similar to the Mortgage Loans that
indicates that such Mortgagor intends to refinance his or her Mortgage Loan and
(ii) otherwise in accordance with the Seller's policy, if such policy is
delivered to the related Servicer in writing. It is understood and agreed that
all rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of Mortgagors and data
relating to their Mortgages shall be retained by Seller. Notwithstanding the
foregoing, each Servicer may, upon written consent of the Seller, solicit the
borrower or Mortgagor of a Mortgage Loan for insurance products.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates, of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included within the REMIC
Estate is effected as described below. To effect a termination of this Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC Estate to adopt
a plan of complete liquidation for each of the Mortgage Loan Groups, as
contemplated by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters acceptable to
the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee either shall sell the Mortgage Loans and distribute
the proceeds of the liquidation of the Trust Estate, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates each in accordance with such plan, so that the liquidation
or distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of twenty-one
(21) years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of Saint James's,
living on the date hereof. The Trustee shall give written notice of termination
of the Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Auction Call; Servicer Termination.
(a) Within 90 days of the Group I Auction Sale Bid Date and with 90 days of
the Group II Auction Sale Bid Date, the Trustee will notify the investment
banking or whole-loan trading firm selected by the Owners of the majority of the
Class R Certificates (such investment bank or trading firm, the "Advisor") who
will solicit on behalf of the Trustee competitive bids for the purchase of the
Mortgage Loans then remaining in such Mortgage Loan Group for fair market value
(such bidders may include the Owners of the Class R Certificates). Such
solicitation shall be conducted substantially in the manner described in Exhibit
M hereto. In the event that satisfactory bids are received as described below,
the proceeds of the sale of such assets shall be deposited into the Certificate
Account. The Trustee will ask the Advisor to solicit, on behalf of the Trustee,
good-faith bids from no fewer than two prospective purchasers that are
considered at the time to be competitive participants in the home equity market.
The Advisor will consult with any securities brokerage houses as then making a
market in the Offered Certificates to obtain a determination as to whether the
fair market value of such assets has been offered.
If the highest good-faith bid received by the Advisor from a qualified
bidder is, in the judgment of the Advisor, not less than the fair market value
of the Mortgage Loans in such Mortgage Loan Group and if such bid would equal or
exceed the amount set forth in the following sentence, the Trustee, following
consultation with and written direction from the Advisor, will sell and assign
the Mortgage Loans in such Mortgage Loan Group without representation, warranty
or recourse to such highest bidder and will redeem the Offered Certificates
related to such Mortgage Loan Group. For the Trustee to consummate
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the sale, the bid must be at least equal to the Termination Price set forth in
Section 9.02(b) hereof. In addition, the bid must be in an amount sufficient to
pay the fees and expenses of the Trustee owing hereunder. If such conditions are
not met, the Trustee will, following consultation with the Advisor, decline to
consummate such sale. In addition, the Trustee will decline to consummate such
sale unless it receives from the Advisor an opinion of counsel addressed to it
that such sale will not give rise either to any "prohibited transaction" tax
under Section 860F(a)(1) of the Code or to any tax on contribution to the REMIC
after the Startup Day under Section 860G(d)(1) of the Code. In the event such
sale is not consummated in accordance with the foregoing, the Trustee will not
be under any obligation to solicit any further bids or otherwise to negotiate
any further sale of the Mortgage Loans in such Mortgage Loan Group. In such
event, however, if requested by the Owners of the Class R Certificates the
Trustee may solicit bids from time to time in the future for the purchase of the
Mortgage Loans in such Mortgage Loan Group upon the same terms described above.
The Trustee may consult with the Advisor and the advice of the Advisor shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder.
(b) On any Monthly Remittance Date on or after the Group I Servicer
Clean-Up Call Date and on any Monthly Remittance Date on or after the Group II
Servicer Clean-Up Call Date, the Servicers servicing Mortgage Loans relating to
such Mortgage Loan Group simultaneously may determine to purchase and may cause
the purchase from the Trust of all (but not fewer than all) Mortgage Loans
serviced by the related Servicer with respect to such Mortgage Loan Group and
all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in such
Mortgage Loan Group, at a price (such price the "Termination Price") equal to
100% of the aggregate Loan Balances of the related Mortgage Loans (including any
REO Property) as of the day of purchase minus amounts remitted from the
Principal and Interest Account to the Certificate Account representing
collections of principal on the related Mortgage Loans during the current
Remittance Period, plus one month's interest on such amount computed at the
Termination Date Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the related
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
If on any such Monthly Remittance Date a Servicer does not elect to
purchase the Mortgage Loans it is servicing and one or more of the other
Servicers have so elected, the Servicer(s) having so elected may give the other
Servicer(s) notice (not less than ten days prior to the next succeeding Monthly
Remittance Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans with respect to such Mortgage Loan Group on such
Monthly Remittance Date at the Termination Price. If the other Servicer(s) do
not agree in writing to purchase the Mortgage Loans they are servicing prior to
the fifth day preceding such Monthly Remittance Date, the electing Servicer(s)
may purchase all Mortgage Loans in such Mortgage Loan Group on such Monthly
Remittance Date.
(c) In the event that an auction sale has not occurred with respect to both
Mortgage Loan Groups and the Servicers fail to exercise their respective options
to purchase all of the Mortgage Loans in both Mortgage Loan Groups, the Owners
of the Class R Certificates are required to purchase all of the Mortgage Loans
in both Mortgage Loan Groups on the Monthly Remittance Date in June 2027.
(d) In connection with any such purchase, such Owners of the Class R
Certificates or Servicers, as applicable, shall unanimously direct the Trustee
to adopt and the Trustee shall adopt, as to the REMIC Estate, a plan of complete
liquidation for all of the Mortgage Loan Groups as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such purchase and liquidation constitutes, as to the
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REMIC Estate, a Qualified Liquidation. In addition, such Owners of the Class R
Certificates or such Servicer shall provide to the Trustee an Opinion of Counsel
acceptable to the Trustee to the effect that such purchase and liquidation does
not constitute a preference payment pursuant to the United States Bankruptcy
Code.
(e) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of the Class R Certificates or
otherwise upon their order or to the related Servicer, if applicable, in
accordance with Section 8.14 hereof. Upon such release, the servicing of the
Mortgage Loans shall remain with the related Servicer, subject to the servicing
provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or by a
court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that the REMIC Estate does not and will no longer qualify as a
REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination the Owners of a majority in Percentage Interests represented by
the Offered Certificates then Outstanding may direct the Trustee on behalf of
the Trust to adopt a plan of complete liquidation, as contemplated by Section
860F(a)(4) of the Code.
The Trustee shall notify the Servicers and the Owners of the Class R
Certificates of such election to liquidate or such determination to purchase, as
the case may be (the "Termination Notice"). The Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, within 60
days from the date of receipt of the Termination Notice (the "Purchase Option
Period"), at their option, purchase from the Trust all (but not fewer than all)
Mortgage Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Mortgage Loan then remaining
in the Trust Estate at a purchase price equal to the Termination Price. If,
during the Purchase Option Period, the Owners of the Class R Certificates have
not exercised the option described in the immediately preceding paragraph, then
upon the expiration of the Purchase Option Period in the event that the Owners
of the Offered Certificates have given the Trustee the direction described in
clause (a) above, the Trustee shall sell the Mortgage Loans and reimburse the
Servicer for unreimbursed (including nonrecoverable) Delinquency Advances,
Servicing Advances and Servicing Fees and distribute the remaining proceeds of
the liquidation of the Trust Estate, each in accordance with the plan of
complete liquidation, such that, if so directed, the liquidation of the Trust
Estate, the distribution of the proceeds of the liquidation and the termination
of this Agreement occur no later than the close of the 60th day, or such later
day as the Owners of the Offered Certificates shall permit or direct in writing,
after the expiration of the Purchase Option Period. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Trustee of an Opinion of Counsel experienced in
federal income tax matters acceptable to the Trustee selected by the Owners of
the Class R Certificates which opinion shall be reasonably satisfactory in form
and substance to the Trustee and the Seller to the effect that the effect of the
Final Determination is to increase substantially the probability that the gross
income of the Trust will be subject to federal taxation, purchase from the Trust
all (but not fewer than all) Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in the Trust Estate at a purchase price equal
to the aggregate Loan Balances of all Mortgage Loans as of the date of such
purchase, plus (a) one month's interest on such amount computed at the
Termination Date Pass-Through Rate, (b) the aggregate amount of unreimbursed
(including nonrecoverable) Delinquency Advances, Servicing Advances and
Servicing Fees and (c) the interest
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portion of any Delinquency Advances which a related Servicer has theretofore
failed to remit. In connection with such purchase, the related Servicer shall
remit to the Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed to
have occurred immediately preceding such purchase. The foregoing opinion shall
be deemed satisfactory unless the Seller or the Trustee gives the Owners of a
majority of the Percentage Interest of the Class R Certificates notice that such
opinion is not satisfactory within thirty days after receipt of such opinion. In
connection with any such purchase, such Owners shall direct the Trustee to adopt
a plan of complete liquidation as contemplated by Section 860F(a)(4) of the Code
and shall provide to the Trustee an Opinion of Counsel experienced in federal
income tax matters to the effect that such purchase constitutes a Qualified
Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and unreimbursed
Delinquency Advances and Servicing Advances and Servicing Fees theretofore
funded by a Servicer from the Servicer's own funds shall be paid by the Trustee
to the Servicer from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B)
shall serve as the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicers hereunder, the Trustee
is hereby empowered to perform the duties of the Servicers it being expressly
understood, however, that the foregoing describes a power and not an obligation
of the Trustee, and that all parties hereto agree that, prior to any termination
of the Servicers, the Servicers and, thereafter, the Trustee or any other
successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicers, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii)to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest (and to be reimbursed therefor as provided
herein).
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii)the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Owners of a majority in Percentage Interest
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of the Certificates of the affected Class or Classes 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 relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. None of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicers under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicers in
accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) Neither the Servicers, the Seller nor the Trustee knowingly shall take
any action that would cause the Class A-8 Certificates or the Class M-1A
Certificates to fail to qualify as "mortgage related securities" within the
meaning of the Securities Exchange Act of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled hereto
on any Payment Date amounts available for distribution in accordance with
the terms hereof (provided, however, that any such failure which is due to
circumstances beyond the control of the Trustee shall not be a cause for
removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall prove
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to be incorrect in any material respect as of the time when the same shall
have been made, and such failure or breach shall continue or not be cured
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Trustee by the Seller or by the Owners of at least
25% of the aggregate Percentage Interests in the Trust Estate represented
by the Offered Certificates then Outstanding, or, if there are no Offered
Certificates then Outstanding, by such Percentage Interests represented by
the Class R Certificates, a written notice specifying such failure or
breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property;
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing; or
(6) the Trustee shall fail to meet the eligibility requirements set
forth in Section 10.08 herein.
The Depositor shall give to the Rating Agencies notice of the occurrence of
any such event of which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is continuing, then
and in every such case the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding or
if there are no Offered Certificates then Outstanding by such majority of the
Percentage Interests represented by the Class R Certificates, may, whether or
not the Trustee resigns pursuant to Section 10.09(b) hereof, immediately,
concurrently with the giving of notice to the Trustee, and without delaying the
30 days required for notice therein, appoint a successor Trustee pursuant to the
terms of Section 10.09 hereof.
