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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)
December 22, 1997
First Alliance Mortgage Loan Trust 1997-4
(Exact name of registrant as specified in its charter)
APPLICATION
New York 33-99604-07 PENDING
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
c/o The Bank of New York
101 Barclay Street - 12 East
New York, New York 10286
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 815-2297
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
First Alliance Mortgage Company registered issuances of up to $580,000,000
principal amount of Mortgage Loan Asset Backed 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. 33-99604) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, First Alliance Mortgage Loan Trust 1997-4 (the
"Registrant" or the "Trust") issued $106,000,000 in aggregate principal amount
of its Mortgaged Loan Asset Backed Certificates, Series 1997-4 (the
"Certificates"), on December 22, 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 December 1, 1997, between First Alliance Mortgage Company (the "Company"),
and in its capacity as servicer (the "Servicer") and The Bank of New York, in
its capacity as trustee (the "Trustee"). The Certificates consist of four
classes, the Class A-1, Class A-2 and Class A-3 Certificates (the "Class A
Certificates") and the Class R Certificates (the "Class R Certificates" and,
together with the Class A Certificates, the "Certificates"). Only the Class A
Certificates were issued pursuant to the Registration Statement. The
Certificates initially evidence, in the aggregate, 100% of the undivided
beneficial ownership interests in the Trust.
The assets of the Trust initially will include two pools (each, a "Mortgage
Loan Group") of closed-end mortgage loans (the "Mortgage Loans") secured by
mortgages or deeds of trust on one-to-four family residential properties. The
Class A-1 Fixed Rate Group Certificates and the Class A-2 Fixed Rate Group
Certificates represent undivided ownership interests in a pool of fixed rate
Mortgage Loans secured by mortgages that may be either in a first or in a junior
lien position. The Class A-3 Variable Rate Group Certificates represent
undivided ownership interests in a pool of variable rate Mortgage Loans secured
by mortgages in a first lien position.
Interest distributions on the Class A Certificates are based on the
Certificate Principal Balance thereof and the then applicable Pass-Through Rate
thereof. The Pass-Through Rate for the Class A-1 Certificates will be 6.710% per
annum. The Pass-Through Rate for the Class A-2 Certificates will be 7.130% per
annum. The Pass-Through Rate for the Class A-3 Certificates adjusts monthly and
with respect to the first Payment Date will be 6.230% per annum.
The Class A-1 Certificates have an aggregate principal amount of
$44,000,000. The Class A-2 Certificates have an aggregate principal amount of
$12,000,000. The Class A-3 Certificates have an aggregate principal amount of
$50,000,000.
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As of the Closing Date, the Mortgage Loans possessed the characteristics
described in the Prospectus dated September 10, 1996 and the Prospectus
Supplement dated December 9, 1997, filed pursuant to Rule 424(b)(5) of the Act
on December 17, 1997.
On December 31, 1997, the Trust acquired $25,987,866.51 of Subsequent
Mortgage Loans pursuant to the terms of the Pooling and Servicing Agreement and
the Subsequent Transfer Agreement attached hereto as Exhibit 10.1 between First
Alliance Mortgage Company and the Trustee on behalf of the Trust dated as of
December 31, 1997. The Subsequent Mortgage Loans possess the characteristics
required by the Prospectus dated September 10, 1996 and the Prospectus
Supplement dated December 9, 1997, filed pursuant to Rule 424(b)(5) of the Act
on December 17, 1997.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
` (a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated December 9, 1997, between First
Alliance Mortgage Company and Prudential Securities
Incorporated.
4.1 Pooling and Servicing Agreement, dated as of December 1, 1997,
between First Alliance Mortgage Company, as Company and
Servicer, and The Bank of New York, as Trustee.
10.1 Subsequent Transfer Agreement, dated as of December 31, 1997,
between First Alliance Mortgage Company and First Alliance
Mortgage Loan Trust 1997-4.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: FIRST ALLIANCE MORTGAGE COMPANY,
as Company
By: /s/ Brian Chisick
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Name: Brian Chisick
Title: President
Dated: January 5, 1998
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement, dated December 9, 1997, between First
Alliance Mortgage Company and Prudential Securities Incorporated.
4.1 Pooling and Servicing Agreement, dated as of December 1, 1997,
between First Alliance Mortgage Company, as Company and Servicer,
and The Bank of New York, as Trustee.
10.1 Subsequent Transfer Agreement dated as of December 31, 1997,
between First Alliance Mortgage Company and First Alliance
Mortgage Loan Trust 1997-4.
Ehibit 1.1
FIRST ALLIANCE MORTGAGE COMPANY
AND
PRUDENTIAL SECURITIES INCORPORATED,
AS REPRESENTATIVE OF THE SEVERAL UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
FIRST ALLIANCE MORTGAGE LOAN TRUST 1997-4
MORTGAGE LOAN ASSET BACKED CERTIFICATES,
6.710% CLASS A-1 FIXED RATE GROUP CERTIFICATES
7.130% CLASS A-2 FIXED RATE GROUP CERTIFICATES
CLASS A-3 VARIABLE RATE GROUP CERTIFICATES
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December 9, 1997
First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614
Prudential Securities Incorporated
As Representative of the Several Underwriters
One New York Plaza, 15th Floor
New York, New York 10292
First Alliance Mortgage Company (the "Company" or the
"Sponsor") hereby confirms its agreement to sell certain mortgage loan asset
backed certificates to Prudential Securities Incorporated and First Union
Capital Markets Corp. (collectively, the "Underwriters") as described herein
relating to the First Alliance Mortgage Loan Trust 1997-4 (the "Trust").
Prudential Securities Incorporated will act as representative of the
Underwriters (in such capacity, the "Representative"). The certificates,
together with certain subordinate certificates to be issued by the Trust, will
evidence in the aggregate the entire beneficial interest in a trust estate (the
"Trust Estate") consisting of two segregated pools (the "Mortgage Pools") of
closed-end mortgage loans (the "Initial Mortgage Loans") and such amounts as may
be held by the Trustee in the Pre-Funding Account ("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 shall
have, as of the close of business on December 1, 1997 (the "Cut-off Date"), an
aggregate principal balance of $80,012,569.85. The certificates are to be issued
under a pooling and servicing agreement dated as of December 1, 1997 (the
"Pooling and Servicing Agreement"), among the Company, in its individual
capacity and in its capacity as servicer (the "Servicer") and The Bank of New
York, in its capacity as trustee (the "Trustee"). On the Closing Date,
approximately $25,987,430.15 will be deposited 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 both Group I and Group II from the Company from time to
time on or before December 31, 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.
On or prior to the date of issuance of the Certificates, the
Company will obtain two certificate guaranty insurance policies (the "Policies")
issued by MBIA Insurance Corporation (the "Insurer") which
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will unconditionally and irrevocably guarantee to the Trustee for the benefit of
the holders of the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates full and complete payment of all amounts payable on the
Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates. All capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the form of Pooling and Servicing Agreement
heretofore delivered to the Underwriters.
1. Securities. The certificates will be issued in classes as
follows: (i) a senior class with respect to each Mortgage Loan Group consisting
of the Class A-1 Fixed Rate Group Certificates (the "Class A-1 Certificates"),
the Class A-2 Fixed Rate Group Certificates (the "Class A-2 Certificates") and
the Class A-3 Variable Rate Group Certificates (the "Class A-3 Certificates" and
collectively with the Class A-1 Certificates and the Class A-2 Certificates the
"Class A Certificates") and (ii) a residual class (the "Class R Certificates").
The Class A Certificates and the Class R Certificates are hereinafter referred
to as the "Certificates."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, the Underwriters that:
A. The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement (No. 33-99604) on Form
S-3 for the registration under the Securities Act of 1933, as amended (the
"Act"), of Mortgage Asset Backed Certificates (issuable in series), which
registration statement, as amended at the date hereof, has become effective.
Such registration statement, as amended to the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(vii) under the Act and complies in all
other material respects with such Rule. The Company proposes to file with the
Commission pursuant to Rule 424(b)(5) under the Act a supplement dated December
9, 1997 to the prospectus dated September 10, 1996 relating to the Certificates
and the method of distribution thereof and has previously advised the
Underwriters of all further information (financial and other) with respect to
the Certificates to be set forth therein. Such registration statement, including
the exhibits thereto, as amended at the date hereof, is hereinafter called the
"Registration Statement"; such prospectus dated September 10, 1996, in the form
in which it will be filed with the Commission pursuant to Rule 424(b)(5) under
the Act is hereinafter called the "Basic Prospectus"; such supplement dated
December 9, 1997 to the Basic Prospectus, in the form in which it will be filed
with the Commission pursuant to Rule 424(b)(5) of the Act, is hereinafter called
the "Prospectus Supplement"; and the Basic Prospectus and the Prospectus
Supplement together are hereinafter called the "Prospectus." The Company will
file with the Commission (i) promptly after receipt from any Underwriter of any
Computational Material (as defined herein) a Form 8-K incorporating such
Computational Materials and (ii) within fifteen days of the issuance of the
Certificates a report on Form 8-K setting forth specific information concerning
the related Mortgage Loans (the "8-K").
B. As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to Rule
424(b)(5) under the Act, and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Prospectus, as amended or
supplemented as of any such time, will comply in all material respects with the
applicable requirements of the Act and the rules thereunder and (ii) the
Registration Statement, as amended as of any such time, did not and will not
contain any untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus, as amended or supplemented
as of any such time, did not and will not contain an untrue statement of a
material fact and did not and will not omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon
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and in conformity with the information furnished in writing to the Company by or
on behalf of any Underwriter specifically for use in connection with the
preparation of the Registration Statement and the Prospectus.
C. The Company is duly organized, validly existing and in good
standing under the laws of the State of California, has full power and authority
(corporate and other) to own its properties and conduct its business as now
conducted by it, and as described in the Prospectus, and is duly qualified to do
business in each jurisdiction in which it owns or leases real property (to the
extent such qualification is required by applicable law) or in which the conduct
of its business requires such qualification except where the failure to be so
qualified does not involve (i) a material risk to, or a material adverse effect
on, the business, properties, financial position, operations or results of
operations of the Company or (ii) any risk whatsoever as to the enforceability
of any Mortgage Loan.
D. There are no actions, proceedings or investigations pending,
or, to the knowledge of the Company, threatened, before any court, governmental
agency or body or other tribunal (i) asserting the invalidity of this Agreement,
the Certificates, the Insurance Agreement, the Indemnification Agreement dated
December 9, 1997 (the "Indemnification Agreement") among the Company, the
Insurer and the Underwriters or of the Pooling and Servicing Agreement, (ii)
seeking to prevent the issuance of the Certificates or the consummation of any
of the transactions contemplated by this Agreement, the Pooling and Servicing
Agreement or any Subsequent Transfer Agreement, (iii) which may, individually or
in the aggregate, materially and adversely affect the performance by the Company
of its obligations under, or the validity or enforceability of, this Agreement,
the Certificates, the Pooling and Servicing Agreement or any Subsequent Transfer
Agreement, or (iv) which may affect adversely the federal income tax attributes
of the Certificates as described in the Prospectus.
E. The execution and delivery by the Company of this Agreement,
the Indemnification Agreement, the Insurance Agreement and the Pooling and
Servicing Agreement, the issuance of the Certificates and the transfer and
delivery of the Mortgage Loans to the Trustee by the Company are within the
corporate power of the Company and have been, or will be, prior to the Closing
Date duly authorized by all necessary corporate action on the part of the
Company and the execution and delivery of such instruments, the consummation of
the transactions therein contemplated and compliance with the provisions thereof
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute or any agreement or instrument to
which the Company or any of its affiliates is a party or by which it or any of
them is bound or to which any of the property of the Company or any of its
affiliates is subject, the Company's charter or bylaws, or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Company, any of its affiliates or any of its or their
properties; and no consent, approval, authorization or order of, or filing with,
any court or governmental agency or body or other tribunal is required for the
consummation of the transactions contemplated by this Agreement or the
Prospectus in connection with the issuance and sale of the Certificates by the
Company except pursuant to the Act. Neither the Company nor any of its
affiliates is 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 Company or any of its affiliates, which
materially and adversely affects, or may in the future materially and adversely
affect, (i) the ability of the Company to perform its obligations under the
Pooling and Servicing Agreement, this Agreement, the Insurance Agreement, the
Indemnification Agreement and any Subsequent Transfer Agreement or (ii) the
business, operations, results of operations, financial position, income,
properties or assets of the Company, taken as a whole.
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F. This Agreement and the Indemnification Agreement have been
duly executed and delivered by the Company, and the Pooling and Servicing
Agreement, the Insurance Agreement and any Subsequent Transfer Agreement will be
duly executed and delivered by the Company, and each constitutes and will
constitute the legal, valid and binding obligation of the Company enforceable in
accordance with their respective terms, except as enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding at law or in equity.
G. The Certificates will conform in all material respects to the
description thereof to be contained in the Prospectus and will be duly and
validly authorized and, when duly and validly executed, authenticated, issued
and delivered in accordance with the Pooling and Servicing Agreement and sold to
the Underwriters as provided herein, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement.
H. At the Closing Date, the Initial Mortgage Loans will conform
in all material respects to the description thereof contained in the Prospectus
and the representations and warranties contained in this Agreement will be true
and correct in all material respects. The representations and warranties set out
in the Pooling and Servicing Agreement are hereby made to the Underwriters as
though set out herein, and at the dates specified in the Pooling and Servicing
Agreement, and any Subsequent Transfer Agreement, such representations and
warranties were or will be true and correct in all material respects.
I. The transfer of the Initial Mortgage Loans to the Trust at the
Closing Date will be treated by the Company for financial accounting and
reporting purposes as a sale of assets and not as a pledge of assets to secure
debt.