(c) The Servicers shall not be liable for any costs relating to the removal
of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the Servicers or
the Owners of any Class of Certificates mentioned herein shall, at the request
of the Trustee, be in writing;
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(c) whenever in the administration of this Agreement the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting to take any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of such
counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within the
discretion or the rights or powers conferred upon it under this Agreement other
than as to validity and sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer is required to
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate (either in writing or orally with
prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in respect
of the execution of the Trust Estate created hereby or the powers granted
hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the Certificates,
except any such recitals and representations relating to the Trustee, shall be
taken as the statements of the Depositor and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Agreement, of the Certificates, or any
Mortgage Loan or document related thereto other than as to validity and
sufficiency of its authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller or the Servicer in
respect of the
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Mortgage Loans or deposited into or withdrawn from the Principal and Interest
Account or the Certificate Account by the Depositor, the related Servicer or the
Seller, and shall have no responsibility for filing any financing or
continuation statement in any public office at any time or otherwise to perfect
or maintain the perfection of any security interest or lien or to prepare or
file any tax returns (except as provided in Section 11.16) or Securities and
Exchange Commission filings for the Trust or to record this Agreement. The
Trustee shall not be required to take notice or be deemed to have notice or
knowledge of any default unless an Authorized Officer of the Trustee shall have
received written notice thereof or an Authorized Officer has actual knowledge
thereof. In the absence of receipt of such notice, the Trustee may conclusively
assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust with the same rights it would
have if it were not Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c) and (d) and Section 7.05
hereof. The Trustee shall have no lien on the Trust Estate for the payment of
such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America and having a deposit rating of at least A- by Standard & Poor's (or such
lower rating as may be acceptable to Standard & Poor's), A2 by Moody's (or such
lower rating as may be acceptable to Moody's) and, if rated by Fitch, having a
rating of at least A- from Fitch (or such lower rating as may be acceptable to
Fitch). If such Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall, upon the request of the Seller
resign immediately in the manner and with the effect hereinafter specified in
this Article X.
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Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may resign
at any time by giving written notice of resignation to the Depositor and by
mailing notice of resignation by first-class mail, postage prepaid, to the
Owners at their addresses appearing on the Register; provided, that the Trustee
cannot resign solely for the failure to receive the Trustee Fee. A copy of such
notice shall be sent by the resigning Trustee to the Rating Agencies. Upon
receiving notice of resignation, the Depositor shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed on
behalf of the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor trustee or trustees. If no successor trustee shall have been appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor, the Depositor may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by the
Offered Certificates or, if there are no Offered Certificates then Outstanding,
by such majority of the Percentage Interests represented by the Class R
Certificates, may at any time remove the Trustee and appoint a successor trustee
by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor and to the Servicer, copies of the record of the act
taken by the Owners, as provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the terms
of this Agreement, or becomes ineligible pursuant to Section 10.08 to serve as
Trustee, the Seller may remove the Trustee and appoint a successor trustee by
written instrument, in triplicate, signed by the Seller duly authorized, one
complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor
Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Seller shall promptly appoint a successor trustee. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor trustee shall be appointed by act of the Seller or the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding, the successor trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor trustee and supersede the
successor trustee appointed by the Depositor. If no successor trustee shall have
been so appointed by the Depositor or the Owners and shall have accepted
appointment in the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
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(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the Rating
Agencies and the Servicers and to the Owners as their names and addresses appear
in the Register. Each notice shall include the name of the successor Trustee and
the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge and
deliver to the Depositor on behalf of the Trust and to its predecessor Trustee
an instrument accepting such appointment hereunder and stating its eligibility
to serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Depositor or the successor Trustee, such predecessor Trustee
shall, upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor trustee all of the rights, powers and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor trustee, the
Depositor on behalf of the Trust shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor trustee all such
rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register. The
Depositor shall send a copy of such notice to the Rating Agencies. If the
Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to Business
of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and except
as otherwise specifically set forth in subsection (a) above, the Trustee shall
timely file all reports prepared by the Depositor
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and required to be filed by the Trust with any federal, state or local
governmental authority having jurisdiction over the Trust, including other
reports that must be filed with the Owners, such as the Internal Revenue
Service's Form 1066 and Schedule Q and the form required under Section 6050J and
6050K of the Code, if applicable to REMICs. The Trustee shall, upon request of
the Tax Matters Person, collect any forms or reports from the Owners determined
by the Tax Matters Person to be required under applicable federal, state and
local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the Trustee
any information necessary to enable the Trustee to meet its obligations under
subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Seller, the Servicers or any Owner for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors, officers, employees
or agents or any such Person against any liability which would otherwise be
imposed by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. In addition, the Depositor and the Seller
covenant and agree to indemnify the Trustee in its capacity as Trustee and not
as successor Servicer (unless resulting from failure of the related predecessor
Servicer to perform in accordance with this Agreement), from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
(including legal fees and expenses) of whatsoever kind arising out of or in
connection with the performance of the Trustee's duties hereunder other than
those resulting from the negligence or bad faith of the Trustee, and the
Depositor shall pay all amounts not otherwise paid pursuant to Sections 2.05 and
7.06 hereof. The Trustee and any director, officer, employee or agent of the
Trustee may rely and shall be protected in acting or refraining from acting in
good faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Depositor
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, of all or any
part of the Trust Estate or separate Trustee or separate Trustees of any part of
the Trust Estate, and to vest in such Person or Persons, in such capacity and
for the benefit of the Owners, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 10.14, such
powers, duties, obligations, rights and trusts as the Depositor and the Trustee
may consider necessary or desirable. If the Depositor shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
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
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under Section 10.08 and no notice to Owner of the appointment of any co-Trustee
or separate Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by reason
of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicers and the Trustee acting jointly may at any time
accept the resignation of or remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion of
the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement in the form of Exhibit L. Subject to this Article X, the Trustee
agrees to comply with the terms of each Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the Owners
to the Trustee to take any action under any provision of this Agreement, the
Depositor, the Seller or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion of
an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the Seller
or the Servicers, stating that the information with respect to such factual
matters is in the possession of the Depositor, the Seller or such Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care
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should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners or other documents provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with the Trustee by any Owner, the
Depositor, the Seller and the Servicers shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at the Corporate Trust Office.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice of any such
events shall be made by overnight courier, registered mail or telecopy followed
by a telephone call.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
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Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many states
and outside the United States and the desire to establish with certainty that
this Agreement will be governed by and construed and interpreted in accordance
with the law of a state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein, this Agreement and
each Certificate shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
therein, without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of the
United States District Court for the Southern District of New York and any court
in the State of New York located in the City and County of New York, and any
appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Nothing contained in this Agreement shall limit or affect the right of
the Depositor, the Seller or the Servicers or other third-party beneficiary
hereunder, as the case may be, to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Mortgage Loans against
any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the terms
of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicers may at any
time and from time to time, and without notice to or the consent of the Owners,
amend this Agreement, subject to the provisions of Section 11.16 and 11.17 and
the consent of the Trustee to such amendment shall not be unreasonably withheld,
for the purpose of (i) curing any ambiguity, typographical error, or mistake,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or to add provisions hereto which are not
inconsistent with the provisions hereof; or (ii) upon receipt of an Opinion of
Counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust, the REMIC Estate or upon the
transferor of a Class R Certificate as a result of the ownership of any Class R
Certificate by a Disqualified Organization, removing the restriction on transfer
set forth in Section 5.08(b) hereof; or (iii) complying with the requirements of
the Code and the regulations proposed or promulgated thereunder including any
amendments necessary to maintain REMIC status or (iv) for any other purpose,
provided that in the case of this clause (iv) such amendment will not adversely
affect in any material respect any Owners. Any such amendment shall be deemed
not to adversely affect in any material respect any Owner if there is delivered
to the Trustee written notification from each Rating Agency that such amendment
will not cause such Rating Agency to reduce its then current rating assigned to
any Class of the Certificates. This Agreement may also be amended by the
Trustee, the Depositor, the Seller and the Servicers at any time and from time
to time, with the prior written approval of a majority of the Percentage
Interest represented by each affected Class of Certificates then Outstanding,
for the purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Owners hereunder. Notwithstanding anything to the
contrary herein, no such amendment shall (a) change in any manner the amount of,
or change the timing of, payments which are required to be distributed to any
Owner without the consent of the Owner of such Certificate, (b) reduce the
aforesaid percentages of Percentage Interests which are required to consent to
any such amendments, without the consent of the Owners of all Certificates of
the Class or Classes affected then Outstanding, (c) adversely affect the
qualification of the REMIC Estate or subject the REMIC Estate to tax, as
evidenced by an Opinion of Counsel satisfactory to the Trustee at the expense of
the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Owner in
the manner set forth in Section 11.05, and to the Rating Agencies.
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(c) The Rating Agencies shall be provided with copies of any amendments to
this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may, subject to
the eligibility requirements for the Trustee set forth in Section 10.08 hereof,
appoint one or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee;
and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Servicers and the Owners by mailing notice thereof
at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the REMIC Estate shall constitute, and
that the affairs of the REMIC Estate shall be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
The Bank of New York or such other person designated pursuant to Section 11.18
hereof shall act as agent for the Trust and as Tax Matters Person for the Trust
and that in such capacity it shall: (i) prepare or cause to be prepared and
filed, in a timely manner, annual tax returns and any other tax return required
to be filed by the REMIC Estate established hereunder using a calendar year as
the taxable year for the REMIC Estate established hereunder; (ii) in the related
first such tax return, make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of the REMIC Estate for it to be
treated as a REMIC; (iii) prepare and forward, or cause to be prepared and
forwarded, to the Owners all information, reports or tax returns required with
respect to the REMIC Estate as, when and in the form required to be provided to
the Owners, and to the Internal Revenue Service and any other relevant
governmental taxing authority in accordance with the REMIC Provisions and any
other applicable federal, state
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or local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the REMIC Estate, except as provided under this Agreement;
(v) represent the Trust or of the REMIC Estate in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to a taxable year of the
Trust or the REMIC Estate, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or the REMIC Estate, and otherwise act on behalf of the
Trust or the REMIC Estate therein in relation to any tax matter involving the
Trust or the REMIC therein; (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to the foregoing
clauses of this Section 11.16, including, without limitation, providing all
notices and other information to the Internal Revenue Service and Owners of
Class R Certificates required of a "tax matters person" pursuant to subtitle F
of the Code and the Treasury Regulations thereunder; (vii) make available
information necessary for the computation of any tax imposed (A) on transferor
of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of The Bank of New York or such other designated Tax
Matters Person pursuant to this Section 11.16 shall survive the termination or
discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each Servicer covenant and
agree for the benefit of the Owners (i) to take no action which would result in
the termination of "REMIC" status for the REMIC Estate, (ii) not to engage in
any "prohibited transaction", as such term is defined in Section 860F(a)(2) of
the Code, and (iii) not to engage in any other action which may result in the
imposition on the Trust of any other taxes under the Code and the Seller in
addition covenants to cause each Servicer not to take or engage in any such
action, to the extent the Seller is aware of any such proposed action by the
Servicer.
(c) The REMIC Estate shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or the
Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to Trustee and the Seller to the effect
that such transaction does not result in a tax imposed on the Trust or cause a
termination of REMIC status for the REMIC Estate; provided, however, that such
transaction is otherwise permitted under this Agreement.
(g) The Trustee, each of the Servicers and Tax Matters Person each agree to
indemnify the Trust for any tax imposed on the Trust or the REMIC Estate as a
result of their own negligence.
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Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such transaction does not result in a tax imposed on the Trust or
the REMIC Estate or cause a termination of REMIC status for the REMIC Estate,
(i) sell any assets in the Trust Estate (except as specifically provided in this
Agreement), (ii) accept any contribution of assets after the Startup Day in
violation of the REMIC Provisions or (iii) agree to any modification of this
Agreement. To the extent that sufficient amounts cannot be so retained to pay or
provide for the payment of such tax, the Trustee is hereby authorized to and
shall segregate, into a separate non-interest bearing account, the net income
from any such Prohibited Transactions of the REMIC Estate and use such income,
to the extent necessary, to pay such tax; provided that, to the extent that any
such income is paid to the Internal Revenue Service, the Trustee shall retain an
equal amount from future amounts otherwise distributable to the Owners of Class
R Certificates and shall distribute such retained amounts to the Owners of
Offered Certificates to the extent they are fully reimbursed and then to the
Owners of the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC Estate for all
purposes of the Code and such Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for the REMIC Estate shall be The Bank of New York as long as
it owns a Class R Certificate. If The Bank of New York does not own a Class R
Certificate, the Tax Matters Person may be any other entity that owns a Class R
Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I. The Seller shall notify the
Trustee in writing of the name and address of another person who accepts a
designation as Tax Matters Person hereunder.