J. The Company possesses all material licenses, certificates,
permits or other authorizations issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by it and as described in the Prospectus and there are no proceedings,
pending or, to the best knowledge of the Company, threatened, relating to the
revocation or modification of any such license, certificate, permit or other
authorization which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the business,
operations, results of operations, financial position, income, property or
assets of the Company taken as a whole.
K. Any taxes, fees and other governmental charges in connection
with the execution and delivery of this Agreement, the Insurance Agreement, the
Indemnification Agreement, and the Pooling and Servicing Agreement or the
execution and issuance of the Certificates have been or will be paid at or prior
to the Closing Date.
L. There has not been 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
Company or its subsidiaries, taken as a whole, from December 31, 1996 to the
date hereof.
M. This Agreement and the Pooling and Servicing Agreement will
conform in all material respects to the descriptions thereof contained in the
Prospectus.
N. The Company 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, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement
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or the institution or threatening of any proceeding for that purpose or (iii)
any notification with respect to the suspension of the qualification of the
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
O. Each assignment of Mortgages required to be prepared pursuant
to the Pooling and Servicing Agreement is based on forms recently utilized by
the Company with respect to mortgaged properties located in the appropriate
jurisdiction and used in the regular course of the Company's business. Based on
the Company's experience with such matters it is reasonable to believe that upon
execution each such assignment will be in recordable form and will be sufficient
to effect the assignment of the Mortgage to which it relates as provided in the
Pooling and Servicing Agreement.
P. The Company is current in all filings under the Securities
Exchange Act and is eligible to use the Registration Statement.
Any certificate signed by any officer of the Company and
delivered to the Representative in connection with the sale of the Certificates
hereunder shall be deemed a representation and warranty as to the matters
covered thereby by the Company to each person to whom the representations and
warranties in this Section 2 are made.
3. Agreements of the Representative. The Representative agrees
with the Company that upon the execution of this Agreement and authorization by
the Representative of the release of the Class A Certificates, the Underwriters
shall offer the Class A Certificates for sale upon the terms and conditions set
forth in the Prospectus as amended or supplemented.
4. Purchase, Sale and Delivery of the Certificates. The Company
hereby agrees, subject to the terms and conditions hereof, to sell the Class A
Certificates to the Underwriters, who, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
hereby agree to purchase the entire aggregate principal amount of the Class A
Certificates in the amounts specified in Schedule A hereto. At the time of
issuance of the Certificates, the Initial Mortgage Loans will be sold by the
Company to the Trust pursuant to the Pooling and Servicing Agreement. The
Subsequent Mortgage Loans will be purchased by the Trust for inclusion in both
Mortgage Loan Groups, from time to time on or before December 31, 1997. The
Company will be obligated, under the Pooling and Servicing Agreement, to service
the Mortgage Loans either directly or through sub-servicers.
The Class A Certificates to be purchased by the Underwriters will
be delivered by the Company to the Underwriters (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC")) against payment
of the purchase price therefor, equal to 99.680% of the aggregate principal
amount of the Class A-1 Certificates, 99.680% of the aggregate principal amount
of the Class A-2 Certificates, and 99.680% of the aggregate principal amount of
the Class A-3 Certificates, plus interest accrued at the Class A-1 Pass-Through
Rate on the Class A-1 Certificates and at the Class A-2 Pass-Through Rate on the
Class A-2 Certificates, in both cases from December 1, 1997 to, but not
including, the settlement date, by a same day federal funds wire payable to the
order of the Company. No accrued interest will be payable on the Class A-3
Variable Rate Group Certificates, which shall be dated their date of delivery.
The Underwriter's fee shall be 32 basis points of each of the Class A
Certificates.
Settlement shall take place at the offices of Arter & Hadden LLP,
1801 K Street, N.W., Washington, D.C. 20006, at 10:00 a.m. (E.S.T.), on December
22, 1997, or at such other time thereafter as the Representative and the Company
determine (such time being herein referred to as the "Closing Date").
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The Class A Certificates will be prepared in definitive form and in such
authorized denominations as the Representative may request, registered in the
name of Cede & Co., as nominee of DTC.
The Company agrees to have the Certificates available for
inspection and review by the Representative in New York City not later than 1:00
p.m. (E.S.T.) on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees
with the Representative that:
A. The Company will promptly advise the Representative and its
counsel (i) when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of
any proceeding for that purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Class A
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will not file any amendment to the
Registration Statement or supplement to the Prospectus after the date hereof and
prior to the Closing Date for the Certificates unless the Company has furnished
the Representative and its counsel copies of such amendment or supplement for
their review prior to filing and will not file any such proposed amendment or
supplement to which the Underwriter reasonably objects, unless such filing is
required by law. The Company will use its best efforts to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
and, if issued, to obtain as soon as possible the withdrawal thereof.
B. If, at any time during the period in which the Prospectus is
required by law to be delivered, any event occurs 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 to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the rules under the Act, the Company will
promptly prepare and file with the Commission, subject to Paragraph A of this
Section 5, an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance and, if such amendment
or supplement is required to be contained in a post-effective amendment to the
Registration Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
C. The Company will furnish to the Representative, without
charge, executed copies of the Registration Statement (including exhibits
thereto) and, so long as delivery of a Prospectus by the Underwriters or a
dealer may be required by the Act, as many copies of the Prospectus, as amended
or supplemented, and any amendments and supplements thereto as the Underwriters
may reasonably request. The Company will pay the expenses of printing (or
otherwise reproducing) all offering documents relating to the offering of the
Class A Certificates.
D. As soon as practicable, but not later than sixteen months
after the date hereof, the Company will cause the Trust to make generally
available to Certificate Owners of the Trust an earnings statement of the Trust
covering a period of at least 12 months beginning after the effective date of
the Registration Statement which will satisfy the provisions of Section 11(a) of
the Act and, at the option of the Company, will satisfy the requirements of Rule
158 under the Act.
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E. During a period of 20 calendar days from the date as of which
this Agreement is executed, neither the Company nor any affiliate of the Company
will, without the Representative's prior written consent (which consent shall
not be unreasonably withheld), enter into any agreement to offer or sell
mortgage loan asset-backed certificates backed by mortgage loans, except
pursuant to this Agreement.
F. So long as any of the Class A Certificates are outstanding,
the Company will cause to be delivered to the Representative (i) all documents
required to be distributed to Certificate Owners of the Trust and (ii) from time
to time, any other information concerning the Trust filed with any government or
regulatory authority that is otherwise publicly available.
G. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all expenses
in connection with the transactions contemplated herein, including, but not
limited to, the expenses of printing (or otherwise reproducing) all documents
relating to the offering, the reasonable fees and disbursements of its counsel
and expenses of the Representative incurred in connection with (i) the issuance
and delivery of the Certificates, (ii) preparation of all documents specified in
this Agreement, (iii) any fees and expenses of the Trustee, the Insurer and any
other credit support provider (including legal fees), accounting fees and
disbursements, and (iv) any fees charged by investment rating agencies for
rating the Class A Certificates.
H. The Company agrees that, so long as any of the Class A
Certificates shall be outstanding, it will deliver or cause to be delivered to
the Representative (i) the annual statement as to compliance delivered to the
Trustee pursuant to the Pooling and Servicing Agreement, (ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to the Pooling and Servicing Agreement as soon as such statement is
furnished to the Company and (iii) any information required to be delivered by
the Company or the Servicer to prepare the report by the Trustee pursuant to
Section 7.8 of the form of Pooling and Servicing Agreement heretofore delivered
to the Representative.
I. The Company will enter into the Pooling and Servicing
Agreement, the Insurance Agreement, and all related agreements on or prior to
the Closing Date.
J. The Company will endeavor to qualify the Class A Certificates
for sale to the extent necessary under any state securities or Blue Sky laws in
any jurisdictions as may be reasonably requested by the Representative, if any,
and will pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with the determination of
the eligibility of the Class A Certificates for investment under the laws of
such jurisdictions as the Representative may reasonably designate, if any.
6. Conditions of the Underwriters' Obligation. The obligation of
the Underwriters to purchase and pay for the Class A Certificates as provided
herein and on Schedule A hereto shall be subject to the accuracy as of the date
hereof and the Closing Date (as if made at the Closing Date) of the
representations and warranties of the Company contained herein (including those
representations and warranties set forth in the Pooling and Servicing Agreement
and incorporated herein), to the accuracy of the statements of the Company made
in any certificate or other document delivered pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
A. The Registration Statement shall have become effective no
later than the date hereof, and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no
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proceedings for that purpose shall have been instituted or threatened, and the
Prospectus shall have been filed pursuant to Rule 424(b).
B. The Representative shall have received the Pooling and
Servicing Agreement and the Class A Certificates in form and substance
satisfactory to the Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
C.1. The Underwriters shall have received the favorable opinion
of the Vice President and General Counsel to the Company, with respect to
the following items, dated the Closing Date, to the effect that:
(a) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of California, and is qualified to do business in each
state necessary to enable it to perform its obligations as
Servicer under the Pooling and Servicing Agreement. The Company
has the requisite power and authority to execute and deliver,
engage in the transactions contemplated by, and perform and
observe the conditions of, this Agreement, the Pooling and
Servicing Agreement, any Subsequent Transfer Agreement, the
Insurance Agreement and the Indemnification Agreement among the
Company, the Insurer and the Underwriters.
(b) This Agreement, the Certificates, the Pooling and
Servicing Agreement, the Insurance Agreement and the
Indemnification Agreement have been duly and validly authorized,
executed and delivered by the Company, all requisite corporate
action having been taken with respect thereto, and each (other
than the Certificates) constitutes the valid, legal and binding
agreement of the Company enforceable against the Company in
accordance with its respective terms.
(c) Neither the transfer of the Initial Mortgage Loans to
the Trust, the issuance or sale of the Certificates nor the
execution, delivery or performance by the Company of the Pooling
and Servicing Agreement, this Agreement, any Subsequent Transfer
Agreement, the Insurance Agreement or the Indemnification
Agreement (A) conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a
default under, (i) any term or provision of the articles of
incorporation or bylaws of the Company; (ii) any term or
provision of any material agreement, contract, instrument or
indenture, to which the Company is a party or is bound; or (iii)
any order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction
over the Company; or (B) results in, or will 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.
(d) The endorsement and delivery of each Note, and the
preparation, delivery and recording of an Assignment in
recordable form, with respect to each Mortgage (in the absence of
the delivery of the opinions described in Section 3.5(b)(ii)(y)
of the Pooling and Servicing Agreement), as and in the manner
contemplated by the Pooling and Servicing Agreement, is
sufficient fully to transfer to the Trustee for the benefit of
the Owners all right, title and interest of the Company in the
Note and Mortgage, as noteholder and mortgagee or assignee
thereof, and will be sufficient to permit the Trustee to avail
itself of all protection available under applicable law against
the claims of any present or future creditors of the Company and
to
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prevent any other sale, transfer, assignment, pledge or other
encumbrance of the Mortgage Loans by the Company from being
enforceable.
(e) No consent, approval, authorization or order of,
registration or filing with, or notice to, courts, governmental
agency or body or other tribunal is required under the laws of
the State of California, for the execution, delivery and
performance of the Pooling and Servicing Agreement, the Insurance
Agreement, this Agreement, the Indemnification Agreement or the
offer, issuance, sale or delivery of the Certificates or the
consummation of any other transaction contemplated thereby by the
Company, except such which have been obtained.
(f) There are no actions, proceedings or investigations
pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of the Pooling and
Servicing Agreement, the Insurance Agreement, this Agreement, the
Indemnification Agreement or the Certificates, (ii) seeking to
prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Pooling and Servicing
Agreement, the Indemnification Agreement, the Insurance Agreement
or this Agreement or (iii) which would materially and adversely
affect the performance by the Company of obligations under, or
the validity or enforceability of, the Pooling and Servicing
Agreement, the Certificates, the Indemnification Agreement, the
Insurance Agreement or this Agreement.
(g) To the best of such counsel's knowledge, the
Registration Statement, the Prospectus Supplement and the
Prospectus do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading
with respect to the statements set forth in the Prospectus under
the caption "Certain Legal Aspects of Mortgage Loans and Related
Matters".
2. The Underwriters shall have received the favorable opinion of
Arter & Hadden LLP, special counsel to the Company, dated the Closing
Date, to the effect that:
(a) The Certificates, assuming due execution and
authentication by the Trustee, and delivery and payment therefor
pursuant to this Agreement are validly issued and outstanding and
are entitled to the benefits of the Pooling and Servicing
Agreement.
(b) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental
authority or court is required under federal laws or the laws of
the State of New York, for the execution, delivery and
performance by the Company of the Pooling and Servicing
Agreement, this Agreement, any Subsequent Transfer Agreement, the
Indemnification Agreement, the Insurance Agreement or the offer,
issue, sale or delivery of the Certificates or the consummation
of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(c) Neither the transfer of the Initial Mortgage Loans to
the Trustee, the issuance or sale of the Certificates, nor the
execution, delivery or performance by the Company of the Pooling
and Servicing Agreement, the Insurance Agreement, any Subsequent
Transfer Agreement, the Indemnification Agreement or this
Agreement will (a) conflict with or result in a breach of, or
constitute a default under any law, rule or regulation of the
State of New York or the federal government, or (b) to such
counsel's knowledge, without independent
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investigation, results in, or will 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.
(d) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the
Company's right, title and interest in the Subsequent Mortgage
Loans to the Trustee and following the consummation of the
transaction contemplated by each Subsequent Transfer Agreement,
the transfer of the Subsequent Mortgage Loans by the Company to
the Trustee will be a sale thereof.
(e) The Registration Statement, the Prospectus and the
Prospectus Supplement (other than the financial and statistical
data included therein, as to which such counsel need express no
opinion), as of the date on which the Registration Statement was
declared effective and as of the date hereof, comply as to form
in all material respects with the requirements of the Act and the
rules and regulations thereunder, and such counsel does not know
of any amendment to the Registration Statement required to be
filed, or of any contracts, indentures or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement, the Prospectus or the Prospectus Supplement which has
not been filed or described as required.
(f) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939 nor the
registration of the Trust created by such Agreement under the
Investment Company Act of 1940 is presently required.
(g) The statements in the Prospectus set forth under the
captions "DESCRIPTION OF THE SECURITIES" and "THE POOLING AND
SERVICING AGREEMENT" and the statements in the Prospectus
Supplement set forth 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.
(h) Except as to any financial or statistical data
contained in the Registration Statement, the statements set forth
in the Prospectus under the caption "DESCRIPTION OF CREDIT
ENHANCEMENT," and in the Prospectus Supplement under the caption
"THE CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE INSURER,"
and any Computational Materials as to which no opinion or belief
need be expressed, to the best of such counsel's knowledge, 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 in order to make the statements
therein not misleading.
(i) Upon receipt by the Trustee of the related Notes,
endorsed as described in the Pooling and Servicing Agreement, and
the receipt by the Company of the purchase price for the
Certificates and for so long as the Trustee maintains actual
physical possession of such Notes, (i) the Trustee shall be
vested with good and indefeasible title to, and shall be the sole
owner of, and shall obtain all right, title and interest of the
Company in, each Mortgage Loan, (ii) in the event that the sale
of the Mortgage Loans were to be recharacterized as a financing
secured by the Mortgage Loans, the Trustee has a first perfected
security interest in the Mortgage Loans and (iii) the recordation
of the assignments of the Mortgages is not required
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for the Trustee to obtain such rights, as against creditors of,
and purported transferees of, the Company.
(j) To the best of the knowledge of such counsel, the
Commission has not issued any stop order suspending the
effectiveness of the Registration Statement or any order directed
to any prospectus relating to the Certificates (including the
Prospectus), and has not initiated or threatened any proceeding
for that purpose.
3. The Underwriters shall have received the favorable opinion of
Arter & Hadden LLP, special tax and bankruptcy counsel to the Company, dated the
Closing Date, to the effect that:
(a) Assuming the REMIC election is made in compliance with
the Pooling and Servicing Agreement, (i) the Trust, exclusive of
the Pre-Funding Account, the Group II Available Funds Cap
Carry-Forward Amount Account and the Capitalized Interest Account
(as defined in the Prospectus Supplement) will qualify as a real
estate mortgage investment conduit ("REMIC") (as defined in the
Internal Revenue Code of 1986, as amended (the "Code")) for
Federal income tax purposes and (ii) each Class of the Offered
Certificates (as defined in the Prospectus Supplement) will be
treated as "regular interests" in the REMIC and the R Class will
be treated as the sole "residual interest" in the REMIC.
(b) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would
adversely affect the Trust Estate (exclusive of the Pre-Funding
Account, the Group II Available Funds Cap Carry-Forward Amount
Account and the Capitalized Interest Account) as a real estate
mortgage investment conduit ("REMIC") as such term is defined in
the Code.
(c) The statements under the captions "SUMMARY OF
PROSPECTUS -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus and
under the captions "SUMMARY -- FEDERAL INCOME TAX ASPECTS" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus
Supplement as they relate to federal tax matters are true and
correct in all material respects.
(d) As a consequence of the qualification of the Trust
(exclusive of the Pre-Funding Account, the Group II Available
Funds Cap Carry-Forward Amount Account and the Capitalized
Interest Account) as a REMIC, the Class A Certificates will be
treated as "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 Trust
(exclusive of the Pre-Funding Account, the Group II Available
Funds Cap Carry-Forward Amount Account and the Capitalized
Interest Account) as a REMIC, interest on the Class A
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 Class A Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
(e) The Trust will not be subject to tax upon its income
or assets by the taxing authority of New York State or New York
City.
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(f) The Trust will not be subject to the California state
income tax. While REMICs are subject to the California state
minimum franchise tax imposed under Article 2, Section 23153 of
the California Revenue and Taxation Code, such counsel does not
express an opinion as to whether the Trust is subject to such
tax.
(g) A court would hold that the conveyance by the Sponsor
of all right, title and interest in the Mortgage Loans to the
Trustee (except for the Sponsor's right, title and interest in
the principal and interest due on such Mortgage Loans on or prior
to the Cut-Off Date), constitutes a sale of the Mortgage Loans
and not a borrowing by the Sponsor secured by the pledge of the
Mortgage Loans. A court would find that, following such
conveyance, the Mortgage Loans and proceeds thereof (net of
payments of principal and interest due on such Mortgage Loans on
or prior to the Cut-Off Date) are not property of the estate of
the Sponsor within the meaning of Section 541 of the Bankruptcy
Code, and, further that the Trustee's rights with respect to the
Mortgage Loans and the proceeds thereof would not subject it to
the automatic stay provisions of Section 362 of the Bankruptcy
Code. Since the conveyance of the Mortgage Loans (net of payments
of scheduled principal due and interest accrued on or prior to
the Cut-Off Date) constitutes a sale of said Mortgage Loans then
the payments thereunder (net of payments of scheduled principal
due on and interest accrued on or prior to the Cut-Off Date) are
not property of the estate of the Sponsor and the distributions
of such payments by the Trustee to the Owners of the Certificates
are not preferential payments made by, for, or on behalf of the
Sponsor under the provisions of Section 547 of the Bankruptcy
Code.
(h) If a court characterized the transfer of the Mortgage
Loans to the Trustee as a pledge of collateral rather than an
absolute sale or assignment, with respect to the Mortgage Loans
and other property included in the Trust on the date hereof, to
the extent governed by the laws of the State of New York, a valid
security interest has been created in favor of the Trustee, which
security interest of the Trustee will be perfected and will
constitute a first perfected security interest, with respect to
the Sponsor's right, title and interest in and to the Notes, upon
endorsement and delivery thereof to the Trustee. With respect to
the security interest of the Trustee in the Notes, New York law
would govern.
4. The Underwriters shall have received the favorable opinion of
Dewey Ballantine LLP, special counsel to the Underwriters, dated the
Closing Date, to the effect that:
(a) The Certificates, assuming due execution and
authentication by the Trustee, and delivery and payment therefor
pursuant to this Agreement, are validly issued and outstanding
and are entitled to the benefits of the Pooling and Servicing
Agreement.
(b) No fact has come to such counsel's attention which
causes them to believe that the Prospectus (other than the
financial statement and other financial and statistical data
contained therein, as to which such counsel need express no
opinion), as of the date thereof, contained any untrue statement
of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) Such other matters as the Underwriters may reasonably
request.
In rendering their opinions, the counsels described in this
Paragraph C may rely, as to matters of fact, on certificates of responsible
officers of the Company, the Trustee and public officials. Such
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opinions may also assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto other than
the Company.
D. The Underwriter shall have received a letter from Deloitte &
Touche, dated on or before the Closing Date, in form and substance satisfactory
to the Underwriters and counsel for the Underwriters, to the effect that they
have performed certain specified procedures requested by the Underwriters with
respect to the information set forth in the Prospectus and certain matters
relating to the Company.
E. The Class A Certificates shall have been rated in the highest
rating category by Moody's Investors Service, Inc., and by Standard & Poor's
Ratings Service, a division of The McGraw-Hill Companies, and such ratings shall
not have been rescinded. The Underwriters and 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 Class A Certificates.
Any such opinions shall be dated the Closing Date and addressed to the
Underwriters or accompanied by reliance letters to the Underwriter or shall
state that the Underwriters may rely upon them.
F. The Underwriters shall have received from the Company a
certificate, signed by the president, a senior vice president or a vice
president of the Company, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement, the
Pooling and Servicing Agreement and this Agreement and that, to the best of his
or her knowledge based upon reasonable investigation:
1. the representations and warranties of the Company in this
Agreement, and in the Indemnification Agreement, as of the Closing Date,
in the Pooling and Servicing Agreement, in the Insurance Agreement and in
all related agreements, as of the date specified in such agreements, are
true and correct, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at
or prior to the Closing Date;
2. there are no actions, suits or proceedings pending, or to the
best of such officer's knowledge, threatened against or affecting the
Company which if adversely determined, individually or in the aggregate,
would be reasonably likely to adversely affect the Company's obligations
under the Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or under the Indemnification Agreement in any material way; and
no merger, liquidation, dissolution or bankruptcy of the Company is
pending or contemplated;
3. the information contained in the Registration Statement and
Prospectus relating to the Company, the Mortgage Loans or the servicing
procedures of it or its affiliates or the subservicer is true and accurate
in all material respects and nothing has come to his or her attention that
would lead such officer to believe that the Registration Statement and
Prospectus includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein not
misleading;
4. the information set forth in the Schedules of Mortgage Loans
required to be furnished pursuant to the Pooling and Servicing Agreement
is true and correct in all material respects;
5. there has been no amendment or other document filed affecting
the articles of incorporation or bylaws of the Company since August 1,
1996, and no such amendment has been authorized. No event has occurred
since December 17, 1997, which has affected the good standing of the
Company under the laws of the State of California;
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6. 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 Company and its subsidiaries, taken as a whole, from
September 30, 1997;
7. on or prior to the Closing Date, there has been no downgrading
nor has any notice been given of (A) any intended or potential downgrading
or (B) any review or possible changes in rating, the direction of which
has not been indicated, in the rating, if any, accorded the Company or in
any rating accorded any securities of the Company, if any, by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of the Act; and
8. each person who, as an officer or representative of the
Company, signed or signs the Registration Statement, the Pooling and
Servicing Agreement, this Agreement, the Indemnification Agreement, the
Insurance Agreement, or any other document delivered pursuant hereto, on
the date of such execution, or on the Closing Date, as the case may be, in
connection with the transactions described in the Pooling and Servicing
Agreement, the Indemnification Agreement, the Insurance Agreement and this
Agreement was, at the respective times of such signing and delivery, and
is now, duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
The Company shall attach to such certificate a true and correct
copy of its certificate or articles of incorporation, as appropriate, and bylaws
which are in full force and effect on the date of such certificate and a
certified true copy of the resolutions of its Board of Directors with respect to
the transactions contemplated herein.
G. The Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date and in form and substance
satisfactory to the Underwriters, to the effect that:
1. the Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York and
has the power and authority to enter into and to take all actions required
of it under the Pooling and Servicing Agreement;
2. the Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as enforceability thereof may be limited by (A) bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally, as such laws would apply in the event of a
bankruptcy, insolvency or reorganization or similar occurrence affecting
the Trustee, and (B) general principles of equity regardless of whether
such enforcement is sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of
the Trustee in connection with its execution and delivery of the Pooling
and Servicing Agreement or the performance of its obligations thereunder;
4. the Certificates have been duly executed, authenticated and
delivered by the Trustee;
5. the execution and delivery of, and performance by the Trustee
of its obligations under, the Pooling and Servicing Agreement do not
conflict with or result in a violation of any statute or regulation
applicable to the Trustee, or the articles or bylaws of the Trustee, or to
the best knowledge
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<PAGE>
of such counsel, any governmental authority having jurisdiction over the
Trustee or the terms of any indenture or other agreement or instrument to
which the Trustee is a party or by which it is bound; and
6. in the event that the Servicer defaults in its obligation to
make advances under the Pooling and Servicing Agreement, the Trustee or
any affiliate of the Trustee, is not prohibited by a provision of its
Articles of Incorporation or Bylaws or by any provision of the banking and
trust laws of the United States of America or the State of New York, as
the case may be (or any rule, regulation, decree or order thereunder),
from assuming its obligation to make such advances.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the Trustee and
public officials. Such opinion may also assume the due authorization, execution
and delivery of the instruments and documents referred to therein by the parties
thereto other than the Trustee.
H. The Underwriters shall have received from the Trustee a
certificate, signed by the President, a senior vice president or an assistant
vice president of the Trustee, dated the Closing Date, to the effect that each
person who, as an officer or representative of the Trustee, signed or signs the
Certificates, the Pooling and Servicing Agreement or any other document
delivered pursuant hereto, on the date hereof or on the Closing Date, in
connection with the transactions described in the Pooling and Servicing
Agreement was, at the respective times of such signing and delivery, and is now,
duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such documents
are their genuine signatures.
I. The Policies relating to the Class A Certificates shall have
been duly executed and issued at or prior to the Closing Date and shall conform
in all material respects to the description thereof in the Prospectus.
J. The Underwriters shall have received a favorable opinion of
Kutak Rock, counsel to the Insurer, dated the Closing Date and in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
1. The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York.
The Insurer is validly licensed and authorized to issue the Policies and
perform its obligations under the Policies in accordance with the terms
thereof, under the laws of the State of New York.
2. The execution and delivery by the Insurer of the Policies, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all necessary
corporate action on the part of the Insurer; the Policies have been duly
executed and are the valid and binding obligations of the Insurer
enforceable in accordance with their terms except that the enforcement of
the Policies may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity.
3. The Insurer is authorized to deliver the Insurance Agreement,
and the Indemnification Agreement, and the Insurance Agreement and the
Indemnification Agreement have been duly executed and are the valid and
binding obligations of the Insurer enforceable in accordance with their
terms except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other
15
<PAGE>
similar laws affecting creditors' rights generally and by general
principles of equity and by public policy considerations relating to
indemnification for securities law violations.
4. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of
the Insurer, the lack of which would adversely affect the validity or
enforceability of the Policies; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the
Policies, the form of each Policy has been filed with, and approved by,
all governmental authorities having jurisdiction over the Insurer in
connection with such Policy.