Section 11.19 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Structured Finance/MBS
Tel: (212) 815-2297
Fax: (212) 815-5309
125
<PAGE>
The Depositor: AMRESCO Residential Securities Corporation
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
3401 Centrelake Drive
Suite 480
Ontario, California 91761
Attn: Janice Cott
Tel: (909) 605-7600
Fax: (909) 605-7619
The Servicers: Advanta Mortgage Corp. USA
16875 West Bernardo Drive
San Diego, CA 92127
Attn: Senior Vice President - Loan Servicing
Tel: (619) 674-1800
Fax: (619) 674-3666
Ameriquest Mortgage Company
1100 Town and Country Road
Orange, CA 92868
Attn: Servicing Manager
Tel: (714) 564-0600
Fax: (714) 973-4535
Option One Mortgage Corporation
2020 East First Street
Suite 100
Santa Ana, CA 92705
Attn: Fabiola Camperi
Tel: (714) 558-7700
Fax: (714) 558-3822
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: The Mortgage Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
126
<PAGE>
Fitch: Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: Hedi Katz
Tel: (212) 908-0500
Fax: (212) 376-6857
DCR: Duff & Phelps Credit Rating Co.
55 East Monroe Street
35th Floor
Chicago, Illinois 00603
Attn: MBS Monitoring
Tel: (312) 368-3100
Fax: (312) 368-3155
Underwriters: Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292
Attn: Sean Low
Tel: (212) 778-1492
Fax: (212) 778-7401
Credit Suisse First Boston
55 E. 52nd St.
New York, New York 10055-0186
Attn: Nita Cherry
Tel: (212) 909-2333
Fax: (212) 479-5502
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attn: Valerie Kay
Tel: (212) 761-4000
Fax: (212) 761-0782
Owners: As set forth in the Register.
END OF ARTICLE XI
127
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, each Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
/s/ Janice M. Cott
By:-----------------------------------------
Vice President
Title:--------------------------------------
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller
/s/ Janice M. Cott
By:-----------------------------------------
Vice President
Title:--------------------------------------
ADVANTA MORTGAGE CORP. USA
as Servicer
/s/ William P. Garland
By:-----------------------------------------
Senior Vice President
Title:--------------------------------------
AMERIQUEST MORTGAGE COMPANY
as Servicer
/s/ P. L. Wayman
By:-----------------------------------------
Executive Vice President
Title:--------------------------------------
OPTION ONE MORTGAGE CORPORATION
as Servicer
/s/ William L. O'Neill
By:-----------------------------------------
Senior Vice President
Title:--------------------------------------
THE BANK OF NEW YORK,
as Trustee
/s/ Franklin B. Austin
By:-----------------------------------------
Assistant Vice President
Title:--------------------------------------
<PAGE>
WASHINGTON )
) ss:
DISTRICT OF COLUMBIA )
On the 12th day of June 1997, before me personally came Janice M. Cott, to
me known, who, being by me duly sworn, did depose and say that she resides at
Huntington Beach, California, that she is a Vice President of AMRESCO
Residential Securities Corporation, a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Joseph C. Fezie
------------------------------------------
Notary Public
<PAGE>
WASHINGTON )
) ss:
DISTRICT OF COLUMBIA )
On the 12th day of June 1997, before me personally came Janice M. Cott, to
me known, who, being by me duly sworn, did depose and say that she resides at
Huntington Beach, California, that she is a Vice President of AMRESCO
Residential Capital Markets, Inc., a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Joseph C. Fezie
-----------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
On the 12th day of June 1997, before me personally came William P. Garland,
to me known, who, being by me duly sworn, did depose and say that he resides at
16875 West Bernardo Dr. San Diego, CA, that he is a Senior Vice President of
Advanta Mortgage Corp. USA, a Delaware corporation; and that he signed his name
thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Susan C. Kelhi
-----------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 11th day of June 1997, before me personally came P. L. Wayman, to me
known, who, being by me duly sworn, did depose and say that she is an Executive
Vice President of Ameriquest Mortgage Company, a Delaware corporation; and that
she signed her name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ C. Brangham
-----------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 12th day of June 1997, before me personally came William L. O'Neill,
to me known, who, being by me duly sworn, did depose and say that he resides at
2020 E. First Street, Santa Ana, CA, that he is a Senior Vice President of
Option One Mortgage Corporation, a California corporation; and that he signed
his name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Jeff Wolfe
-----------------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June 1997, before me personally came Franklin Austin, to
me known, who, being by me duly sworn, did depose and say that he resides at
Hoboken, NJ, that he is an Assistant Vice President of The Bank of New York, a
New York banking corporation; and that he signed his name thereto by order of
the Board of Directors of said national banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Marilyn O. Austin
-----------------------------------------
Notary Public
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-1- CUSIP:___________
ISIN:___________
COMMON CODE:___________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-1-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-1-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-1 (the "Class A-1
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer (the
"Servicers") and The Bank of New York, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-1 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B-1A, Class B-1F (the "Class B Certificates" and
collectively with the Class A Certificates and the Mezzanine Certificates, the
"Offered Certificates"), Class S Certificates (the "Class S Certificates"),
Class C Certificates (the "Class C Certificates") and Class R (Residual
Interest) (the "Class R Certificates"). The Offered Certificates, the Class S
Certificates, the Class C Certificates and the Class R Certificates are together
referred to herein as the "Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-1 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-1
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-1 Certificates. The Percentage Interest of each Class A-1
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-1 Certificate on the Startup Day by the aggregate Class A-1 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-1-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., or the Servicers, or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the
Mortgage Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-1-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-1-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
A-1-6
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-2- CUSIP:____________
ISIN:____________
COMMON CODE:____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-2-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-2 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-2-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-2 (the "Class A-2
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer (the
"Servicers") and The Bank of New York, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-2 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), the Class C Certificates (the "Class C Certificates") and Class
R (Residual Interest) (the "Class R Certificates"). The Offered Certificates,
the Class S Certificates, the Class C Certificates and the Class R Certificates
are together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-2 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-2
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-2 Certificates. The Percentage Interest of each Class A-2
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-2 Certificate on the Startup Day by the aggregate Class A-2 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-2-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc. or any of their affiliates. This Certificate is limited in right of payment
to certain collections and recoveries relating to the Mortgage Loans and amounts
on deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-2-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-2-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
Date of Authentication:__________
A-2-6
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-3- CUSIP:____________
ISIN:____________
COMMON CODE:____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-3-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-3 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-3-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-3 (the "Class A-3
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "ServicerS") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-3 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), Class S Certificates (the "Class S Certificates"), Class C
Certificates (the "Class C Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Offered Certificates, the Class S Certificates, the
Class C Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-3 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-3
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-3 Certificates. The Percentage Interest of each Class A-3
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-3 Certificate on the Startup Day by the aggregate Class A-3 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-3-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code, and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-3-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-3-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication:____________
A-3-6
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-4- CUSIP:___________
ISIN:___________
COMMON CODE:___________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-4-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-4 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-4-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-4 (the "Class A-4
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-4 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), Class S Certificates (the "Class S Certificates") Class C
Certificates (the "Class C Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Offered Certificates, the Class S Certificates, the
Class C Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-4 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-4
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-4 Certificates. The Percentage Interest of each Class A-4
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-4 Certificate on the Startup Day by the aggregate Class A-4 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-4-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-4-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-4-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
Date of Authentication:__________
A-4-6
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-5- CUSIP:__________
ISIN:__________
COMMON CODE:__________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-5-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-5 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-5-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-5 (the "Class A-5
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-6, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-5 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), Class S Certificates (the "Class S Certificates") Class C
Certificates (the "Class C Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Offered Certificates, the Class S Certificates, the
Class C Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-5 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-5
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-5 Certificates. The Percentage Interest of each Class A-5
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-5 Certificate on the Startup Day by the aggregate Class A-5 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-5-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-5-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-5-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication:____________
A-5-6
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-6- CUSIP:_____________
ISIN:_____________
COMMON CODE:_____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-6-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-6-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-6 (the "Class A-6
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as a Seller (a "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-7, Class A-8, Class A-9 (collectively, including
the Class A-6 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), Class S Certificates (the "Class S Certificates") Class C
Certificates (the "Class C Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Offered Certificates, the Class S Certificates, the
Class C Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-6 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-6 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-6
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-6 Certificates. The Percentage Interest of each Class A-6
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-6 Certificate on the Startup Day by the aggregate Class A-6 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-6-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicer or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-6-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-6-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication:____________
A-6-6
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-7- CUSIP:____________
ISIN:____________
COMMON CODE:____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-7-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-7-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-7 (the "Class A-7
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company as a Servicer and Option One Mortgage Corporation as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-8, Class A-9 (collectively, including
the Class A-7 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), Class S Certificates (the "Class S Certificates") Class C
Certificates (the "Class C Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Offered Certificates, the Class S Certificates, the
Class C Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-7 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-7 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-7
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-7 Certificates. The Percentage Interest of each Class A-7
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-7 Certificate on the Startup Day by the aggregate Class A-7 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-7-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-7-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-7-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication:____________
A-7-6
<PAGE>
EXHIBIT A-8
FORM OF CLASS A-8 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
Class A-8
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-8- CUSIP:_____________
ISIN:_____________
COMMON CODE:_____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-8-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-8 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-8-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-8 (the "Class A-8
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-9 (collectively, including
the Class A-8 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B (the "Class B Certificates" and collectively with the
Class A Certificates and the Mezzanine Certificates, the "Offered
Certificates"), the Class C Certificates (the "Class C Certificates") and Class
R (Residual Interest) (the "Class R Certificates"). The Offered Certificates,
the Class S Certificates, the Class C Certificates and the Class R Certificates
are together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-8 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-8 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-8
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-8 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-8 Certificates. The Percentage Interest of each Class A-8
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-8 Certificate on the Startup Day by the aggregate Class A-8 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
A-8-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-8-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-8 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-8 Certificates are exchangeable for new
Class A-8 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-8-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
Date of Authentication:__________
A-8-6
<PAGE>
EXHIBIT A-9
FORM OF CLASS A-9 CERTIFICATE
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-9
(Adjustable Pass-Through Rate)
Representing Certain Interests in a Pool of Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS"
IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF
THE CODE.
No: A-9 CUSIP:___________________
ISIN:___________________
COMMON CODE:___________________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
A-9-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group II listed in Schedule I-B
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement..
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date), be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-9-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class A-9 (the "Class A-9
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 (collectively, including
the Class A-9 Certificates, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B-1A, Class B-1F (the "Class B Certificates" and
collectively with the Class A Certificates and the Mezzanine Certificates, the
"Offered Certificates"), Class S Certificates (the "Class S Certificates"),
Class C (the "Class C Certificates") and Class R (Residual Interest) (the "Class
R Certificates"). The Offered Certificates, the Class S Certificates, the Class
C Certificates and the Class R Certificates are together referred to herein as
the "Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class A-9 Certificates as of the
close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class A-9 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-9 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-9 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class A-9 Certificates. The Percentage Interest of each Class A-9
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-9 Certificate on the Startup Day by the aggregate Class A-9 Certificate
Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release any
Servicer from any of its obligations under the Pooling and Servicing Agreement.
A-9-3
<PAGE>
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation, as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
A-9-4
<PAGE>
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class A-9 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-9 Certificates are exchangeable for new
Class A-9 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
A-9-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Depositor
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
Date of Authentication:__________
A-9-6
<PAGE>
EXHIBIT B-1
FORM OF CLASS M-1F CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8 AND CLASS A-9,
CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS M-1F
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: M-1F CUSIP:_____________
ISIN:_____________
COMMON CODE:_____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
M-1F-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class M-1F Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
M-1F-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class M-1F (the "Class M-1F
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation in its capacity as Depositor (the
"Depositor), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer, and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A (the "Class M-1A Certificates" and
collectively with the Class M-1F Certificates, the "Class M-1 Certificates")
Class M-2A, Class M-2F (the "Class M-2 Certificates" and collectively with the
Class M-1 Certificates, the "Mezzanine Certificates"), Class B (the "Class B
Certificates" and collectively with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates"), Class S Certificates (the "Class S
Certificates") Class C Certificates (the "Class C Certificates") and Class R
(Residual Interest) (the "Class R Certificates"). The Offered Certificates, the
Class S Certificates (the "Class S Certificates"), Class C Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class M-1F Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class M-1F Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class
M-1F Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class M-1F Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class M-1 Certificates. The Percentage Interest of each
Class M-1F Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class M-1F Certificate on the Startup Day by the aggregate Class M-1F
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into
M-1F-3
<PAGE>
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Sub-Servicer shall release any Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code, and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
M-1F-4
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class M-1F Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class M-1F Certificates are exchangeable for new
Class M-1F Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
M-1F-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication_____________
M-1F-6
<PAGE>
EXHIBIT B-2
FORM OF CLASS M-1A CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8 AND CLASS A-9,
CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS M-1A
(Adjustable Pass-Through Rate)
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No: M-1A CUSIP:_______________
ISIN:_______________
COMMON CODE:_______________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
M-1A-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group II listed in Schedule I-B
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement .
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class M-1A Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
M-1A-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class M-1A (the "Class M-1A
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), the Class M-1F (the "Class M-1F Certificates" and
collectively with the Class M-1A Certificates, the "Class M-1 Certificates") the
Class M-2A, Class M-2F (the "Class M-2 Certificates" and collectively with the
Class M-1 Certificates, the "Mezzanine Certificates"), Class B-1A, Class B-1F
(the "Class B Certificates" and collectively with the Class A Certificates and
the Mezzanine Certificates, the "Offered Certificates"), Class S Certificates
(the "Class S Certificates") Class C Certificates (the "Class C Certificates")
and Class R (Residual Interest) (the "Class R Certificates"). The Offered
Certificates, the Class S Certificates, the Class C Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class M-1A Certificates as of the
close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class M-1A Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class M-1A Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class M-1A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class M-1A Certificates. The Percentage Interest of each
Class M-1A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class M-1A Certificate on the Startup Day by the aggregate Class M-1A
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
M-1A-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any property in the Trust Estate and thereby effect early
retirement of the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances relating to
the qualification of the REMIC as a REMIC under the Code the Mortgage Loans may
be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
M-1A-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class M-1A Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class M-1A Certificates are exchangeable for new
Class M-1A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
M-1A-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
Date of Authentication______________
M-1A-6
<PAGE>
EXHIBIT B-3
FORM OF CLASS M-2F CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS M-1F AND
CLASS M-1A CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS M-2F
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: M-2F CUSIP:_____________
ISIN:_____________
COMMON CODE:_____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
M-2F-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement .
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class M-2F Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
M-2F-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class M-2F (the "Class M-2F
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F (the "Class M-1
Certificates") Class M-2A (the "Class M-2A Certificates" and collectively with
the Class M-2F Certificates, the "Class M-2 Certificates" and collectively with
the Class M-1 Certificates, the "Mezzanine Certificates"), Class B (the "Class B
Certificates" and collectively with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates"), Class S Certificates (the "Class S
Certificates") Class C Certificates (the "Class C Certificates") and Class R
(Residual Interest) (the "Class R Certificates"). The Offered Certificates, the
Class S Certificates, the Class C Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class M-2F Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class M-2F Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class
M-2F Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class M-2F Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class M-2F Certificates. The Percentage Interest of each
Class M-2F Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class M-2F Certificate on the Startup Day by the aggregate Class M-2F
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
M-2F-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
M-2F-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class M-2F Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class M-2F Certificates are exchangeable for new
Class M-2F Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
M-2F-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
Date of Authentication____________
M-2F-6
<PAGE>
EXHIBIT B-4
FORM OF CLASS M-2A CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS M-1F AND
CLASS M-1A CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS M-2A
(Adjustable Pass-Through Rate)
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No: M-2A CUSIP:_____________
ISIN:_____________
COMMON CODE:_____________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
M-2A-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group II listed in Schedule I-B
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement .
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class M-2A Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
M-2A-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class M-2A (the "Class M-2A
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F (collectively the "Class M-1
Certificates") Class M-2F (the "Class M-2F Certificates" and collectively with
the Class M-2A Certificates, the "Class M-2 Certificates" and collectively with
the Class M-1 Certificates, the "Mezzanine Certificates"), Class B (the "Class B
Certificates" and collectively with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates"), the Class S Certificates (the "Class
S Certificates") Class C Certificates (the "Class C Certificates") and Class R
(Residual Interest) (the "Class R Certificates"). The Offered Certificates, the
Class S Certificates, the Class C Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class M-2A Certificates as of the
close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class M-2A Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class M-2A Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class M-2A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class M-2A Certificates. The Percentage Interest of each
Class M-2A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class M-2A Certificate on the Startup Day by the aggregate Class M-2A
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
M-2A-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(iii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
M-2A-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class M-2A Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class M-2A Certificates are exchangeable for new
Class M-2A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
M-2A-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication_____________
M-2A-6
<PAGE>
EXHIBIT B-5
FORM OF CLASS B-1F CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2,
CLASS A-3, CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9,
CLASS M-1F, CLASS M-1A, CLASS M-2F AND CLASS M-2A CERTIFICATES OF THIS SERIES TO
THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS B-1F
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") 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.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: B-1F CUSIP:______________
ISIN:______________
COMMON CODE:______________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
B-1F-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement .
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class B-1F Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
B-1F-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class B-1F (the "Class B-1F
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F (collectively the "Class M-1
Certificates"), Class M-2A, Class M-2F (the "Class M-2 Certificates" and
collectively with the Class M-1 Certificates, the "Mezzanine Certificates"),
Class B-1A (the "Class B-1A Certificates" and collectively with the Class B-1F,
the "Class B Certificates" and collectively with the Class A Certificates and
the Mezzanine Certificates, the "Offered Certificates"), Class S Certificates
(the "Class S Certificates") Class C Certificates (the "Class C Certificates")
and Class R (Residual Interest) (the "Class R Certificates"). The Offered
Certificates, the Class S Certificates, the Class C Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class B-1F Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class B-1F Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class
B-1F Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class B-1F Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class B-1F Certificates. The Percentage Interest of each
Class B-1F Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class B-1F Certificate on the Startup Day by the aggregate Class B-1F
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into
B-1F-3
<PAGE>
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Sub-Servicer shall release any Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account and the Principal and
Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase form the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
B-1F-4
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class B-1F Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B-1F Certificates are exchangeable for new
Class B-1F Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-1F-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
Date of Authentication___________
B-1F-6
<PAGE>
EXHIBIT B-6
FORM OF CLASS B-1A CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS M-1A,
CLASS M-1F, CLASS M-2A AND CLASS M-2F CERTIFICATES OF THIS SERIES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS B-1A
(Adjustable Pass-Through Rate)
Representing Certain Interests in a Pool of Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional ownership interest in the Mortgage
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No: B-1A CUSIP:__________
ISIN:__________
COMMON CODE:__________
$ June ___, 1997
- --------------------- ---------------- _______________
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------
Registered Owner
B-1A-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group II listed in Schedule I-B
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Mortgage
Loan documents and the Seller's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing to pay the Certificates as
specified in the Pooling and Servicing Agreement); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement .
The Owner hereof is entitled to principal payments on each Payment Date, as
hereinafter described, which will fully amortize such original Certificate
Principal Balance over the period from the date of initial issuance of the
Certificates to the final Payment Date for the Class B-1A Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 25, 1997 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
B-1A-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class B-1A (the "Class B-1A
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F (the "Class M-1
Certificates"), Class M-2A, Class M-2F (the "Class M-2 Certificates" and
collectively with the Class M-1 Certificates, the "Mezzanine Certificates"),
Class B-1F (the "Class B-1F Certificates" and collectively with the Class B-1A
Certificates, the "Class B Certificates", and collectively with the Class A
Certificates and the Mezzanine Certificates, the "Offered Certificates"), Class
S Certificates (the "Class S Certificates") Class C Certificates (the "Class C
Certificates") and Class R (Residual Interest) (the "Class R Certificates"). The
Offered Certificates, the Class S Certificates, the Class C Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class B-1A Certificates as of the
close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class B-1A Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class B-1A Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class B-1A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class B-1A Certificates. The Percentage Interest of each
Class B-1A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class B-1A Certificate on the Startup Day by the aggregate Class B-1A
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the
B-1A-3
<PAGE>
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release any Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, or AMRESCO Residential Capital
Markets, Inc., the Servicers or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Mortgage Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (c) at
any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
(ii) provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
B-1A-4
<PAGE>
The Owners of the majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class B-1A Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B-1A Certificates are exchangeable for new
Class B-1A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-1A-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication_____________
B-1A-6
<PAGE>
EXHIBIT B-7
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS M-1A,
CLASS M-1F, CLASS M-2A, CLASS M-2F, CLASS B-1A AND CLASS B-1F CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE INTEREST-ONLY CLASS C CERTIFICATE
Representing Certain Interests Relating to a Pool of Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA LONG BEACH MORTGAGE COMPANY OPTION ONE MORTGAGE
CORPORATION as Servicer This certificate does not represent an interest in, or
an obligation of, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation or AMRESCO Residential Capital
Markets, Inc. This certificate represents a fractional ownership interest in the
Mortgage Loans as described herein, moneys in certain Accounts created pursuant
to the Pooling and Servicing Agreement and certain other rights relating thereto
and is payable only from amounts received by the Trustee relating to the
Mortgage Loans held by the Trust.
- ----------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No.: C-1
June ___, 1997
--------------
Date
100%
- ------------------ _______________
Percentage Interest Final Scheduled
Payment Date
AMRESCO Residential Capital Markets Inc.
----------------------------------------
Registered Holder
B-7-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans in Group I and Group II listed in
Schedules I-A and I-B to the Pooling and Servicing Agreement which the Seller
has caused to be delivered to the Depositor and the Depositor has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Mortgage Loan documents and the Seller's interest in any Property which
secured a Mortgage Loan but which has been acquired by foreclosure or deed in
lieu of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by each Servicer); and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing to pay the Certificates as specified in the Pooling and Servicing
Agreement); and (d) certain of the Seller's rights under the Transfer Agreements
that are being assigned to the Trust in the Pooling and Servicing Agreement .
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
B-7-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class C (the "Class C
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F, Class M-2A, Class M-2F
(together, the "Mezzanine Certificates"), Class B-1A, Class B-1F (the "Class B
Certificates" and together with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates"), Class S Certificates (the "Class S
Certificates") and Class R (the "Class R Certificates"). The Offered
Certificates, the Class S Certificates, the Class C Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Holders of the Class C Certificates as of the
close of business on the last business day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs (the "Record
Date") may be entitled to receive the Class C Distribution Amount (as defined in
the Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least 5 business days prior to the related record date,
or by check mailed to the address of the person entitled thereto as it appears
on the Register.
Each Owner of record of a Class C Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class C Certificates. The Percentage Interest of each Class C
Certificate as of any date of determination will be equal to the percentage
interest set forth on such Class C Certificate.
The Trustee or any duly appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-servicer shall release any
Servicer from any of its obligations under the Pooling and Servicing Agreement.
B-7-3
<PAGE>
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Seller, the Depositor or any of their subsidiaries and affiliates and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement), all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the REMIC or (b) the disposition of all property acquired in
respect of any Mortgage Loan remaining in the REMIC or (c) at any time when a
Qualified Liquidation of the REMIC is effected as described below. To effect a
termination of the Pooling and Servicing Agreement pursuant to clause (c) above,
the Owners of all Certificates then Outstanding shall (i) unanimously direct the
Trustee on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters acceptable to
the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee shall either sell the Mortgage Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute equitably in
kind all of the assets of the REMIC to the remaining Owners of the Certificates,
each in accordance with such plan, so that the liquidation or distribution of
the REMIC, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the REMIC, and thereby effect early retirement of the
Certificates, during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property in the Trust Estate and thereby effect
early retirement of the Certificates on any Monthly Remittance Date on or after
the Servicer Clean-Up Call Date and (iii) under certain circumstances relating
to the qualification of the REMIC as a REMIC under the Code the Mortgage Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
B-7-4
<PAGE>
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Sellers and the
Servicers at any time and from time to time, without the consent of the Owners;
provided that in certain circumstances provided for in the Pooling and Servicing
Agreement, such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class C Certificates are issuable only as registered Certificates in
minimum percentage interests of all interests in the Class C Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class C Certificates are exchangeable for new
Class C Certificates of the same percentage interest as the Class C Certificates
exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-7-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
Date of Authentication______________
B-7-6
<PAGE>
EXHIBIT B-8
FORM OF CLASS S CERTIFICATE
AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1997-2 MORTGAGE LOAN
PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS S CERTIFICATE
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by AMRESCO Residential Securities Corporation
and Serviced by
ADVANTA MORTGAGE CORP. USA
as Servicer
This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicer. This certificate represents a fractional ownership interest in the
Mortgage Loans as described herein, moneys in certain Accounts created pursuant
to the Pooling and Servicing Agreement and certain other rights relating thereto
and is payable only from amounts received by the Trustee relating to the
Mortgage Loans held by the Trust.