5. To the extent the Policies constitute securities within the
meaning of Section 2(1) of the Act, they are securities that are exempt
from the registration requirements of the Act.
6. The information set forth under the caption "THE CERTIFICATE
INSURANCE POLICIES AND THE CERTIFICATE INSURER" in the Prospectus
Supplement dated December 9, 1997, insofar as such statements constitute a
description of the Policies, accurately summarizes the Policies.
In rendering this opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the Trustee,
the Insurer and public officials. Such opinion may assume the due authorization,
execution and delivery of the instruments and documents referred to therein by
the parties thereto other than the Insurer.
K. On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended or potential
downgrading or (B) any review or possible changes in rating, the direction of
which has not been indicated, in the rating, if any, accorded the Company or in
any rating accorded any securities of the Company, if any, by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of the Act.
L. On or prior to the Closing Date there shall not have occurred
any downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Insurer's
claims paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the Act.
M. 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 September 30, 1997, of (A) the
Company, its subsidiaries and affiliates or since September 30, 1997, of (B) the
Insurer, that is in the Underwriters' judgment material and adverse and that
makes it in the Underwriter's judgment impracticable to market the Class A
Certificates on the terms and in the manner contemplated in the Prospectus.
N. The Underwriters shall have received from the Insurer a
certificate, signed by the President, a senior vice president or a vice
president of the Insurer, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Policies, the Insurance
Agreement, the Indemnification Agreement and the related documents and that, to
the best of his or her knowledge based on reasonable investigation:
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<PAGE>
1. each person who as an officer or representative of the
Insurer, signed or signs the Policies, the Insurance Agreement, the
Indemnification Agreement or any other document delivered pursuant hereto,
on the date thereof, or on the Closing Date, in connection with the
transactions described in this Agreement was, at the respective times of
such signing and delivery, and is now a duly authorized representative of
the Insurer and is authorized to execute and deliver this certificate.
2. The financial data presented in the table set forth under the
heading "THE CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE INSURER"
in the Prospectus Supplement presents fairly the financial position of the
Insurer as of December 31, 1996 and September 30, 1997, respectively, and
to the best of the Insurer's knowledge since such date, no material and
adverse change has occurred in the financial position of the Insurer other
than as set forth in then Prospectus Supplement.
3. The audited financial statements dated as of December 31, 1996
and the unaudited financial statements dated as of September 30, 1997
incorporated by reference into the Prospectus Supplement are true and
accurate.
4. The information which relates to the Insurer or the Policies
under the caption titled "THE CERTIFICATE INSURANCE POLICIES AND THE
CERTIFICATE INSURER" in the Prospectus Supplement is true and correct in
all material respects.
5. There are no actions, suits, proceedings or investigations
pending or, to the best of the Insurer's knowledge, threatened against it
at law or in equity or before or by any court, governmental agency, board
or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise) or
operations or which would materially and adversely affect its ability to
perform its obligations under the Policies or the Insurance Agreement
dated as of December 1, 1997 (the "Insurance Agreement") among the
Insurer, First Alliance Mortgage Company, as Company, First Alliance
Mortgage Company, as Servicer, and The Bank of New York, as Trustee.
6. The execution and delivery of the Insurance Agreement and the
Policies and the compliance with the terms and provisions thereof will not
conflict with, result in a breach of, or constitute a default under any of
the terms, provisions or conditions of the Restated Charter or By-Laws of
the Insurer or of any agreement, indenture or instrument to which the
Insurer is a party.
7. The issuance of the Policies and the execution, delivery and
performance of the Insurance Agreement have been duly authorized by all
necessary corporate proceedings. No further approvals or filings of any
kind, including, without limitation, any further approvals or further
filing with any governmental agency or other governmental authority, or
any approval of the Insurer's board of directors or stockholders, are
necessary for the Policies and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
The officer of the Insurer certifying to items 2 and 3 shall be
an officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and correct
copy of its certificate or articles of incorporation, as appropriate, and its
bylaws, all of which are in full force and effect on the date of such
certificate.
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O. The Underwriters shall have received from Dewey Ballantine
LLP, special counsel to the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Certificates, the
Prospectus and such other related matters as the Underwriters shall reasonably
require.
P. The Underwriters and counsel for the Underwriters shall have
received copies of any opinions of counsel to the Company or the Insurer
supplied to the Trustee relating to matters with respect to the Certificates or
the Policies. Any such opinions shall be dated the Closing Date and addressed to
the Underwriter or accompanied by reliance letters to the Underwriters or shall
state that the Underwriters may rely thereon.
Q. The Underwriters shall have received such further information,
certificates and documents as the Underwriters may reasonably have requested not
fewer than three (3) full business days prior to the Closing Date.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all respects when and as provided in this Agreement, if
the Company is in breach of any covenants or agreements contained herein or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and counsel to the Underwriters, this
Agreement and all obligations of the Underwriters hereunder, may be canceled on,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Company in writing, or by telephone or
telegraph confirmed in writing.
7. Expenses. If the sale of the Class A Certificates provided for
herein is not consummated by reason of a default by the Company in its
obligations hereunder, then the Company will reimburse the Underwriters, upon
demand, for all reasonable out-of-pocket expenses (including, but not limited
to, the reasonable fees and expenses of Dewey Ballantine LLP) that shall have
been incurred by each of them in connection with their investigation with regard
to the Company and the Class A Certificates and the proposed purchase and sale
of the Class A Certificates.
8. Indemnification and Contribution. A. Regardless of whether any
Class A Certificates are sold, the Company will indemnify and hold harmless each
Underwriter, each of its respective officers and directors and each person who
controls such Underwriter within the meaning of the Act or the Securities
Exchange Act of 1934 (the "1934 Act"), against any and all losses, claims,
damages, or liabilities (including the cost of any investigation, legal and
other expenses incurred in connection with any amounts paid in settlement of any
action, suit, proceeding or claim asserted), joint or several, to which they may
become subject, under the Act, the 1934 Act or other federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained (i) in
the Registration Statement, or any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein, not misleading or (ii)
in the Basic Prospectus or the Prospectus Supplement or any amendment thereto or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and will reimburse each such indemnified party for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
18
<PAGE>
furnished to the Company by or on behalf of an Underwriter specifically for use
in connection with the preparation thereof.
B. Regardless of whether any Class A Certificates are sold, each
Underwriter severally agrees to indemnify and hold harmless the Company, each of
its officers and directors and each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act against any losses, claims,
damages or liabilities to which they or any of them become subject under the
Act, the 1934 Act or other federal or state law or regulation, at common law or
otherwise, to the same extent as the foregoing indemnity, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in (i) the Registration Statement, or any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading or in (ii) the Basic Prospectus or the
Prospectus Supplement or any amendment thereto or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such Underwriter specifically for use in the preparation thereof and so
acknowledged in writing, and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending against such loss, claim, damage, liability or action.
C. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Paragraphs A and B above such person
(hereinafter called the indemnified party) shall promptly notify the person
against whom such indemnity may be sought (hereinafter called the indemnifying
party) in writing thereof; but the omission to notify the indemnifying party
shall not relieve such indemnifying party from any liability which it may have
to any indemnified party otherwise than under such Paragraph. The indemnifying
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding any indemnified party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel, or (ii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
for all such indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by the
Underwriters in the case of parties indemnified pursuant to Paragraph A and by
the Company in the case of parties indemnified pursuant to Paragraph B. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
above, 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
19
<PAGE>
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. If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages or
liabilities referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the related Underwriters from the sale of
the Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only relative benefits referred to in clause (i) above but also the relative
fault of the Company and of the related Underwriters in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the related
Underwriters shall be deemed to be in such proportion so that the related
Underwriter is responsible for that portion determined by multiplying the total
amount of such losses, claims, damages and liabilities, including legal and
other expenses, by a fraction, the numerator of which is (x) the excess of the
Aggregate Resale Price of the Class A Certificates purchased by such Underwriter
over the aggregate purchase price of the Class A Certificates specified in
Section 4 of this Agreement and the denominator of which is (y) the Aggregate
Resale Price of the Class A Certificates purchased by such Underwriter and the
Company is responsible for the balance, provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of the immediately preceding
sentence, the "Aggregate Resale Price" of the Class A Certificates at the time
of any determination shall be the weighted average of the purchase prices (in
each case expressed as a percentage of the aggregate principal amount of the
Class A Certificates so purchased), determined on the basis of such principal
amounts, paid to the related Underwriter by all subsequent purchasers that
purchased the Class A Certificates on or prior to such date of determination.
The relative fault of the Company and the related Underwriter shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the related
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
E. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Paragraph D. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Paragraph D shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, the Underwriters shall not be required to contribute any amount in
excess of the amount by which the Aggregate Resale Price exceeds the amount of
any damages that the Underwriters have otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission.
20
<PAGE>
F. Each Underwriter agrees to provide the Company no later than
two Business Days prior to the day on which such materials are required to be
filed with a copy of any Computational Materials (as defined below) produced by
such Underwriter for filing with the Commission on Form 8-K.
G. Each Underwriter severally agrees, assuming all information
provided to it by the Company is accurate and complete in all material respects,
to indemnify and hold harmless the Company, each of the Company's officers and
directors and each person who controls the Company within the meaning of Section
15 of the Securities 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 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. The
obligations of an Underwriter under this Section 8(G) shall be in addition to
any liability which such Underwriter may otherwise have.
H. The Company and each Underwriter each expressly waive, and
agree not to assert, any defense to their respective indemnification and
contribution obligations under this Section 8 which they might otherwise assert
based upon any claim that such obligations are unenforceable under federal or
state securities laws or by reasons of public policy.
I. The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
each Underwriter within the meaning of the Act or the 1934 Act; and the
obligations of each Underwriter under this Section 8 shall be in addition to any
liability that such Underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each director of the Company and to each person,
if any, who controls the Company within the meaning of the Act or the 1934 Act;
provided, however, that in no event shall the Company or any Underwriter be
liable for double indemnification.
9. Information Supplied by the Underwriters. The statements set
forth in the last paragraph on the front cover page of the Prospectus regarding
market-making and under the heading "Underwriting" in the Supplement (to the
extent such statements relate to the Underwriters), together with the
Computational Materials, constitute the only information furnished by the
Underwriter to the Company for the purposes of Sections 2(B) and 8(A) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
The Company will cause any Computational Materials (as defined
below) with respect to the Class A Certificates which are delivered by any
Underwriter to the Company to be filed with the Commission on a Current Report
on Form 8-K (the "Form 8-K -- Computational Materials") not later than the date
on which such materials are required to be filed pursuant to the Kidder/PSA
Letters (as defined below), provided, however, that the Company shall have no
obligation to file any materials which, in the reasonable determination of the
Company after consultation with such Underwriter, (i) are not required to be
filed pursuant to the Kidder/PSA Letters or (ii) contain any erroneous
information or 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; it being understood, however, that the Company shall have no
obligation to review or pass upon the accuracy or adequacy of, or to correct,
any Computational Materials provided by any Underwriter to the Depositor as
aforesaid. For purposes hereof, as to each Underwriter, the term "Computational
Materials" shall mean those materials delivered by an Underwriter to the Company
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the
21
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Commission to Kidder, Peabody Acceptance Corporation I and certain affiliates,
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 (together, the "Kidder/PSA Letters") for which the filing of such
material is a condition of the relief granted in such letters.
10. Notices. All communications hereunder shall be in writing
and, if sent to the Representative, shall be mailed or delivered or telecopied
and confirmed in writing to the Representative at Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: Len Blum;
and, if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed in writing to the Company at the address set forth above, Attention:
Director of Secondary Marketing.
11. Survival. All representations, warranties, covenants and
agreements of the Company contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriters and the Company
contained in Section 8 hereof, and the representations, warranties and
agreements of the Underwriters contained in Section 3 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriters or any controlling persons, or any subsequent
purchaser or the Company or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Certificates. The
provisions of Sections 5, 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Termination. The Underwriters shall have the right to
terminate this Agreement by giving notice as hereinafter specified at any time
at or prior to the Closing Date if (a) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (b) trading of any securities
of the Company shall have been suspended on any exchange or in any
over-the-counter market, (c) a general moratorium on commercial banking
activities shall have been declared by either federal or New York State
authorities, (d) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis which,
in the Representative's reasonable judgment, is material and adverse, and, in
the case of any of the events specified in clauses (a) through (d), such event
singly or together with any other such event makes it in the Representative's
reasonable judgment impractical to market the Class A Certificates. Any such
termination shall be without liability of any other party except that the
provisions of Paragraph G of Section 5 (except with respect to expenses of the
Underwriters) and Sections 7 and 8 hereof shall at all times be effective. If
the Underwriters elect to terminate this Agreement as provided in this Section
12, the Company shall be notified promptly by the Underwriters by telephone,
telegram or facsimile transmission, in any case, confirmed by letter.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns
(which successors and assigns do not include any person purchasing a Certificate
from the Underwriters), and the officers and directors and controlling persons
referred to in Section 8 hereof and their respective successors and assigns, and
no other persons will have any right or obligations hereunder.
14. Applicable Law; Venue. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York. Any
action or proceeding brought to enforce or arising out of any provision of this
Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the
22
<PAGE>
jurisdiction of such courts and agree to waive any defense or claim of forum non
conveniens they may have with respect to any such action or proceeding brought.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
16. 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 parties hereto.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto hereby execute this Underwriting
Agreement, as of the day and year first above written.
FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Mark Mason
------------------------------------
Name: Mark Mason
Title: Executive Vice President, CFO
PRUDENTIAL SECURITIES INCORPORATED,
As Representative of the Several Underwriters
By: /s/ Len Blum
------------------------------------
Name: Len Blum
Title: Managing Director
{UNDERWRITING AGREEMENT SIGNATURE PAGE}
<PAGE>
Schedule A
CLASS A-1 CERTIFICATES (1)
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Prudential Securities Incorporated $26,400,000 $26,315,520.00
First Union Capital Markets Corp. 17,600,000 17,543,680.00
----------
Total $44,000,000 $43,859,200.00
=========== ==============
CLASS A-2 CERTIFICATES (2)
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Prudential Securities Incorporated $7,200,000 $7,176,960.00
First Union Capital Markets Corp. 4,800,000 4,784,640.00
---------
Total $12,000,000 $11,961,600.00
=========== ==============
CLASS A-3 CERTIFICATES
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Prudential Securities Incorporated $30,000,000 $29,904,000.00
First Union Capital Markets Corp. 20,000,000 19,936,000.00
----------
Total $50,000,000 $49,840,000.00
=========== ==============
(1) Plus accrued interest from December 1, 1997 to (but not including) December
22, 1997 at the Class A-1 Pass-Through Rate.
(2) Plus accrued interest from December 1, 1997 to (but not including) December
22, 1997 at the Class A-2 Pass-Through Rate.
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
FIRST ALLIANCE MORTGAGE LOAN TRUST
1997-4
Among
FIRST ALLIANCE MORTGAGE COMPANY,
as Company
FIRST ALLIANCE MORTGAGE COMPANY,
as Servicer
and
THE BANK OF NEW YORK,
as Trustee
Dated as of December 1, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION................................... 1
1.1. Definitions................................................. 1
1.2. Use of Words and Phrases................................... 28
1.3. Captions; Table of Contents................................ 28
1.4. Opinions................................................... 28
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST......................... 28
2.1. Establishment of the Trust................................. 28
2.2. Office..................................................... 28
2.3. Purposes and Powers........................................ 29
2.4. Appointment of the Trustee; Declaration of Trust........... 29
2.5. Expenses of Trustee........................................ 29
2.6. Ownership of the Trust..................................... 29
2.7. Situs of the Trust......................................... 29
2.8. Miscellaneous REMIC Provisions............................. 29
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY AND THE SERVICER;
COVENANT OF COMPANY TO CONVEY MORTGAGE LOANS........................ 30
3.1. Representations and Warranties of the Company.............. 30
3.2. Representations and Warranties of the Servicer............. 32
3.3. Representations and Warranties of the Company
with Respect to the Mortgage Loans....................... 35
3.4. Covenants of the Company to Take Certain Actions
with Respect to the Mortgage Loans In Certain Situations. 37
3.5. Conveyance of the Mortgage Loans........................... 38
3.6. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans;
Certification by Trustee................................... 42
3.7. Cooperation Procedures..................................... 43
3.8. Conveyance of the Subsequent Mortgage Loans................ 43
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES................................... 45
4.1. Issuance of Certificates................................... 45
4.2. Sale of Certificates....................................... 45
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.............................. 46
5.1. Terms...................................................... 46
5.2. Forms...................................................... 46
5.3. Execution, Authentication and Delivery..................... 46
5.4. Registration and Transfer of Certificates.................. 47
5.5. Mutilated, Destroyed, Lost or Stolen Certificates.......... 48
5.6. Persons Deemed Owners...................................... 49
5.7. Cancellation............................................... 49
5.8. Limitation on Transfer of Ownership Rights................. 49
5.9. Assignment of Rights....................................... 50
ARTICLE VI
COVENANTS........................................................... 50
6.1. Distributions.............................................. 50
6.2. Money for Distributions to be Held in Trust; Withholding... 50
6.3. Protection of Trust Estate................................. 51
6.4. Performance of Obligations................................. 51
6.5. Negative Covenants......................................... 52
6.6. No Other Powers............................................ 52
6.7. Limitation of Suits........................................ 52
6.8. Unconditional Rights of Owners to Receive Distributions.... 53
6.9. Rights and Remedies Cumulative............................. 53
6.10. Delay or Omission Not Waiver............................... 53
6.11. Control by Owners.......................................... 53
6.12. Access to Owners of Certificates' Names and Addresses...... 54
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES................................ 54
7.1. Collection of Money........................................ 54
7.2. Establishment of Accounts.................................. 54
7.3. The Certificate Insurance Policies......................... 54
7.4 Pre-Funding Account and Capitalized Interest Account....... 56
7.5. Flow of Funds.............................................. 57
7.6. Investment of Accounts..................................... 60
7.7. Eligible Investments....................................... 61
7.8. Reports by Trustee......................................... 62
7.9. Additional Reports by Trustee.............................. 64
7.10. Group II Available Funds Cap Trust......................... 64
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...................... 64
8.1. Servicer and Sub-Servicers................................. 64
8.2. Collection of Certain Mortgage Loan Payments............... 66
8.3. Sub-Servicing Agreements Between Servicer and
Sub-Servicers............................................ 66
8.4. Successor Sub-Servicers.................................... 66
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8.5. Liability of Servicer...................................... 67
8.6. No Contractual Relationship Between Sub-Servicer and
Trustee or the Owners.................................... 67
8.7. Assumption or Termination of Sub-Servicing Agreement
by Trustee............................................... 67
8.8. Principal and Interest Account............................. 67
8.9. Delinquency Advances, Compensating Interest and
Servicing Advances....................................... 68
8.10. Purchase of Mortgage Loans................................. 69
8.11. Maintenance of Insurance................................... 70
8.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................... 70
8.13. Realization Upon Defaulted Mortgage Loans.................. 71
8.14. Trustee to Cooperate; Release of Files..................... 72
8.15. Servicing Compensation..................................... 73
8.16. Annual Statement as to Compliance.......................... 73
8.17. Annual Independent Certified Public Accountants' Reports... 73
8.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans............................. 73
8.19. Assignment of Agreement.................................... 74
8.20. Events of Servicing Termination............................ 74
8.21. Resignation of Servicer and Appointment of Successor....... 76
8.22. Waiver of Past Events of Servicing Termination............. 79
8.23. Inspections by Certificate Insurer; Errors and Omissions
Insurance................................................ 79
8.24. Merger, Conversion, Consolidation or Succession to
Business of Servicer..................................... 79
8.25. Notices of Material Events................................. 79
8.26. Monthly Servicing Report and Servicing Certificate......... 80
8.27. Indemnification by the Company............................. 82
8.28. Indemnification by the Servicer............................ 82
ARTICLE IX
TERMINATION OF TRUST................................................ 83
9.1. Termination of Trust....................................... 83
9.2. Termination Upon Option of Servicer........................ 83
9.3. Termination Upon Loss of REMIC Status...................... 84
9.4. Disposition of Proceeds.................................... 85
9.5. Netting of Amounts......................................... 85
ARTICLE X
THE TRUSTEE......................................................... 85
10.1. Certain Duties and Responsibilities........................ 85
10.2. Removal of Trustee for Cause............................... 87
10.3. Certain Rights of the Trustee.............................. 88
10.4. Not Responsible for Recitals or Issuance of Certificates... 90
10.5. May Hold Certificates...................................... 90
10.6. Money Held in Trust........................................ 90
10.7. No Lien for Fees........................................... 90
10.8. Corporate Trustee Required; Eligibility.................... 90
10.9. Resignation and Removal; Appointment of Successor.......... 90
10.10. Acceptance of Appointment by Successor Trustee............. 91
10.11. Merger, Conversion, Consolidation or Succession to
Business of the Trustee............92
10.12. Reporting; Withholding..................................... 92
10.13. Liability of the Trustee................................... 92
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10.14. Appointment of Co-Trustee or Separate Trustee.............. 93
10.15 Reserved................................................... 94
ARTICLE XI
MISCELLANEOUS....................................................... 94
11.1. Compliance Certificates and Opinions....................... 94
11.2. Form of Documents Delivered to the Trustee................. 94
11.3. Acts of Owners............................................. 95
11.4. Notices, etc. to Trustee................................... 95
11.5. Notices and Reports to Owners; Waiver of Notices........... 96
11.6. Rules by Trustee and the Company........................... 96
11.7. Successors and Assigns..................................... 96
11.8. Severability............................................... 96
11.9. Benefits of Agreement...................................... 96
11.10. Legal Holidays............................................. 96
11.11. Governing Law.............................................. 97
11.12. Counterparts............................................... 97
11.13. Usury...................................................... 97
11.14. Amendment.................................................. 97
11.15. REMIC Status; Taxes........................................ 98
11.16. Additional Limitation on Action and Imposition
of Tax................................................... 99
11.17. Appointment of Tax Matters Person..........................100
11.18. The Certificate Insurer....................................100
11.19. Maintenance of Records.....................................100
11.20. Notices....................................................100
<PAGE>
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 B -- Mortgage Loan Schedule
EXHIBIT C -- Form of Class R Certificate
EXHIBIT D -- Form of Certificate Re: Mortgage Loans Prepaid in full After the
Cut-Off Date
EXHIBIT E -- Form of Initial Certification
EXHIBIT F -- Form of Final Certification
EXHIBIT G -- Form of Delivery Order
EXHIBIT H -- Form of Class R Tax Matters Transfer Certificate
EXHIBIT I -- Form of Notice for Certificate Insurance Policy
EXHIBIT J -- Form of Monthly Report
EXHIBIT K -- Form of Request for Release
EXHIBIT L -- Form of Subsequent Transfer Agreement
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POOLING AND SERVICING AGREEMENT, relating to FIRST ALLIANCE
MORTGAGE LOAN TRUST 1997-4, dated as of December 1, 1997, by and among FIRST
ALLIANCE MORTGAGE COMPANY, a California corporation (the "Company"), the Company
in its fiduciary capacity as servicer of the Trust (the "Servicer"), and THE
BANK OF NEW YORK, a New York banking corporation, in its capacity as trustee
(the "Trustee").
WHEREAS, the Company wishes to establish (x) the Trust and two
subtrusts and (y) the Group II Available Funds Cap Trust and provide for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution thereof;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed 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 Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate
Insurer") is intended to be a third party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Company, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. 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
7.2, 7.10(a) or 8.8 hereof.
"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 3.8 hereof, notice given not less than three Business Days prior to the
related Subsequent Transfer Date of the Company'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 to be delivered for
inclusion in each such Group.
"Agreement": This Pooling and Servicing Agreement, as it may
be amended from time to time, and including the Exhibits hereto.
"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.
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"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Company
and the Servicer, initially including those individuals whose names appear on
the lists of Authorized Officers delivered on the Startup Day, and with respect
to the Trustee, any Vice President, Assistant Vice President, Assistant
Treasurer or Assistant Secretary of the Trustee.
"Available Funds": With respect to Group I, the Group I
Available Funds and with respect to Group II, the Group II Available Funds.
"Available Funds Shortfall": Any of the Group I Available
Funds Shortfall or the Group II Available Funds Shortfall.
"Balloon Loan": Any Mortgage Loan which has an amortization
schedule which extends beyond its maturity date, resulting in an unamortized
principal balance due in a single payment at maturity.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the States of New York and
California 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 7.2(b) hereof and maintained by
the Trustee.
"Certificate": Any one of the Class A 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 7.2(a) hereof and maintained by the Trustee; provided
that the funds in such account shall not be commingled with any other funds held
by the Trustee.
"Certificate Insurance Policies": The Fixed Rate Certificate
Insurance Policy and the Variable Rate Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation or any
successor thereto, as issuer of the Certificate Insurance Policies.
"Certificate Insurer Default": The existence and continuance
of any of the following:
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policies in accordance with their terms; or
(b)(i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of or in
respect of the Certificate Insurer under any applicable United States, federal
or state law, or appointing a custodian, receiver, liquidator, rehabilitator,
assignee, trustee, sequestrator or other similar official of any substantial
part of the Certificate Insurer's property, or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
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(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the filing by the Certificate
Insurer to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Certificate Insurer of any substantial part of its
property, or the failure of the Certificate Insurer to pay debts generally as
they become due, or the admission by the Certificate Insurer in writing of its
inability to pay its debts generally as they become due.
"Certificate Principal Balance": As to the Class A-1
Certificates, the Class A-1 Certificate Principal Balance, as to the Class A-2
Certificates, the Class A-2 Certificate Principal Balance and as to the Class
A-3 Certificates, the Class A-3 Certificate Principal Balance. The Class R
Certificates do not have a "Certificate Principal Balance".
"Class": All of the Class A-1 Certificates, all of the Class
A-2 Certificates, all of the Class A-3 Certificates or all of the Class R
Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates,
the Class A-2 Certificates or the Class A-3 Certificates.
"Class A Distribution Amount": Any of the Class A-1
Distribution Amount, the Class A-2 Distribution Amount or the Class A-3
Distribution Amount.
"Class A-1 Carry-Forward Amount": With respect to any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-1 Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution made to the Owners of the Class A-1 Certificates on such
immediately preceding Payment Date and (ii) 30 days' interest on the interest
portion of such amount at the Class A-1 Pass-Through Rate.
"Class A-1 Certificate": Any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein. The Class A-1
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed on account of the Class A-1
Principal Distribution Amount pursuant to Section 7.5(d)(iv)(B)(1) hereof with
respect to principal thereon on all prior Payment Dates.
"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 interest
accruing after the Cut-Off Date and as of any Payment Date, the aggregate amount
of interest accrued on the Class A-1 Certificate Principal Balance immediately
prior to such Payment Date during the related Interest Accrual Period at the
Class A-1 Pass-Through Rate.
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"Class A-1 Distribution Amount": The sum of (x) the Group I
Principal Distribution Amount payable to the Owners of the Class A-1
Certificates pursuant to Section 7.5(d)(iv)(B)(1) and (y) the Class A-1 Current
Interest.