No.: S-1
June ___, 1997
--------------
Date
100%
- ------------------ _________________
Percentage Interest Final Scheduled
Distribution Date
AMRESCO Residential Capital Markets, Inc.
-----------------------------------------
Registered Owner
Trustee Authentication
The Bank of New York,
as Trustee
By: _____________________
Name: ___________________
Title: ____________________
Date of Authentication: _________________________
B-8-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the Cut-Off Date on any Mortgage
Loan that is current as of Cut-Off Date) listed in Schedule II to the Pooling
and Servicing Agreement which the Seller has caused to be delivered to the
Depositor and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06 of the
Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by each
Servicer); (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policies relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (d) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is required to send this Certificate to the Trustee prior
to receiving the final distribution hereon. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
B-8-2
<PAGE>
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF PRINCIPAL WITH RESPECT
TO THE MORTGAGE LOANS.
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class S (the "Class S
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a Servicer
(collectively, the "Servicers") and The Bank of New York, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 Class A-8, Class A-9 (collectively,
the "Class A Certificates") Class M-1A, Class M-1F (the "Class M-1
Certificates"), Class M-2A, Class M-2F (the "Class M-2 Certificates" and
together with the Class M-1 Certificates, the "Mezzanine Certificates"), Class
B-1A, Class B-1F (the "Class B Certificates" and collectively with the Class A
Certificates and the Mezzanine Certificates, the "Offered Certificates") Class C
(the "Class C Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing July 25, 1997, the Owners of the Class S Certificates as of the close
of business on the last business day of the calendar month immediately preceding
the calendar month in which such Payment Date occurs (the "Record Date") will be
entitled to receive the Class S Distribution Amount (as defined in the Pooling
and Servicing Agreement) relating to such Payment Date. Distributions will be
made in immediately available funds to such Owners, by wire transfer or
otherwise, to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee at
least 5 business days prior to the related record date, or by check mailed to
the address of the person entitled thereto as it appears on the Register.
Each Owner of record of a Class S Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Payment Date to the
Owners of the Class S Certificates. The Percentage Interest of each Class S
Certificate as of any date of determination will be equal to the percentage
interest set forth on such Class S Certificate.
The Trustee or any duly appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Holder shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
B-8-3
<PAGE>
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
AMRESCO Residential Securities Corporation or AMRESCO Residential Capital
Markets, Inc., the Servicers or any of their subsidiaries and affiliates or any
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Accounts (except as otherwise provided in the Pooling and Servicing
Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of the payment to the Owners of all
Certificates from amounts other than those available under the Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate and (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee shall
either sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property remaining in the Trust Estate and
thereby effect early retirement of the Certificates on any Monthly Remittance
Date on or after the Servicer Clean-Up Call Date and (iii) under certain
circumstances relating to the
B-8-4
<PAGE>
qualification of the REMIC as a REMIC under the Code the Mortgage Loans may be
sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then outstanding with the prior written consent of the
Certificate Insurer have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicers at any time and from time to time, with the prior written approval of
not less than a majority of the Percentage Interest represented by each affected
Class of Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be amended without the
consent of the Owners. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class S Certificates are issuable only as registered Certificates in
minimum percentage interests of all interests in the Class S Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class S Certificates are exchangeable for new
Class S Certificates of the same percentage interest as the Class S Certificates
exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-8-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
B-8-6
<PAGE>
EXHIBIT B-9
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES
B-9-1
<PAGE>
TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN
REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional residual ownership interest in the
Trust Estate.)
No: R - 1 June ___, 1997
-----------------
Date
Percentage Interest 99.999 % ____________________________
------------ Final Scheduled Payment Date
AMRESCO Residential Capital Markets, Inc.
-----------------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans listed in Schedules I-A and I-B to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of
the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Seller's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by each Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit
B-9-2
<PAGE>
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement and (d) certain rights of the
Seller under the Transfer Agreements that are being assigned to the Trust in the
Pooling and Servicing Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
Date of Authentication:_______________________
B-9-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class R (the "Class R
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), Advanta
Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage Company, as a Servicer
and Option One Mortgage Corporation, as a Servicer (the "Servicers"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor") and The Bank of New York, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F, Class M-2A, Class M-2F (the
"Mezzanine Certificates"), Class B-1A, Class B-1F (the "Class B Certificates"
and collectively with the Class A Certificates and the Mezzanine Certificates,
the "Offered Certificates") the Class S (the "Class S Certificates") and the
Class C (the "Class C Certificates"). The Offered Certificates, the Class S
Certificates, the Class C Certificates and the Class R Certificates are together
referred to herein as the "Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release any
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers, or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the REMIC or (b) the disposition of all property acquired in
respect of any Mortgage Loan remaining in the Trust Estate or (c) at any time
when a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Owners of all Certificates then Outstanding shall (i)
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as
B-9-4
<PAGE>
contemplated by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters acceptable to
the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee shall either sell the Mortgage Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute equitably in
kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates, each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property remaining in the Trust Estate and
thereby effect early retirement of the Certificates or any Monthly Remittance
Date on or after the Servicer Clean-Up Call Date and (iii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early retirement of
the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates, or if there are no longer any Offered Certificates then
outstanding, the Owners of a majority of the Percentage Interests represented by
the Class R Certificates then outstanding, have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
Consent of the Owners; provided that in certain other circumstances provided for
in the Pooling and Servicing Agreement, such consent of the Owners will be
required prior to amendments. Any such consent by the Owner at the time of the
giving thereof, of this Certificate shall be conclusive and binding upon such
Owner and upon all future Owners of the Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are
B-9-5
<PAGE>
exchangeable for new Class R Certificates evidencing the same Percentage
Interest as the Class R Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-9-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
B-9-7
<PAGE>
EXHIBIT B-9
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH
THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES
B-9-1
<PAGE>
TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN
REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1997-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATE CLASS R (Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Mortgage Loans
Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation or AMRESCO Residential Capital Markets, Inc.
This Certificate represents a fractional residual ownership interest in the
Trust Estate.)
No: R - 2 June ___, 1997
---------------
Date
Percentage Interest 0.001 % ____________________________
------------ Final Scheduled Payment Date
The Bank of New York, as Tax Matters person
-------------------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans listed in Schedules I-A and I-B to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of
the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Seller's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by each Servicer); and (c) proceeds of
all the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policy relating to the
Mortgage Loans, cash proceeds,
B-9-2
<PAGE>
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing to pay the Certificates
as specified in the Pooling and Servicing Agreement) and (d) certain rights of
the Seller under the Transfer Agreements that are being assigned to the Trust in
the Pooling and Servicing Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
Trustee Authentication
THE BANK OF NEW YORK, as Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
Date of Authentication:_________________________
B-9-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2, Mortgage Loan Pass-Through Certificates, Class R (the "Class R
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1997 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller") Advanta
Mortgage Corp. U.S.A., as a Servicer, Long Beach Mortgage Company, as a Servicer
and Option One Mortgage Corporation, as a Servicer (the "Servicers") AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor") and The Bank of New York, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1997-2 Mortgage Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, (collectively,
the "Class A Certificates"), Class M-1A, Class M-1F, Class M-2A, Class M-2F
(together, the "Mezzanine Certificates"), Class B-1A, Class B-1F (the "Class B
Certificates" and, collectively with the Class A Certificates and the Mezzanine
Certificates, the "Offered Certificates") the Class S (the "Class S
Certificates") and the Class C (the Class C Certificates"). The Offered
Certificates, the Class S Certificates, the Class C Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicers to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release any
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc., the Servicers, or any of their affiliates. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the REMIC or (b) the disposition
of all property acquired in respect of any Mortgage Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described
B-9-4
<PAGE>
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (c) above, the Owners of all Certificates then Outstanding shall (i)
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Trustee will attempt to sell all remaining Mortgage Loans and other property
then constituting the Trust Estate, and thereby effect early retirement of the
Certificates during the 90 days after the Auction Sale Bid Date and (ii) in the
event that the Auction Sale does not occur, the Servicers may, at their option,
purchase from the Trust all remaining Mortgage Loans serviced by the related
Servicer and any other related property remaining in the Trust Estate and
thereby effect early retirement of the Certificates or any Monthly Remittance
Date on or after the Servicer Clean-Up Call Date and (iii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early retirement of
the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates, or if there are no longer any Offered Certificates then
outstanding, the Owners of a majority of the Percentage Interests represented by
the Class R Certificates then outstanding, have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicers at any time and from time to time, and without the
consent of the Owners; provided, that in certain other circumstances provided
for in the Pooling and Servicing Agreement, such consent of the Owners will be
required prior to amendments. Any such consent by the Owner at the time of the
giving thereof, of this Certificate shall be conclusive and binding upon such
Owner and upon all future Owners of the Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
B-9-5
<PAGE>
The Class R Certificates are issuable only as registered Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement.
B-9-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed on behalf of the Trust.
THE BANK OF NEW YORK,
as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
B-9-7
<PAGE>
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
AMRESCO Residential Securities Corporation (the "Depositor"), as Depositor,
AMRESCO Residential Capital Markets, Inc., as Seller (the "Seller"), as Seller,
and AMRESCO Residential Securities Corporation Mortgage Loan Trust 1997-2, as
Purchaser, pursuant to the Pooling and Servicing Agreement dated as of June 1,
1997 among the Seller, the Depositor, Advanta Mortgage Corp. USA, as a Servicer,
Long Beach Mortgage Company, as a Servicer and Option One Mortgage Corporation,
as a Servicer and The Bank of New York, as Trustee (the "Pooling and Servicing
Agreement"), hereby confirm their understanding with respect to the sale by the
Depositor and the purchase by the Purchaser of those Mortgage Loans (the
"Subsequent Mortgage Loans") listed on the attached Schedule of Mortgage Loans
for deposit to Group I or Group II as designated in the Schedule of Mortgage
Loans.
Conveyance of Subsequent Mortgage Loans. As of _____________, 199__ (the
"Subsequent Cut-Off Date"), the Seller does hereby irrevocably transfer, assign,
setover and otherwise convey to the Depositor and the Depositor does hereby
irrevocably transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for herein) all right,
title and interest in and to any and all benefits accruing from the Subsequent
Mortgage Loans (other than any principal and interest payments received thereon
on or prior to the Subsequent Cut-Off Date) which are delivered to the Trustee
herewith (and all substitutions therefor as provided by Sections 3.03, 3.04,
3.05 and 3.06 of the Pooling and Servicing Agreement), together with the related
Subsequent Mortgage Loan documents and the interest in any Property which
secured a Subsequent Mortgage Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; and proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Subsequent Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing). The Depositor shall deliver the original Mortgage or mortgage
assignment with evidence of recording thereon (except as otherwise provided by
the Pooling and Servicing Agreement) and other required documentation in
accordance with the terms set forth in Sections 3.05 and 3.07 of the Pooling and
Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Depositor.
Additional terms of the sale are attached hereto as Attachment A.
The Depositor hereby affirms the representations and warranties set forth
in the Pooling and Servicing Agreement that relate to the Depositor and the
Subsequent Mortgage Loans as of the date hereof. The Depositor hereby delivers
notice and confirms that each of the conditions set forth in Section 3.08(b) to
the Pooling and Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Pooling and Servicing Agreement are hereby
ratified, confirmed and incorporated herein, provided that in the event of any
conflict the provisions of this Subsequent Transfer Agreement shall control over
the conflicting provisions of the Pooling and Servicing Agreement.
C-1
<PAGE>
Terms capitalized herein and not defined herein shall have their respective
meanings as set forth in the Pooling and Servicing Agreement.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
as Depositor
By:________________________________________
Name:
Title:
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
as Seller
By:_________________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee for AMRESCO
Residential Securities Corporation Mortgage
Loan Trust 1997-2
By:_________________________________________
Name:
Title:
Dated:
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE RE: MORTGAGE LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of AMRESCO Residential
Capital Markets, Inc., hereby certify that between the Cut-Off Date and the
Startup Day, the following Schedule of Mortgage Loans have been prepaid in full.