"Class A-1 Pass-Through Rate": 6.710% per annum.
"Class A-2 Carry-Forward Amount": With respect to any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-2 Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution made to the Owners of the Class A-2 Certificates on such
immediately preceding Payment Date and (ii) 30 days' interest on the interest
portion of such amount at the Class A-2 Pass-Through Rate.
"Class A-2 Certificate": Any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto
representing the right to distributions as set forth herein. The Class A-2
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Original Certificate Principal Balance of the Class A-2
Certificates less any amounts actually distributed on account of the Class A-2
Distribution Amount pursuant to Section 7.5(d)(iv)(B)(2) hereof made with
respect to principal thereon on all prior Payment Dates.
"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 interest
accruing after the Cut-Off Date and as of any Payment Date, the aggregate amount
of interest accrued on the Class A-2 Certificate Principal Balance immediately
prior to such Payment Date during the related Interest Accrual Period at the
Class A-2 Pass-Through Rate.
"Class A-2 Distribution Amount": The sum of (x) the Group I
Principal Distribution Amount payable to the Owners of the Class A-2
Certificates pursuant to Section 7.5(d)(iv)(B)(2) hereof and (y) the Class A-2
Current Interest.
"Class A-2 Pass-Through Rate": 7.130% per annum; provided that
on any Payment Date after the Clean-Up Call Date, the Class A-2 Pass-Through
Rate shall be the lesser of (x) 7.630% and (y) the Group I Available Funds Cap.
"Class A-3 Carry-Forward Amount": With respect to any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-3 Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution made to the Owners of the Class A-3 Certificates on such
immediately preceding Payment Date and (ii) 30 days' interest on the interest
portion of such amount at the Class A-3 Pass-Through Rate.
"Class A-3 Certificate": Any Certificate designated as a
"Class A-3 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein. The Class A-3
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
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"Class A-3 Certificate Principal Balance": As of any time of
determination, the Original Certificate Principal Balance of the Class A-3
Certificates less any amounts actually distributed on account of the Class A-3
Principal Distribution Amount pursuant to Section 7.5(d)(iv)(D) hereof with
respect to principal thereon on all prior Payment Dates.
"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 interest
accruing after the Cut-Off Date and as of any Payment Date, the aggregate amount
of interest accrued on the Class A-3 Certificate Principal Balance immediately
prior to such Payment Date during the related Interest Accrual Period at the
Class A-3 Pass-Through Rate.
"Class A-3 Distribution Amount": The sum of (x) the Group II
Principal Distribution Amount payable to the Owners of the Class A-3
Certificates pursuant to Section 7.5(d)(iv)(D) hereof and (y) the Class A-3
Current Interest.
"Class A-3 Formula Pass-Through Rate": The rate determined by
clause (x) of the definition of "Class A-3 Pass-Through Rate."
"Class A-3 Pass-Through Rate": For the initial Payment Date,
6.230%. As of any Payment Date thereafter, the lesser of (x) LIBOR plus, in the
case of any Payment Date on or prior to the Clean-Up Call Date, 0.23% per annum,
or in the case of any Payment Date thereafter, 0.46% per annum and (y) the Group
II Available Funds Cap for such Payment Date.
"Class A-3 Termination Date": December 20, 2027.
"Class R Certificate": Any of those Certificates representing
certain residual rights to distributions from the REMIC, designated as a "Class
R Certificate" on the face thereof, in the form of Exhibit C hereto and
evidencing an interest designated as the "residual interest" in the Trust for
purposes of the REMIC Provisions.
"Clean-Up Call Date": The date on which the outstanding
aggregate Loan Balance of the Mortgage Loans in the Trust has declined to 10% or
less of the Maximum Collateral Amount.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property and with
respect to any Second Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining principal balance, as of origination of the Second Mortgage Loan
of the Senior Lien note(s) relating to such Second Mortgage Loan and (ii) the
Original Principal Amount of the Note relating to such Second Mortgage Loan
divided by (b) the Appraised Value of the related Property.
"Compensating Interest": As defined in Section 8.9(b) hereof.
"Corporate Trust Office": The principal office of the Trustee
at 101 Barclay Street, New York, New York 10286, attention: First Alliance
Mortgage Loan Trust 1997-4 or any other office of the Trustee designated as such
hereunder.
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"Coupon Rate": The rate of interest borne by each Note.
"Current Interest": As of any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest and the Class A-3
Current Interest.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Remittance Period as part of a payment that is in
excess of the amount of the monthly payment due for such Remittance Period and
which is not a Paid-in-Full Mortgage Loan, nor is intended to cure a
delinquency.
"Cut-Off Date": December 1, 1997.
"Delinquency Advance": As defined in Section 8.9(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the second day of the month
immediately succeeding the month in which such payment was due. 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 Company to the Trustee on the Startup Day
pursuant to Section 4.1 hereof.
"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 the
Principal and Interest Account or the Certificate Account, an institution whose
deposits are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, the long-term deposits of which shall be rated (x) A
or better by Standard & Poor's and (y) A2 or better by Moody's and in one of the
highest short-term rating categories, unless otherwise approved in writing by
the Certificate Insurer and each of Moody's and Standard & Poor's, and which is
any of the following: (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer, Moody's and Standard & Poor's and, in each
case acting or designated by the Servicer as the depository institution for the
Principal and Interest Account; provided, however, that any such institution or
association shall have combined capital, surplus and undivided profits of at
least $100,000,000. Notwithstanding the foregoing, the Principal and Interest
Account or the Certificate Account may be held by (a) the Trustee or (b) an
institution otherwise meeting the preceding requirements except that the only
applicable rating requirement shall be that the unsecured and uncollateralized
debt obligations thereof shall be rated Baa3 or better by Moody's if such
institution has trust powers and the Principal and Interest Account is held by
such institution in its trust capacity and not in its commercial capacity.
"Determination Date": As to each Remittance Date, the 12th day
of each month, or if such day is not a Business Day, the next succeeding
Business Day.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
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"Disqualified Organization": "Disqualified Organization" shall
have the meaning set forth from time to time in the definition thereof at
Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Due Date": The first day of the month of the related Payment
Date.
"Due Period": With respect to any Payment Date, the period
commencing on the second day of the month preceding the month of such Payment
Date (or, with respect to the first Due Period, the day following the Cut-Off
Date) and ending on the related Due Date.
"Eligible Investments": Those investments so designated
pursuant to Section 7.7 hereof.
"Event of Default": Any event described in clauses (a) or (b)
of Section 8.20 hereof.
"Event of Servicing Termination": Any event as described in
Section 8.20 hereof.
"Excess Subordinated Amount": With respect to any Mortgage
Loan Group and Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to the related Mortgage Loan Group on such Payment Date after
taking into account the payment of the related Class A Distribution Amounts on
such Payment Date (except for any distributions of related Subordination
Reduction Amounts on such Payment Date) over (y) the related Specified
Subordinated Amount for such Payment Date.
"Fannie Mae": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.5 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the mortgage file pursuant to this Agreement.
"Final Certification": The final certification in the form set
forth as Exhibit F hereto and delivered by the Trustee to the Company within 90
days after the Startup Day pursuant to Section 3.6 hereof.
"Final Determination": As defined in Section 9.3(a) hereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"Fixed Rate Certificate": Any of the Class A-1 Certificates or
the Class A-2 Certificates.
"Fixed Rate Certificate Carry-Forward Amount": With respect to
any Payment Date, the sum of the Class A-1 Carry-Forward Amount and the Class
A-2 Carry-Forward Amount.
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"Fixed Rate Certificate Insurance Policy": The certificate
guaranty insurance policy (number 25444) dated December 22, 1997 issued by the
Certificate Insurer to the Trustee for the benefit of the Owners of the Fixed
Rate Certificates.
"Fixed Rate Certificate Current Interest": The sum of the
Class A-1 Current Interest and the Class A-2 Current Interest.
"Fixed Rate Certificate Principal Balance": As of any time of
determination, the sum of the Class A-1 Certificate Principal Balance and the
Class A-2 Certificate Principal Balance.
"Fixed Rate Distribution Amount": The sum of the Class A-1
Distribution Amount and the Class A-2 Distribution Amount.
"Funding Period": With respect to each of Group I and Group
II, the 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 Pre-Funding Account Earnings with
respect to such Group) is less than $100,000, (ii) the date on which the
Servicer may be removed pursuant to Section 8.20(a) or (b) hereof and (iii)
December 31, 1997.
"Group I": The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having been assigned to Group I,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group I Amortized Subordinated Amount Requirement": As of any
date of determination, the product of (x) 1.60% and (y) the Group I Maximum
Collateral Amount.
"Group I Available Funds": As defined in Section 7.3(a)(i)
hereof.
"Group I Available Funds Cap": The weighted average of the
Coupon Rates on the Mortgage Loans in Group I less the sum of the rates at which
(i) the Group I Servicing Fee, (ii) the Group I Trustee Fee and (iii) the Group
I Premium Amount are calculated.
"Group I Available Funds Shortfall": As defined in Section
7.5(d)(ii)(A).
"Group I Capitalized Interest Requirement": $40,681.57.
"Group I Initial Specified Subordinated Amount": $0.00.
"Group I Insured Payment": As defined in the Fixed Rate
Certificate Insurance Policy.
"Group I Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all scheduled interest collected by
the Servicer during the related Due Period, with respect to the Mortgage Loans
in Group I, (ii) all Delinquency Advances relating to interest made by the
Servicer on such Remittance Date with respect to Group I and (iii) all
Compensating Interest paid by the Servicer on such Remittance Date with respect
to Group I.
"Group I Maximum Collateral Amount": $56,000,000.
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"Group I Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group I Interest Remittance Amount for such Remittance
Date and (ii) the Group I Principal Remittance Amount for such Remittance Date.
"Group I Original Aggregate Loan Balance": The aggregate Loan
Balances of all Initial Mortgage Loans in Group I as of the Cut-Off Date, i.e.,
$44,699,563.80.
"Group I Preference Amount": As defined in the Fixed Rate
Certificate Insurance Policy.
"Group I Premium Amount": As to any Payment Date beginning
with the third Payment Date, the product of one-twelfth of (x) the Group I
Premium Percentage and (y) the Fixed Rate Certificate Principal Balance on such
Payment Date (before taking into account any distributions of principal to be
made to the Owners of the Fixed Rate Certificates on such Payment Date).
"Group I Premium Percentage": As defined in the Insurance
Agreement.
"Group I Principal Distribution Amount": With respect to the
Fixed Rate Certificates on the first Payment Date, the Group I Initial Specified
Subordinated Amount, if any and for the first Payment Date and for any Payment
Date thereafter, the lesser of:
(x) the Group I Total Available Funds plus any Group I Insured
Payment minus the Fixed Rate Certificates Current Interest for
such Payment Date; and
(y) the excess, if any, of (i) the sum, without duplication of:
(a) the Fixed Rate Certificate Carry-Forward
Amount,
(b) the principal portion of all scheduled
monthly payments on the Mortgage Loans in
Group I due on or prior to the related Due
Date during the related Due Period, to the
extent actually received by the Trustee on
or prior to the related Remittance Date or
to the extent advanced by the Servicer on or
prior to the related Remittance Date and any
Prepayments made by the respective
Mortgagors during the related Remittance
Period,
(c) the Loan Balance of each Mortgage Loan in
Group I that either was repurchased by the
Company or an Originator or purchased by the
Servicer on the related Remittance Date, to
the extent such Loan Balance is actually
received by the Trustee on or prior to the
related Remittance Date,
(d) any Substitution Amounts delivered by the
Company or an Originator on the related
Remittance Date in connection with a
substitution of a Mortgage Loan in Group I
(to the extent such Substitution Amounts
relate to principal), to the extent such
Substitution Amounts are actually received
by the Trustee on or prior to the related
Remittance Date,
(e) all Net Liquidation Proceeds actually
collected by the Servicer with respect to
the Mortgage Loans in Group I during the
related Remittance Period (to the extent
such Net Liquidation Proceeds relate to
principal) to the extent actually received
by the Trustee on or prior to the related
Remittance Date,
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(f) the amount of any Group I Subordination
Deficit for such Payment Date,
(g) the proceeds received by the Trustee of any
termination as set forth in Article IX
hereof of Group I (to the extent such
proceeds related to principal),
(h) any moneys released from the Pre-Funding
Account as a prepayment of the Fixed Rate
Certificates on the Payment Date which
immediately follows the end of the Funding
Period, and
(i) the amount of any Subordination Increase
Amount with respect to Group I for such
Payment Date, to the extent of any Net
Monthly Excess Cashflow available for such
purpose;
over
(ii) the amount of any Subordination Reduction Amount with
respect to Group I for such Payment Date.
"Group I Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the scheduled principal actually
collected by the Servicer with respect to Mortgage Loans in Group I during the
related Due Period, (ii) Prepayments collected in the related Remittance Period,
(iii) the Loan Balance of each such Mortgage Loan in Group I that either was
repurchased by an Originator or by the Company or purchased by the Servicer on
such Remittance Date, to the extent such Loan Balance was actually deposited in
the Principal and Interest Account, (iv) any Substitution Amounts delivered by
the Company 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 such Remittance Date, (v) all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Mortgage Loans in Group
I during the related Due Period (to the extent such Liquidation Proceeds related
to principal), (vi) all Delinquency Advances relating to principal made by the
Servicer on such Remittance Date with respect to Group I and (vii) the amount of
any investment losses required to be deposited by the Company or the Servicer
pursuant to Sections 7.6(e) or 8.8(b).
"Group I Projected Net Monthly Excess Cashflow": As of any
date of calculation, Net Monthly Excess Cashflow relating to Group I (other than
any Subordination Reduction Amount included therein), as calculated pursuant to
Section 7.5(d)(iii) hereof on the Payment Date immediately preceding such date
of calculation.
"Group I Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group I Insured Payments previously received by the Trustee
and not previously repaid to the Certificate Insurer pursuant to Section
7.5(d)(ii)(C) or Section 7.5(d)(ii)(D) hereof plus (ii) interest accrued on each
such Group I Insured Payment not previously repaid calculated at the Late
Payment Rate from the date the Trustee received the related Group I Insured
Payment to, but not including, such Payment Date and (y)(i) any amounts then due
and owing to the Certificate Insurer relating to Group I under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee and the Company of the amount of
any Group I Reimbursement Amount.
"Group I Servicing Fee": With respect to Group I, as to any
Payment Date, the product of (x) one-twelfth of 0.50% and (y) the aggregate Loan
Balances of the Mortgage Loans in Group I as of the
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opening of business on the first day of the related Remittance Period. Such
Servicing Fee is retained by the Servicer pursuant to Sections 8.8(c)(i) and
8.15 hereof.
"Group I Specified Subordinated Amount": Means (a) for any
Payment Date occurring during the period commencing on the Startup Day and
ending on the later of (i) the date upon which principal equal to one-half of
the Group I Maximum Collateral Amount has been received and (ii) the 30th
Payment Date following the Startup Day, the greater of (A) the Group I Amortized
Subordinated Amount Requirement and (B) two (2) times the excess of (x) one-half
of the aggregate Loan Balances of all Mortgage Loans in Group I which are 90 or
more days Delinquent (including REO Properties) over (y) five times the Group I
Projected Net Monthly Excess Cashflow as of such Payment Date; and (b) for any
Payment Date occurring after the end of the period in clause (a) above, the
greatest of (i) the lesser of (A) the Group I Amortized Subordinated Amount
Requirement and (B) two (2) times the Group I Amortized Subordinated Amount
Requirement stated as a percentage of the Original Certificate Principal Balance
of the Fixed Rate Certificates times the current Fixed Rate Certificate
Principal Balance, (ii) two (2) times the excess of (A) one-half of the
aggregate Loan Balances of all Mortgage Loans in Group I which are 90 or more
days Delinquent (including REO Properties) over (B) three times the Group I
Projected Net Monthly Excess Cashflow as of such Payment Date and (iii) an
amount equal to 0.50% of the Group I Maximum Collateral Amount; provided,
however, notwithstanding the above, in the event that any Group I Insured
Payment or Group II Insured Payment is made by the Certificate Insurer, the
amount described in this clause (b) shall remain equal to the Group I Amortized
Subordinated Amount Requirement. The Specified Subordinated Amount may be
reduced or eliminated by the Certificate Insurer in its sole discretion. Prior
to any such reduction or elimination, the Servicer and the Certificate Insurer
shall give written notice to the Rating Agencies.
"Group I Subordinated Amount": As of any Payment Date, the
difference, if any, between (x) the sum of (i) the aggregate Loan Balances of
the Mortgage Loans in Group I as of the close of business on the last day of the
related Remittance Period and (ii) any amount on deposit in the Pre-Funding
Account at such time exclusive of any Pre-Funding Account Earnings related to
Group I and (y) the Fixed Rate Certificate Principal Balance as of such Payment
Date (after taking into account the payment of the Fixed Rate Distribution
Amount (except for any portion thereof related to an Insured Payment) on such
Payment Date).
"Group I Subordination Deficit": With respect to Group I and
any Payment Date, the amount, if any, by which (x) the Fixed Rate Certificate
Principal Balance, after taking into account the payment of the Group I
Principal Distribution Amount on such Payment Date (except any payment to be
made as to principal from the proceeds of the Fixed Rate Certificate Insurance
Policy), exceeds (y) the sum of (a) the aggregate Loan Balances of the Mortgage
Loans in Group I as of the close of business on the last day of the related Due
Period and (b) the amount, if any, on deposit in the Pre-Funding Account
exclusive of any Pre-Funding Account Earnings related to Group I as of the close
of business on the last day of the related Remittance Period; provided that for
the purpose of calculating Loan Balances to determine if a Subordination Deficit
exists, the aggregate amount of the principal component of all unreimbursed
Delinquency Advances shall be deducted from the related actual Loan Balances.
"Group I Total Available Funds": As defined in Section
7.3(a)(i) hereof.
"Group I Total Available Funds Shortfall": As defined in
Section 7.3(b) hereof.
"Group I Total Monthly Excess Spread": With respect to Group I
and any Payment Date, the difference between (i) the interest which is collected
on the Mortgage Loans in Group I during the related Remittance Period, less the
Group I Servicing Fee plus the interest portion of any Delinquency Advances
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and Compensating Interest paid by the Servicer with respect to Group I for such
Remittance Period and (ii) the sum of (x) the interest due on the Fixed Rate
Certificates on such Payment Date and (y) the Group I Premium Amount and the
Group I Trustee Fee, if any, for such Payment Date.
"Group I Trustee Fee": The amount payable monthly to the
Trustee on each Payment Date, in an amount equal to the product of (x)
one-twelfth of 0.02% and (y) the Fixed Rate Certificate Principal Balance as of
the opening of business on the first day of the preceding Remittance Period.
"Group II": The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having been assigned to Group II,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group II Amortized Subordinated Amount Requirement": As of
any date of determination, the product of (x) 2.20% and (y) the Group II Maximum
Collateral Amount.
"Group II Available Funds": As defined in Section 7.3(a)
hereof.
"Group II Available Funds Cap": As of any Payment Date, the
weighted average of the Coupon Rates on the Mortgage Loans in Group II less the
sum of (a) the rates of which (i) the Group II Servicing Fee, (ii) the Group II
Trustee Fee, (iii) beginning on the third Payment Date, the Group II Premium
Amount are determined and (b) beginning on the seventh Payment Date, 0.50% per
annum expressed as a percentage of the Mortgage Loans in Group II.
"Group II Available Funds Cap Carry-Forward Amortization
Amount": As of any Payment Date, any amount distributed from the Group II
Available Funds Cap Carry-Forward Amount Account on such Payment Date pursuant
to Section 7.5(e) hereof.
"Group II Available Funds Cap Carry-Forward Amount": As of any
Payment Date, the excess, if any, of (x) the sum of (i) the excess, if any,
equal to (a) the aggregate amount of interest due on the Class A-3 Certificates
on all prior Payment Dates, calculated at the Class A-3 Formula PassThrough Rate
applicable to each such Payment Date over (b) the aggregate amount of interest
due on the Class A-3 Certificates on all prior Payment Dates, calculated at the
Class A-3 Pass-Through Rate applicable to each such Payment Date, (ii) the
amount, if any, described in clause (iii) hereof as of the immediately preceding
Payment Date and (iii) the product of (a) one-twelfth of the Class A-3 Formula
Pass-Through Rate on such Payment Date and (b) the sum of the amounts described
in clauses (i) and (ii) preceding over (y) all Group II Available Funds Cap
Carry-Forward Amortization Amounts actually funded on all prior Payment Dates.
"Group II Available Funds Cap Carry-Forward Amount Account":
The Available Funds Cap Carry-Forward Amount Account established in accordance
with Section 7.10 hereof and maintained by the Trustee.
"Group II Available Funds Cap Trust": The First Alliance
Available Funds Cap Trust 1997-4 created pursuant to Section 7.10(a) hereof.
"Group II Available Funds Shortfall": As defined in Section
7.5(d)(ii)(A).
"Group II Capitalized Interest Requirement": $38,247.38.
"Group II Initial Specified Subordinated Amount": $0.00.
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"Group II Insured Payment": As defined in the Variable Rate
Certificate Insurance Policy.
"Group II Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all scheduled interest collected by
the Servicer during the related Due Period with respect to the Mortgage Loans in
Group II, (ii) all Delinquency Advances relating to interest made by the
Servicer on such Remittance Date with respect to Group II, and (iii) all
Compensating Interest paid by the Servicer on such Remittance Date with respect
to Group II.
"Group II Maximum Collateral Amount": $50,000,000.
"Group II Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Remittance
Date and (ii) the Group II Principal Remittance Amount for such Remittance Date.
"Group II Original Aggregate Loan Balance": The aggregate Loan
Balances of all Initial Mortgage Loans in Group II as of the Cut-Off Date, i.e.,
$35,313,006.05.
"Group II Preference Amount": As defined in the Variable Rate
Certificate Insurance Policy.
"Group II Premium Amount": As to any Payment Date on or after
the third Payment Date, the product of one-twelfth of (x) the Group II Premium
Percentage and (y) the Class A-3 Certificate Principal Balance on such Payment
Date (before taking into account any distributions of principal to be made to
the Owners of Class A-3 Certificates on such Payment Date).
"Group II Premium Percentage": As defined in the Insurance
Agreement.
"Group II Principal Distribution Amount": With respect to the
Class A-3 Certificates on the first Payment Date, the Group II Initial Specified
Subordinated Amount, if any, and for the first Payment Date and for any Payment
Date thereafter, the lesser of:
(x) the Group II Total Available Funds plus any Group II Insured
Payment minus the Class A-3 Current Interest for such Payment
Date; and
(y) the excess, if any, of (i) the sum, without any duplication
of:
(a) the Class A-3 Carry-Forward Amount,
(b) the principal portion of all scheduled
monthly payments on the Mortgage Loans in
Group II due on or prior to the related Due
Date during the related Due Period, to the
extent actually received by the Trustee on
or prior to the related Remittance Date or
to the extent advanced by the Servicer on or
prior to the related Remittance Date and any
Prepayments made by the respective
Mortgagors during the related Remittance
Period,
(c) the Loan Balance of each Mortgage Loan in
Group II that either was repurchased by the
Company or an Originator or purchased by the
Servicer on the related Remittance Date, to
the extent such Loan Balance is actually
received by the Trustee, on or prior to the
related Remittance Date,
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(d) any Substitution Amounts delivered by the
Company or an Originator on the related
Remittance Date in connection with a
substitution of a Mortgage Loan in Group II
(to the extent such Substitution Amounts
relate to principal), to the extent such
Substitution Amounts are actually received
by the Trustee, on or prior to the related
Remittance Date,
(e) all Net Liquidation Proceeds actually
collected by the Servicer with respect to
the Mortgage Loans in Group II during the
related Remittance Period (to the extent
such Net Liquidation Proceeds relate to
principal) to the extent actually received
by the Trustee, on or prior to the related
Remittance Date,
(f) the amount of any Group II Subordination
Deficit for such Payment Date,
(g) the proceeds received by the Trustee of any
termination as set forth in Article IX
hereto of Group II (to the extent such
proceeds related to principal),
(h) any moneys released from the Pre-Funding
Account as a prepayment of the Class A-3
Certificates on the Payment Date which
immediately follows the end of the Funding
Period, and
(i) the amount of any Subordination Increase
Amount with respect to Group II for such
Payment Date, to the extent of any Net
Monthly Excess Cashflow available for such
purpose;
over
(ii) the amount of any Subordination Reduction
Amount with respect to Group II for such
Payment Date.
"Group II Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the scheduled principal actually
collected by the Servicer with respect to Mortgage Loans in Group II during the
related Due Period, (ii) the Prepayments collected in the related Remittance
Period, (iii) the Loan Balance of each such Mortgage Loan in Group II that
either was repurchased by an Originator or by the Company or purchased by the
Servicer on such Remittance Date, to the extent such Loan Balance was actually
deposited in the Principal and Interest Account, (iv) any Substitution Amounts
delivered by the Company 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 such Remittance Date, (v) all Net Liquidation
Proceeds actually collected by the Servicer with respect to such Mortgage Loans
in Group II during the related Due Period (to the extent such Liquidation
Proceeds related to principal), (vi) all Delinquency Advances relating to
principal made by the Servicer on such Remittance Date with respect to Group II
and (vii) the amount of any investment losses required to be deposited by the
Company or the Servicer pursuant to Sections 7.6(e) and 8.8(b) hereof.
"Group II Projected Net Monthly Excess Cashflow": As of any
date of calculation, Net Monthly Excess Cashflow relating to Group II (other
than any Subordination Reduction Amount included therein), as calculated
pursuant to Section 7.5(d)(iii) hereof on the Payment Date immediately preceding
such date of calculation.
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"Group II Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group II Insured Payments previously received by the Trustee
and not previously repaid to the Certificate Insurer pursuant to Sections
7.5(d)(ii)(C) and 7.5(d)(ii)(D) hereof plus (ii) interest accrued on each such
Group II Insured Payment not previously repaid calculated at the Late Payment
Rate from the date the Trustee received the related Group II Insured Payment to,
but not including, such Payment Date and (y)(i) any amounts then due and owing
to the Certificate Insurer relating to Group II under the Insurance Agreement
plus (ii) interest on such amounts at the Late Payment Rate. The Certificate
Insurer shall notify the Trustee and the Company of the amount of any Group II
Reimbursement Amount.
"Group II Servicing Fee": With respect to Group II, as to any
Payment Date, the product of (x) one-twelfth of 0.50% and (y) the aggregate Loan
Balances of the Mortgage Loans in Group II as of the opening of business on the
first day of the related Remittance Period. Such Servicing Fee is retained by
the Servicer pursuant to Sections 8.8(c)(i) and 8.15 hereof.