Capitalized terms not defined herein shall have the meanings ascribed thereto in
the Pooling and Servicing Agreement dated as of June 1, 1997 among AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller, Advanta Mortgage Corp. USA, Long Beach Mortgage
Company and Option One Mortgage Corporation, as the Servicers and The Bank of
New York, as Trustee).
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---
Dated: June __, 1997
AMRESCO RESIDENTIAL MORTGAGE
CORPORATION
By:______________________________________
Title:___________________________________
D-1
<PAGE>
EXHIBIT E
FORM OF CUSTODIAN'S RECEIPT
CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking association,
in its capacity as custodian (the "Custodian") under that certain Custodial
Agreement dated as of June 1, 1997 (the "Custodial Agreement") among AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller (the "Seller"), Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as Servicers, The Bank of
New York, as Trustee and the Custodian, hereby acknowledges receipt (subject to
review as required by Section 2.3(c) of the Custodial Agreement) of the items
delivered to it by the Seller and the Depositor with respect to the Mortgage
Loans pursuant to Section 2.3 of the Custodial Agreement.
The Schedule of Mortgage Loans for the Initial Mortgage Loans in Group I
and Group II is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 2.3 of the Custodial Agreement and shall otherwise
comply with Section 2.3 of the Custodial Agreement as required thereby.
BANKERS TRUST OF CALIFORNIA, N.A., as
Custodian
By:______________________________________
Title:___________________________________
Dated: June __, 1997
E-1
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking association, acting in its capacity as
custodian (the "Custodian") of a certain pool of mortgage loans (the "Pool")
heretofore conveyed in trust to The Bank of New York, as trustee (the
"Trustee"), pursuant to that certain Custodial Agreement dated as of June 1,
1997 (the "Custodial Agreement") among the Custodian, AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO Residential Capital Markets, Inc.,
as Seller (the "Seller"), Advanta Mortgage Corp. USA, Long Beach Mortgage
Company and Option One Mortgage Corporation, as Servicers, and the Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 2.3(c) of the
Custodial Agreement, to review the Mortgage Files relating to the Pool within a
specified period following the Startup Day and to notify the Seller promptly of
any defects with respect to the Pool, and the Seller is required to remedy such
defects or take certain other action, all as set forth in Section 2.3(b) of the
Custodial Agreement; and
WHEREAS, Section 2.3(c) of the Custodial Agreement requires the Custodian
to deliver this Pool Certification upon the satisfaction of certain conditions
set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined that
all required documents (or certified copies of documents listed in Section
2.3(b) of the Custodial Agreement) other than Mortgage Loan paid in full or
otherwise specified on the Exception Report attached hereto have been executed
or received, and that such documents relate to the Mortgage Loans identified in
the Schedules of Mortgage Loans pursuant to Section 2.3(b) of the Custodial
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Mortgage Loans, any remedial action by the
Seller pursuant to Section 2.3(b) of the Custodial Agreement has been completed.
The Custodian makes no certification hereby, however, with respect to any
intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
By:______________________________________
Title:___________________________________
Dated: June __, 1997
F-1
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
The Bank of New York, as Trustee
101 Barclay Street
New York, New York 10286
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of June 1, 1997 (the "Pooling and Servicing Agreement") among AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller, Advanta Mortgage Corp. USA, Long Beach Mortgage
Company and Option One Mortgage Corporation, as Servicers, and The Bank of New
York, as Trustee (the "Trustee"), the Depositor HEREBY CERTIFIES that all
conditions precedent to the issuance of the AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1997-2, Mortgage Loan Pass-Through Certificate,
Class A, Class M-1, Class M-2, Class B, Class S, Class C and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE
AND DELIVER said Certificates in accordance with Schedule 1 attached hereto, and
to RELEASE said Certificates to the owners thereof, or otherwise upon their
order.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
By:______________________________________
Title:___________________________________
Dated: June __, 1997
G-1
<PAGE>
EXHIBIT H
[RESERVED]
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he makes this
affidavit.
2. That (i) the Investor is not a "disqualified organization" and will not
be a "disqualified organization" as of [date of transfer] (For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ___ day of ___________________, _____________.
[NAME OF INVESTOR]
By:______________________________________
[Name of Officer]
[Title of Officer]
I-1
<PAGE>
[Corporate Seal]
Attest:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ______ day of _______________,
________.
_____________________________
NOTARY PUBLIC
COUNTY OF__________________
STATE OF___________________
My commission expires the ______ day of _______________, ________.
I-2
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
The Bank of New York
101 Barclay Street
New York, NY 10286
Re: AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1997-2
Mortgage Loan Pass-Through Certificates
("Certificates")
Gentlemen:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ______________________ ("Seller"), [PURCHASER] (the
"Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for](1) the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and will
not be registered under the Act and may not be resold or transferred unless they
are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing Agreement
dated as of June 1, 1997 (the "Pooling and Servicing Agreement") pursuant to
which the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that it is able to bear the economic risks of
such an investment;
5. [The Purchaser is not an "employee benefit plan," within the meaning of
Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") that is subject to the provisions of Title I of ERISA or a
"plan" described in Section 4975(e)(1) of the Internal Revenue Code of 1986] OR
[The source of funds to be used by the Purchaser to purchase the Certificates is
a general account and either (i) no part of such assets constitutes assets of an
"employee benefit plan," within the meaning of Section 3(3) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to
the provisions of Title I of ERISA or a "plan" described in Section 4975(e)(l)
of the Internal Revenue Code of 1986, or (ii) to the extent that such assets
constitute assets of an "employee benefits plan" within the meaning of Section
3(3) of ERISA, or a "plan" within the meaning of Section 4975(e)(1) of the Code,
it acknowledges that in the discharge of its duty as a plan fiduciary in
connection with the purchase of the Certificates it has concluded that such
purchase will not constitute a violation of Section 404(a) of ERISA];
- ----------
(1) Not required if the Purchaser is a broker/dealer.
J-1
<PAGE>
6. If the Purchaser sells any of the Certificates at its option, it will
(i) obtain from any investor that purchases any Certificate from it a letter
substantially in the form of Exhibit J-1 or J-2 to the Pooling and Servicing
Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an opinion of counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate Register,
its address, including telecopier number and telephone number, is as follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate the
provisions of the first sentence of Section 5.08(d) of the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:______________________________________
Name:____________________________________
Title:___________________________________
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<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
The Bank of New York
101 Barclay Street
New York, NY 10286
Re: AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1997-2
Mortgage Loan Pass-Through Certificates
("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the above-referenced
Certificates from _______________ ("Seller") hereby certify that:
1. We are acquiring the Certificates for our own account for investment and
not with a view to or for sale or transfer in connection with any distribution
thereof in any manner which would violate the Securities Act of 1933, as amended
(the "Act"), provided that the disposition of our property shall at all times be
and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated as
of June 1, 1997 (the "Pooling and Servicing Agreement") pursuant to which the
Certificates are being sold, and such other documents and information concerning
the Certificates and the home equity loans in which the Certificates represent
interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an opinion of counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
6. We are acquiring the Certificates for our own account and the source of
funds to be used by us to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(l) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, we acknowledge that
in the discharge of our duty as a plan fiduciary in connection with the purchase
of the Certificates we have concluded that such purchase will not constitute a
violation of Section 404(a) of ERISA;
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<PAGE>
7. We certify that for purposes of the Certificate Register, our address,
including telecopier number and telephone number, is as follows:
________________________________________________________
________________________________________________________
________________________________________________________
telecopier:_____________________________________________
telephone:______________________________________________
8. If we sell any of the Certificates, will obtain from any purchaser from
us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of the
first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:______________________________________
Name:____________________________________
Title:___________________________________
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<PAGE>
EXHIBIT K
[FORM OF LIQUIDATION REPORT]
K-1
<PAGE>
EXHIBIT L
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Agreement"), dated as of June 1, 1997 by and among The Bank of New York, not
individually, but solely as Trustee (including its successors under the Pooling
and Servicing Agreement defined below, the "Trustee"), AMRESCO Residential
Capital Markets, Inc. (the "Seller"), Option One Mortgage Corporation as a
Servicer, Long Beach Mortgage Company, as a Servicer and Advanta Mortgage Corp.
USA as a Servicer (including their successors under the Pooling and Servicing
Agreement, collectively, the "Servicers"), AMRESCO Residential Securities
Corporation (the "Depositor") and Bankers Trust Company of California, N.A.
(together with any successor in interest or any successor appointed hereunder,
the "Custodian").
WITNESSETH THAT
WHEREAS, the Seller, the Servicers, the Trustee and the Depositor have entered
into a Pooling and Servicing Agreement dated as of June 1, 1997 relating to the
issuance of AMRESCO Residential Securities Corporation Mortgage Loan
Pass-Through Certificates, Series 1997-2 (as amended and supplemented from time
to time, the "Pooling and Servicing Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by the Depositor, the Seller and the Servicers under the Pooling and
Servicing Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee, the Seller, the Servicers, the
Depositor and the Custodian hereby agree as follows:
ARTICLE I Definitions
Capitalized terms used in this Agreement and not defined herein shall have
the meanings assigned in the Pooling and Servicing Agreement, unless otherwise
required by the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. Custodian to Act as Agent; Acceptance of Custodial Files.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges receipt of the Notes, the Mortgages, the assignments and
other documents relating to the Mortgage Loans identified on the schedule
attached hereto and delivered to it and declares that it holds and will hold
such Notes, Mortgages, assignments and other documents and any similar documents
received by the Custodian subsequent to the date hereof (the "Custodial Files")
as agent for the Trustee, in trust, for the use and benefit of all present and
future Owners of the Certificates.
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Section 2.2. Recordation of Assignments.
If any Custodial File includes one or more assignments to the Trustee of
Notes and related Mortgages that have not been recorded, each such assignment
shall be delivered by the Custodian to the Seller for the purpose of recording
it in the appropriate public office for real property records (unless the
Originator is Option One or Long Beach, in which case Option One or Long Beach
shall so submit such assignments), and the Seller or Option One or Long Beach,
as applicable, at no expense to the Custodian, shall promptly cause to be
recorded in the appropriate public office for real property records each such
assignment and, upon receipt thereof from such public office, shall return each
such assignment to the Custodian.
Section 2.3. Review of Custodial Files.
(a) The Custodian agrees, for the benefit the Owners of the Certificates,
to review, in accordance with the provisions of Section 2.3(b) hereof each
Custodial File. If in performing the review required by this Section 2.3 the
Custodian finds any document or documents constituting a part of a Custodial
File to be missing or defective, the Custodian shall promptly so notify the
Seller, the Servicers, the Depositor and the Trustee.
(b) In connection with the transfer and assignment of the Initial Mortgage
Loans and prior to each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Initial Mortgage Loan or
on each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgage or Subsequent Mortgage Loans, (A) the original Notes endorsed in
blank or to the order of the Trustee, (B) the original title insurance
policy or any one of an original title binder, an original preliminary
title report or an original title commitment or a copy of any of the
foregoing certified by the issuer of the title insurance policy, or the
attorney's opinion of title, (C) originals or certified copies of all
intervening recorded assignments, showing a complete chain of title from
origination to the Trustee, if any, with evidence of recording thereon, (D)
originals of all assumption, modification, written assurance or
substitution agreements, if any and (E) either: (1) the original Mortgage,
with evidence of recording thereon, (2) a certified copy if such original
Mortgage has not been returned by the applicable recording office, or (3) a
copy of the Mortgage certified by the public recording office in those
instances where the original recorded Mortgage has been lost;
(ii) cause the Custodian on behalf Trustee, within 60 days following
the Startup Day with respect to the Initial Mortgage Loans or on each
Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages or Subsequent Mortgage Loans to complete the assignments of the
Mortgages to "The Bank of New York, as Trustee of AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1997-2 under the Pooling and
Servicing Agreement dated as of June 1, 1997" to be submitted to the Seller
for recording in the appropriate jurisdictions (unless the Originator is
either Option One or Long Beach, in which case either Option One or Long
Beach shall so submit such assignments for recording in the appropriate
jurisdictions); provided, however, that the Depositor shall not be required
to cause the Custodian to complete and cause the related Originator (if the
Originator is either Option One or Long Beach) or the Seller to record an
assignment for any Mortgage with respect to a Property located in
California or with respect to which the original recording information is
lacking;
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(iii) if not delivered on the Startup Day, deliver the title insurance
policy or title searches, the original Mortgages and such recorded
assignments, together with originals or duly certified copies of any and
all prior assignments, to the Custodian on behalf of the Trustee within 15
days of receipt thereof by the Depositor (but in any event, with respect to
any Mortgage as to which original recording information has been made
available to the Depositor, within one year after the Startup Day with
respect to the Initial Mortgage Loans or on each Subsequent Transfer Date
with respect to the Qualified Replacement Mortgages or Subsequent Mortgage
Loans); and
(iv) furnish to the Trustee at the Depositor's expense, an opinion of
counsel with respect to the sale and perfection of the Subsequent Mortgage
Loans delivered to the Trust, corporate and enforceability matters and an
opinion of counsel as to the tax consequences to the Trust, if any,
resulting from the conveyance of Subsequent Mortgage Loans, each in form
and substance satisfactory to the Trustee.
Notwithstanding anything to the contrary contained in this Section, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor shall be deemed to have satisfied its
obligations upon delivery to the Custodian on behalf of the Trustee of a copy of
such Mortgage, such assignment or assignments of such Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be kept in the related File.
All recording required pursuant to this Section shall be accomplished at
the expense of the Seller.
(c) The Trustee agrees to execute and deliver and to cause the Custodian to
execute and deliver on the Startup Day an acknowledgment of receipt of the items
delivered by the Seller or the Depositor in the form attached as Exhibit E to
the Pooling and Servicing Agreement, and declares that it will hold such
documents and any amendments, replacement or supplements thereto, as well as any
other assets included in the definition of Trust Estate and which are delivered
to the Trustee, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Owners. The Trustee, and the Custodian on behalf
of the Trustee agree, for the benefit of the Owners, to review such items within
45 days after the Startup Day (or, with respect to any document delivered after
the Startup Day, within 45 days of receipt and with respect to any Subsequent
Mortgage Loan or Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and to deliver to the Depositor, the Seller and the
related Servicer a certification in the form attached to the Pooling and
Servicing Agreement as Exhibit F thereto (a "Pool Certification") to the effect
that, as to each Mortgage Loan listed in the Schedule of Mortgage Loans (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically identified
in such Pool Certification as not covered by such Pool Certification), (i) all
documents required to be delivered to it pursuant to Section 3.05(b)(i) of the
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and have not been mutilated, damaged or torn and relate to
such Mortgage Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on items (1), (3) and (4) of the
Schedule of Mortgage Loans accurately reflects the information set forth in the
File. Neither the Trustee nor the Custodian shall have any responsibility for
reviewing any File except as expressly provided in subsection 3.06(a) of the
Pooling and Servicing Agreement. Without limiting the effect of the preceding
sentence, in reviewing any File, neither the Trustee nor the Custodian shall
have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment is in proper form (except to
determine if the Trustee is the assignee), whether any document (other than the
assignments) has been
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<PAGE>
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. Neither the Trustee nor the Custodian shall be under any duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall either the Trustee or the Custodian be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
Section 2.4. Custodian to Cooperate; Release of Custodial Files.
Upon the payment in full of any Mortgage Loan, or the receipt by either
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, such Servicer shall immediately notify the
Custodian by a certification (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Principal and Interest Account
pursuant to Section 8.8 of the Pooling and Servicing Agreement have been or will
be so deposited) of an officer of the Servicer and shall request delivery to it
of the Custodial File. The Custodian agrees, upon receipt of such certification
and request, promptly to release the related Custodial File to such Servicer
within three days.
From time to time as is appropriate for the servicing or foreclosure of any
Mortgage Loan, each Servicer shall deliver to the Custodian a certificate of an
officer of the related Servicer requesting that possession of all or any
document constituting part of the Custodial File be released to such Servicer
and certifying as to the reason for such release and that such release will not
invalidate any insurance coverage provided in respect of the Mortgage Loan. With
such certificate, the related Servicer shall deliver to the Custodian a receipt
signed by an officer of the Servicer on behalf of the Servicer, and within three
days of receipt of the foregoing, the Custodian shall deliver the Custodial File
or such document to such Servicer and the Servicer shall hold the Custodial File
or such document in trust for the benefit of the Owners of the Certificates. The
related Servicer shall cause each Custodial File or any document therein so
released to be returned to the Custodian when the need therefor by such Servicer
no longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Principal and Interest Account to the extent required by the Pooling and
Servicing Agreement or (ii) the Custodial File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Property either judicially or
non-judicially, and such Servicer has delivered to the Custodian a certificate
of an officer of the Servicer certifying as to the name and address of the
Person to which such Custodial File or such document were delivered and the
purpose or purposes of such delivery. The Custodian shall deliver such receipt
with respect thereto to the related Servicer upon receipt of notice from such
Servicer that it has deposited the related Liquidation Proceeds in the Principal
and Interest Account to the extent required by the Pooling and Servicing
Agreement.
Section 2.5. Assumption Agreements.
In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Agreement in accordance with the terms and provisions of the Pooling and
Servicing Agreement, the related Servicer shall notify the Custodian that such
assumption or substitution agreement has been completed by forwarding to the
Custodian the original of such assumption or substitution agreement, which copy
shall be added to the related Custodial File and,
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<PAGE>
for all purposes, shall be considered a part of such Custodial File to the same
extent as all other documents and instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Trustee.
With respect to each Note, Mortgage and other documents constituting each
Custodial File which are delivered to the Custodian, the Custodian is
exclusively the bailee and agent of the Trustee, holds such documents for the
benefit of the Owners of the Certificates and undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement. Except
upon compliance with the provisions of Section 2.4 of this Agreement, no Note,
Mortgage or other document constituting a part of a Custodial File shall be
delivered by the Custodian to a Servicer or otherwise released from the
possession of the Custodian.
Section 3.2. Indemnification.
Neither the Custodian nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith in good faith and believed by it or
them to be within the purview of this Custodial Agreement, except for its or
their own negligence, lack of good faith or willful misconduct. In no event
shall the Custodian or its directors, officers, agents and employees be held
liable for any special, indirect or consequential damages resulting from any
action taken or omitted to be taken by it or them hereunder or in connection
herewith even if advised of the possibility of such damages.
The Seller agrees to indemnify and hold the Custodian and its directors,
officers, agents and employees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, including reasonable
attorney's fees, that may be imposed on, incurred by or asserted against it or
them in any way relating to or arising out of this Custodial Agreement or any
action taken or not taken by it or them hereunder unless such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements were imposed upon, incurred by or asserted against the
Custodian because of the breach by the Custodian of its obligations hereunder,
which breach was caused by negligence, lack of good faith or willful misconduct
on the part of the Custodian or any of its directors, officers, agents or
employees. The foregoing indemnification shall survive any termination of this
Custodial Agreement and the resignation or termination of the Custodian
hereunder.
Section 3.3 Reliance of Custodian.
In the absence of bad faith on the part of the Custodian, the Custodian may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any request, instructions, certificate, opinion
or other document furnished to the Custodian, reasonably believed by the
Custodian to be genuine and to have been signed or presented by the proper party
or parties and conforming to the requirements of this Agreement; but in the case
of any loan document or other request, instruction, document or certificate
which by any provision hereof is specifically required to be furnished to the
Custodian, the Custodian shall be under a duty to examine the same to determine
whether or not it conforms to the requirements of this Agreement.
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Section 3.4. Custodian May Own Certificates.
The Custodian in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Custodian.
Section 3.5. Custodian's Fees and Expenses.
The Seller covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Seller will pay or reimburse the Custodian
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Custodian in accordance with any of the provisions of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from its
negligence or bad faith.
Section 3.6. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may resign from the obligations and duties hereby imposed
upon it as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans upon giving 60 days written notice to the Trustee. Upon receiving
such notice of resignation, the Trustee shall either take custody of the
Custodial Files itself and give prompt notice thereof to the Seller, the
Servicers, the Depositor and the Custodian or promptly appoint a successor
Custodian. If the Trustee shall not have taken custody of the Custodial Files
and no successor Custodian shall have been so appointed and have accepted
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.
The Trustee may remove the Custodian at any time upon giving 60 days
written notice. In such event, the Trustee shall appoint, or petition a court of
competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian shall be a depository institution subject to supervision or
examination by federal or state authority and shall be able to satisfy the other
requirements contained in Section 3.8.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.6 shall become
effective upon acceptance of appointment by the successor Custodian. The Trustee
shall give prompt notice to the Depositor, the Seller, the Servicers and the
Custodian of the appointment of any successor Custodian. No successor Custodian
shall have been appointed and accepted appointment by the Trustee without the
prior approval of the Depositor, the Seller, the Servicers and the Custodian.
Section 3.7. Merger or Consolidation of Custodian.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian 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.
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Section 3.8. Representations of the Custodian.
The Custodian hereby represents that it is a depository institution subject
to supervision or examination by a federal or state authority, has a combined
capital and surplus of at least $50,000,000 and is qualified to do business in
the jurisdiction in which it will hold any Custodian File.
ARTICLE IV Miscellaneous Provisions
Section 4.1. Notices.
All notices, requests, consents and demands and other communications
required under this Agreement or pursuant to any other instrument or document
delivered hereunder shall be in writing and shall be deemed given when properly
delivered, at the addresses specified below (unless changed by the particular
party whose address is stated herein by similar notice in writing):
The Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: ______________________
Tel: (212) 815-2312
Fax: (212) 815-5309
The Depositor: AMRESCO Residential Securities Corporation
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
3401 Centrelake Drive
Suite 480
Ontario, California 91761
Attn: Michael W. Trickey
Tel: (909) 605-7600
Fax: (909) 605-7619
The Servicers: Advanta Mortgage Corp. USA
16875 West Bernardo Drive
San Diego, CA 92127
Attn: Senior Vice President - Loan Servicing
Tel: (619) 674-1800
Fax: (619) 674-3666
Long Beach mortgage Company
1100 Town & Country Road
6th Floor
Orange, CA 92668
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Attention: _____________________
Tel: (714) 564-0600
Fax: (714) 543-6847
Option One Mortgage Corporation
2020 East First Street
Suite 100
Santa Ana, CA 92705
Attn: Fabiola Camperi
Tel: (714) 558-7700
Fax: (714) 558-3822
The Custodian: Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attn: AMRESCO Residential Securities
Corporation 96-5 Custodian
Tel: (714) 253-7575
Fax: (714) 253-7577
Section 4.2. Amendments.
No modification or amendment of or supplement to this Agreement shall be
valid or effective unless the same is in writing and signed by all parties
hereto, and neither the Seller, the Servicers, the Depositor nor the Trustee
shall enter into any amendment hereof except as permitted by the Pooling and
Servicing Agreement. The Trustee shall give prompt notice to the Custodian of
any amendment or supplement to the Pooling and Servicing Agreement and furnish
the Custodian with written copies thereof.
Section 4.3. Governing Law.
This Agreement shall be deemed a contract made under the laws of the State
of California and shall be construed and enforced in accordance with and
governed by the laws of the State of California.
Section 4.4. Recordation of Agreement.
To the extent permitted by applicable law, 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
Servicers and at their expense on direction by the Trustee, but only upon
direction accompanied by an opinion of counsel to the effect that such
recordation materially and beneficially affects the interests of the Owners of
the Certificates.
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.
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Section 4.5. 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 Owners thereof.
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<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
THE BANK OF NEW YORK, ADVANTA MORTGAGE CORP. USA,
as Trustee as a Servicer
By: ______________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:____________________________ Title:_____________________________
AMRESCO RESIDENTIAL CAPITAL AMRESCO RESIDENTIAL SECURITIES
MARKETS, INC., as Seller CORPORATION, as Depositor
By: ______________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:____________________________ Title:_____________________________
OPTION ONE MORTGAGE BANKERS TRUST COMPANY OF
CORPORATION, CALIFORNIA, N.A. , as Custodian
as a Servicer
By:________________________________
By:______________________________ Name:______________________________
Name:____________________________ Title:_____________________________
Title:___________________________
LONG BEACH MORTGAGE COMPANY,
as a Servicer
By: ______________________________
Name:_____________________________
Title:____________________________
<PAGE>
STATE OF )
): ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came ______________, to
me known, who, being by me duly sworn did depose and say that he/she resides at
____________________; that he/she is a ____________________ of The Bank of New
York, a New York banking corporation described in and that executed the above
instrument as Trustee; and that he/she signed his/her name thereto by order of
the Board of Directors of said banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came __________________,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at ________________, _____________________________; that he/she is a
____________________ of AMRESCO Residential Capital Markets, Inc., a Delaware
Corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
____________________, _______________________; that he/she is the
____________________ of Option One Mortgage Corporation, a _______________
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
____________________, _______________________; that he/she is the
____________________ of Long Beach Mortgage Company, a _______________
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
____________________, _______________________; that he is the
__________________________________ of Advanta Mortgage Corp. USA, a Delaware
Corporation; and that he/she signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came __________________,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at ________________, _____________________________; that he/she is a
____________________ of AMRESCO Residential Securities Corporation, a Delaware
Corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of June, 1997, before me personally came __________________,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at ________________, _____________________________; that he/she is a
____________________ of Bankers Trust Company of California, N.A, a national
banking association; and that he signed his name thereto by order of the Board
of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________________
Notary Public
<PAGE>
EXHIBIT M
AUCTION SALE BID PROCEDURES
I. Pre-Auction Process
a. Within 90 days of the Auction Sale Bid Date, the Trustee will notify
the Advisor of the assets of the proposed auction.
b. Upon receiving notice of the proposed auction, the Advisor will
initiate its general auction procedures consisting of the following:
(i) with the assistance of the Owner(s) of the majority of the
Percentage Interests of the Class R Certificates, 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 (which may
include the Seller and the Owners of the Class R Certificates); (iv)
send a confidentiality agreement to all qualified bidders; (v) upon
receipt of a signed confidentiality agreement, send solicitation
packages to all interested bidders on behalf of the Trustee; and (vi)
notify all potential bidders of the anticipated timetable.
c. The general solicitation package will include: (i) the prospectus from
the public offering of the Offered Certificates ("Prospectus"); (ii) a
copy of all monthly servicing reports or a copy of all annual
servicing reports and, upon a written request, the prior years'
monthly servicing reports; (iii) a form of a purchase and sale
agreement and servicing agreement for such sale; (iv) a description of
the minimum purchase price required to cause the Trustee to sell the
Mortgage Loans as set forth in Section 9.2(b) of the Pooling and
Servicing Agreement; (v) a formal bidsheet; (vi) a detailed timetable;
and (vii) a preliminary data tape of the Mortgage Loans as of the most
recent Payment Date reflecting the same data attributes used to create
the original Cut-Off Date tables for the Prospectus.
d. The Advisor will send solicitation packages to all bidders no later
than the Payment Data preceding the date of the auction, which data
shall be fifteen (15) Business Days before a Payment Date (the
"Auction Date"). Bidders will be required to submit any due diligence
questions in writing to the Advisor, for determination of their
relevancy, no later than ten (10) Business Days before the Auction
Date. The Advisor 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 bidders.
II. Auction Process
a. The Advisor will be allowed to bid in the auction, but will not be
required to do so.
<PAGE>
b. Each of the Seller and the Owners of the Class R Certificates will
also be allowed to bid in the auction if it deems it appropriate, but
will not be required to do so.
c. 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 bidder to be notified by 2:00 p.m. EST. All acceptable bids
(as described in Section 9.2(b) of the Pooling and Servicing
Agreement) will be due on a conforming basis on the bid sheet
contained in the solicitation package.
d. If the Trustee receives fewer than two market value bids from
competitive participants in the home equity loan market, the Trustee
may, following consultation with the Advisor, decline to consummate
the sale.
e. Upon notification to the winning bidder, a one percent (1%) good faith
deposit of the aggregate balance of the unpaid principal balances of
the Mortgage Loans as of the last days of the preceding Remittance
Period will be required to be wired to the Trustee upon acceptance of
the bid. This deposit, along with any interest income attributable to
it, will be credited to the purchase price, but will not be
refundable. 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 final
Payment Date.
f. The winning bidder will receive on the Auction Date a copy of the
draft purchase and sale agreement and servicing agreement.
g. The Advisor will provide to the Trustee an opinion of counsel stating
that the sale will not give rise either to any "prohibited
transaction" tax under Section 860(F)(a)(1) of the Code or to any tax
on contributions to the REMIC after the Startup Day under Section
860G(d)(1) of the Code.
h. The Advisor will provide to the Trustee a letter concluding whether or
not the winning bid is a fair market value bid. The Advisor will also
provide this letter if it is the winning bidder. In the case where the
Advisor is the winning bidder, it will provide in its letter for
market comparables and valuations.
<PAGE>
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
[BY ORIGINATOR]
<PAGE>
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
[BY ORIGINATOR]
<PAGE>
SCHEDULE II
SCHEDULE OF CLASS S MORTGAGE LOANS
<PAGE>
SCHEDULE III
LIST OF TRANSFER AGREEMENTS
1. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
October 1, 1996, between Accredited Home Lenders, Inc. ("Accredited"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated October 1, 1996, between Accredited, as seller and the Seller, as
buyer.
2. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
January 30, 1997, between Admiral Mortgage Company ("Admiral"), as seller
and the Seller, as buyer and Continuing Loan Purchase Agreement dated
January 30, 1997, between Admiral, as seller and the Seller, as buyer.
3. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
__________, 1997, between AMRESCO Residential Conduit, Inc. ("ARCI"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated __________, 1997, between ARCI, as seller and the Seller, as buyer.
4. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
October 25, 1996, between AMRESCO Residential Mortgage Corporation
("ARMC"), as seller and the Seller, as buyer and Continuing Loan Purchase
Agreement dated October 25, 1996, between ARMC, as seller and the Seller,
as buyer.
5. Supplement dated June 12, 1997, to Assignment, Assumption and Recognition
Agreement dated February 27, 1997, between DLJ Mortgage Capital, Inc.
("DLJ") as seller, BNC Mortgage, Inc. ("BNC") as originator, and the Seller
as buyer and Assignment, Assumption and Recognition Agreement dated
February 27, 1997, between DLJ as seller, BNC as originator, and the Seller
as buyer.
6. Supplement dated June 12, 1997, to Assignment, Assumption and Recognition
Agreement dated January 29, 1997, between DLJ as seller, BNC as originator,
and the Seller as buyer and Assignment, Assumption and Recognition
Agreement dated January 29, 1997, between DLJ as seller, BNC as originator,
and the Seller as buyer.
7. Supplement dated June 12, 1997, to Assignment, Assumption and Recognition
Agreement dated November 22, 1996, between DLJ as seller, BNC as
originator, and the Seller as buyer and Assignment, Assumption and
Recognition Agreement dated November 22, 1996, between DLJ as seller, BNC
as originator, and the Seller as buyer.
8. Supplement dated June 12, 1997, to Assignment, Assumption and Recognition
Agreement dated October 25, 1996, between DLJ as seller, BNC as originator,
and the Seller as buyer and Assignment, Assumption and Recognition
Agreement dated October 25, 1996, between DLJ as seller, BNC as originator,
and the Seller as buyer.
9. Supplement dated June 12, 1997, to Assignment, Assumption and Recognition
Agreement dated September 12, 1996, between DLJ as seller, BNC as
originator, and the Seller as buyer
<PAGE>
and Assignment, Assumption and Recognition Agreement dated September 12,
1996, between DLJ as seller, BNC as originator, and the Seller as buyer.
10. Master Mortgage Loan Purchase Agreement dated October 31, 1995 between BNC
as seller, and DLJ as buyer, with amendment dated October 31, 1995.
11. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
August 15, 1996, between First Colony Financial Group ("First Colony") as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated August 15, 1996, between First Colony, as seller and the Seller, as
buyer .
12. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
December 1, 1996, between First Deposit National Bank ("First Deposit"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated December 1, 1996, between First Deposit, as seller and the Seller, as
buyer.
13. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
September 1, 1996, between Highland Federal Bank ("Highland"), as seller
and the Seller, as buyer and Continuing Loan Purchase Agreement dated
September 1, 1996, between Highland, as seller and the Seller, as buyer.
14. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
June 8, 1996, between Investaid Corporation ("Investaid"), as seller and
the Seller, as buyer and Continuing Loan Purchase Agreement dated June 8,
1996, between Investaid as seller and the Seller, as buyer.
15. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
November 1, 1995, between Ameriquest Mortgage Company, as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated November 1,
1995, between Long Beach Mortgage Company (now known as Ameriquest Mortgage
Company), as seller and the Seller, as buyer.
16. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
November 22, 1996, between National Mortgage Corporation ("National
Mortgage"), as seller and the Seller, as buyer and Continuing Loan Purchase
Agreement dated November 22, 1996, between National Mortgage, as seller and
the Seller, as buyer.
17. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
April 5, 1996, between New Century Mortgage Corporation ("New Century"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated April 5, 1996, between New Century, as seller and the Seller, as
buyer.
18. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
March 1, 1996, between Option One Mortgage Corporation ("Option One"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated March 1, 1996, between Option One, as seller and the Seller, as
buyer.
<PAGE>
19. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
February 27, 1997, between Pan American Bank, F.S.B. ("Pan American"), as
seller and the Seller, as buyer and Continuing Loan Purchase Agreement
dated February 27, 1997, between Pan American, as seller and the Seller, as
buyer.
20. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
October 25, 1996, between Quality Mortgage USA, Inc. ("Quality"), as seller
and the Seller, as buyer and Continuing Loan Purchase Agreement dated
October 25, 1996, between Quality, as seller and the Seller, as buyer.
21. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
October 1, 1996, between Quality, as seller and the Seller, as buyer and
Continuing Loan Purchase Agreement dated October 1, 1996, between Quality,
as seller and the Seller, as buyer.
22. Supplement dated December 18, 1996, to Assignment, Assumption & Recognition
Agreement dated October 25, 1996, between DLJ as seller, Quality as
originator, and the Seller as buyer and Assignment Assumption and
Recognition Agreement dated October 25, 1996, between DLJ as seller,
Quality as originator, and the Seller as buyer.
23. Supplement dated December 18, 1996, to Assignment, Assumption and
Recognition Agreement dated September 27, 1996, between DLJ as seller,
Quality as originator, and the Seller as buyer and Assignment, Assumption
and Recognition Agreement dated September 27, 1996, between Quality as
seller, and DLJ, as buyer, with amendment dated October 31, 1995.
24. Master Mortgage Loan Purchase Agreement dated September 29, 1995, between
Quality as seller, and DLJ, as buyer, with amendment dated October 31,
1995.
25. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
November 18, 1996, between United Lending Group, Inc. ("United"), as seller
and the Seller, as buyer and Continuing Loan Purchase Agreement dated
November 18, 1996, between United, as seller and the Seller, as buyer.
26. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
May 10, 1996, between Walsh Securities, Inc. ("Walsh"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated May 10, 1996,
between Walsh, as seller and the Seller, as buyer.
27. Supplement dated June 12, 1997, to Continuing Loan Purchase Agreement dated
October 1,1 996, between WMC Mortgage Corp., as seller and the Seller, as
buyer and Continuing Loan Purchase Agreement dated October 1, 1996, between
Wyerhaeuser Mortgage Company, now known as WMC Mortgage Corp., as seller
and the Seller, as buyer.
<PAGE>
SCHEDULE IV
LIST OF ORIGINATORS
1. Accredited Home Lenders, Inc.
2. Admiral Mortgage Company
3. AMRESCO Residential Conduit, Inc.
4. AMRESCO Residential Mortgage Corporation
5. BNC Mortgage, Inc.
6. First Colony Financial Group
7. First Deposit National Bank
8. Highland Federal Bank
9. Investaid Corporation
10. Ameriquest Mortgage Company
11. National Mortgage Corporation
12. New Century Mortgage Corporation
13. Option One Mortgage Corporation
14. Pan American Bank, F.S.B.
15. Quality Mortgage USA, Inc.
16. United Lending Group
17. Walsh Securities, Inc.
18. WMC Mortgage Corp.