"Group II Specified Subordinated Amount": Means (a) for any
Payment Date occurring during the period commencing on the Startup Day and
ending on the later of (i) the date upon which principal equal to one-half of
the Group II Maximum Collateral Amount has been received and (ii) the 30th
Payment Date following the Startup Day, the greater of (A) the Group II
Amortized Subordinated Amount Requirement and (B) two times the excess of (x)
one-half of the aggregate Loan Balances of all Mortgage Loans in Group II which
are 90 or more days Delinquent (including REO Properties) over (y) five times
the Group II Projected Net Monthly Excess Cashflow as of such Payment Date; and
(b) for any Payment Date occurring after the end of the period in clause (a)
above, the greatest of (i) the lesser of (A) the Group II Amortized Subordinated
Amount Requirement and (B) two (2) times the Group II Amortized Subordinated
Amount Requirement stated as a percentage of the Original Certificate Principal
Balance of the Class A-3 Certificates times the current Class A-3 Certificate
Principal Balance, (ii) two (2) time the excess of (A) one-half of the aggregate
Loan Balances of all Mortgage Loans in Group II which are 90 or more days
Delinquent (including REO Properties) over (B) three times the Group II
Projected Net Monthly Excess Cashflow as of such Payment Date and (iii) an
amount equal to 0.50% of the Group II Maximum Collateral Amount; provided,
however, notwithstanding the above, in the event that any Group I Insured
Payment or Group II Insured Payment is made by the Certificate Insurer, the
Group II Specified Subordinated Amount shall remain equal to the Group II
Amortized Subordinated Amount Requirement.
"Group II Subordinated Amount": As of any Payment Date, the
difference, if any, between (x) the sum of (i) the aggregate Loan Balances of
the Mortgage Loans in Group II as of the close of business on the last day of
the related Remittance Period and (ii) any amount on deposit in the Pre-Funding
Account at such time exclusive of any Pre-Funding Account Earnings related to
Group II and (y) the Class A-3 Certificate Principal Balance as of such Payment
Date (after taking into account the payment of the Class A-3 Distribution Amount
(except for any portion thereof related to an Insured Payment) on such Payment
Date).
"Group II Subordination Deficit": With respect to Group II and
any Payment Date, the amount, if any, by which (x) the Class A-3 Certificate
Principal Balance, after taking into account the payment of the Group II
Principal Distribution Amount on such Payment Date (except any payment to be
made as to principal from the proceeds of the Variable Rate Certificate
Insurance Policy), exceeds (y) the sum of (a) the aggregate Loan Balances of the
Mortgage Loans in Group II as of the close of business on the last day of the
related Due Period and (b) the amount, if any, on deposit in the Pre-Funding
Account exclusive of any Pre-Funding Account Earnings related to Group II as of
the close of business on the last day of the related Remittance Period; provided
that for the purpose of calculating Loan Balances to determine if a
Subordination Deficit exists, the aggregate amount of the principal component of
all unreimbursed Delinquency Advances shall be deducted from the related actual
Loan Balances.
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<PAGE>
"Group II Total Available Funds": As defined in Section
7.3(a)(ii) hereof.
"Group II Total Available Funds Shortfall": As defined in
Section 7.3(b) hereof.
"Group II Total Monthly Excess Spread": With respect to Group
II and any Payment Date, the difference between (i) the interest which is
collected on the Mortgage Loans in Group II during the related Remittance
Period, less the Group II Servicing Fee for such Remittance Period plus the
interest portion of any Delinquency Advances and Compensating Interest paid by
the Servicer with respect to Group II for such Remittance Period and (ii) the
sum of (x) the interest due on the Class A-3 Certificates on such Payment Date
and (y) the Group II Premium Amount, and the Group II Trustee Fee, if any, for
such Payment Date.
"Group II Trustee Fee": The amount payable monthly to the
Trustee on each Payment Date, in an amount equal to the product of (x)
one-twelfth of 0.02% and (y) the Class A-2 Certificate Principal Balance as of
the opening of business on the first day of the related Remittance Period.
"Highest Lawful Rate": As defined in Section 11.13.
"Indemnification Agreement": The Indemnification Agreement
dated as of December 9, 1997, among the Certificate Insurer, the Company and the
Underwriters.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"Initial Certification": The initial certification in the form
set forth as Exhibit E hereto and delivered by the Trustee to the Company on the
Startup Day pursuant to Section 3.6 hereof.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to
the Trust by the Company on the Startup Day.
"Initial Premiums": The initial premium (covering three
months) for Group I and Group II payable by the Company on behalf of the Trust
to the Certificate Insurer in consideration of the delivery to the Trustee of
each of the Certificate Insurance Policies.
"Insurance Agreement": The Insurance Agreement dated as of
December 1, 1997, among the Company, the Servicer, the Trustee and the
Certificate Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary
mortgage insurance policy relating to a Mortgage Loan.
"Insured Payment": A Group I Insured Payment or a Group II
Insured Payment.
"Interest Accrual Period": With respect to the Fixed Rate
Certificates and any Payment Date, the calendar month immediately preceding such
Payment Date. A "Calendar Month" shall be deemed to be 30 days. With respect to
the Class A-3 Certificates and any Payment Date, the period commencing on the
immediately preceding Payment Date (or in the case of the first Payment Date,
the Startup Day) and ending on the day immediately preceding the current Payment
Date. All calculations of interest on the Fixed Rate Certificates will be made
on the basis of a 360-day year assumed to consist of twelve 30-day months and
all calculations of interest on the Class A-3 Certificates will be made on the
basis of the actual number of days elapsed in the related Interest Accrual
Period and in a year of 360 days.
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"Interest Determination Date": With respect to any Interest
Accrual Period for the Class A-3 Certificates, the second London Business Day
preceding such Interest Accrual Period.
"Late Payment Rate": For any Payment Date, the rate of
interest, as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Latest Termination Date": The later to occur of (i) the Class
A-2 Certificate Termination Date and (ii) the Class A-3 Certificate Termination
Date.
"LIBOR": With respect to any Interest Accrual Period for the
Class A-3 Certificates, the rate determined by the Trustee on the related
Interest Determination Date on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits, as such rates appear on Telerate Page
3750, as of 11:00 a.m. (London time) on such Interest Determination Date. On
each Interest Determination Date, LIBOR for the related Interest Accrual Period
will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the
nearest whole multiple of 0.0625%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related Interest Accrual Period shall be the higher of (i)
LIBOR as determined on the previous Interest Determination
Date and (ii) the Reserve Interest Rate.
"Liquidated Loan": As defined in Section 8.13(b) hereof. A
Mortgage Loan which is purchased from the Trust pursuant to Section 3.4, 3.6 or
8.10 hereof is not a "Liquidated Loan".
"Liquidation Expenses": Expenses which are incurred by the
Servicer in connection with the liquidation of any defaulted Mortgage Loan, such
expenses, including, without limitation, legal fees and expenses, and any
unreimbursed Servicing Advances expended by the Servicer pursuant to Sections
8.9(c) and 8.13 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 the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Initial Mortgage Loan,
the principal balance thereof on the Cut-Off Date, and with respect to each
Subsequent Mortgage Loan, the principal balance thereof on the relevant
Subsequent Cut-Off Date less, in either case, any related Principal Remittance
Amounts relating to such Mortgage Loan included in previous related Monthly
Remittance Amounts that were received by the Servicer or any Sub-Servicer
whether or not delivered to the Trustee, however, that the Loan Balance for any
Mortgage Loan which 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.
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<PAGE>
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 3.4, 3.6 or
8.10 hereof, an amount equal to the Loan Balance of such Mortgage Loan as of the
date of purchase, plus one month's interest on the outstanding Loan Balance
thereof as of the beginning of the preceding Remittance Period computed at the
Coupon Rate less the Servicing Fee (expressed as an annual percentage rate), if
any, together with, without duplication, the aggregate amount of (i) all
delinquent interest, all Delinquency Advances and Servicing Advances theretofore
made with respect to such Mortgage Loan and not subsequently recovered from the
related Mortgage Loan and (ii) all Delinquency Advances which the Servicer or
any Sub-Servicer has theretofore failed to remit with respect to such Mortgage
Loan.
"London Business Day": A day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
"Maximum Collateral Amount": $106,000,000.
"Monthly Exception Report": The monthly report delivered by
the Servicer to the Trustee on each Determination Date, commencing with the
Determination Date in January 1998, pursuant to Section 8.8(d)(ii). Each Monthly
Exception Report shall cover the immediately preceding Remittance Period and
shall consist of (i) an activity report of the Mortgage Loans setting forth the
Loan Balance of Mortgage Loans as of the first day of the related Remittance
Period, scheduled payments due, Prepayments, Liquidated Loan balances, and the
resulting Loan Balance of the Mortgage Loans as of the last day of the related
Remittance Period and (ii) separate reports of (a) payoffs, Curtailments,
foreclosures and bankruptcies such reports to provide the payment details for
each Mortgage Loan covering the immediately preceding Remittance Period and any
Prepayments not previously reported from a prior Remittance Period, and (b)
Prepayments and delinquencies, such reports to reflect the current status of
each Mortgage Loan with payment details as of the last day of the related
Remittance Period.
"Monthly Remittance Amount": With respect to Group I, the
Group I Monthly Remittance Amount and with respect to Group II, the Group II
Monthly Remittance Amount.
"Monthly Servicing Report": As defined in Section 8.26.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Note.
"Mortgage Loans": Such of the mortgage loans (including
Initial Mortgage Loans and Subsequent Mortgage Loans) transferred and assigned
to the Trust pursuant to Section 3.5(a) and Section 3.8 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 the terms "First Mortgage Loan" and
"Second Mortgage Loan." 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
Company, in fact was not transferred and assigned to the Trust for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement.
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<PAGE>
"Mortgage Loan Group": Either Group I or Group II. References
herein to the related Class of Class A Certificates, when used with respect to a
Mortgage Loan Group, shall mean (A) in the case of Group I, the Fixed Rate
Certificates and (B) in the case of Group II, the Class A-3 Certificates.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section
7.5(d)(iii) hereof.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Trustee.
"Operative Documents": Collectively, this Agreement, the
Certificate Insurance Policies, the Certificates, the Insurance Agreement, the
Underwriting Agreement, any Sub-Servicing Agreement, the Registration Statement
and the Indemnification Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances
of all Initial Mortgage Loans as of the Cut-Off Date, i.e., $80,012,569.85.
"Original Certificate Principal Balance": As of the Startup
Day and as to each Class of Class A Certificates, the original Certificate
Principal Balances thereof, as follows:
Class A-1 Certificates $44,000,000
Class A-2 Certificates $12,000,000
Class A-3 Certificates $50,000,000
The Class R Certificates do not have an Original Certificate
Principal Balance.
"Original Group I Pre-Funded Amount": $11,300,436.20.
"Original Group II Pre-Funded Amount": $14,686,993.95.
"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 $25,987,430.15.
"Original Principal Amount": With respect to each Note, the
principal amount of such Note on the date of origination thereof.
"Originator": The Company and any entity from which the
Company acquires Mortgage Loans.
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<PAGE>
"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 canceled by the Trustee or
delivered to the Trustee 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 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; and
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.5 hereof.
(v) Certificates as to which the Trustee has made the
final distribution thereon, whether or not such Certificates have been
returned to the Trustee.
"Overfunded Interest Amount": With respect to each Subsequent
Transfer Date, the sum, if any, of (A) with respect to the Fixed Rate
Certificates, the excess of (i) the product of (x) a fraction, the numerator of
which is the aggregate Loan Balances of the Subsequent Mortgage Loans related to
Group I acquired by the Trust on such Subsequent Transfer Date and the
denominator of which is the Original Group I Pre-Funded Amount and (y) the
amount related to Group I in the Capitalized Interest Account on such Subsequent
Transfer Date over (ii) the Group I Capitalized Interest Requirement after
taking into account any transfers described in Section 7.4(e) hereof and (B)
with respect to the Class A-3 Certificates, the excess of (i) the product of (x)
a fraction, the numerator of which is the aggregate Loan Balances of the
Subsequent Mortgage Loans related to Group II acquired by the Trust on such
Subsequent Transfer Date and the denominator of which is the Original Group II
Pre-Funded Amount and (y) the amount related to Group II in the Capitalized
Interest Account on such Subsequent Transfer Date over (ii) the Group II
Capitalized Interest Requirement after taking into account any transfers
described in Section 7.4(e) hereof.
"Owner": The Person in whose name a Certificate is registered
in the Register, to the extent described in Section 5.6.
"Paid-in-Full Mortgage Loan": With respect to any Payment
Date, a Mortgage Loan on which the entire obligation of the related Mortgagor
has been satisfied and the lien on the property may be removed during the
related Remittance Period.
"Pass-Through Rate": As to the Class A-1 Certificates, the
Class A-1 Pass-Through Rate and as to the Class A-2 Certificates, the Class A-2
Pass-Through Rate and as to the Class A-3 Certificates, the Class A-3
Pass-Through Rate.
"Payment Date": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 20th day of each month, or
if such day is not a Business Day, the next succeeding Business Day, commencing
in the month following the Startup Day.
"Percentage Interest": As to any Class A Certificate, that
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance set forth on such Certificate as of the Cut-Off
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Date and the denominator of which is the Original Certificate Principal Balance
of all Class A Certificates of the same Class as of the Cut-Off Date; and as to
any Class R Certificate, that Percentage Interest set forth on such Class R
Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Expected Losses": With respect to any period,
the sum of (i) all Realized Losses with respect to the Mortgage Loans
experienced during such period and (ii) the product of (A) 0.43 and (B) with
respect to any date of determination, the sum of (x) 25% of the Loan Balances of
all Mortgage Loans which are greater than 30 days Delinquent and less than 60
days Delinquent, (y) 50% of the Loan Balances of all Mortgage Loans which are
greater than 60 days Delinquent and less than 90 days Delinquent, and (z) 100%
of the Loan Balances of all Mortgage Loans which are greater than 90 days
Delinquent (including REO Properties).
"Pool Cumulative Realized Losses": With respect to any period,
the sum of all Realized Losses experienced since the Startup Date with respect
to the Mortgage Loans.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate
principal balances of all Mortgage Loans 90 or more days Delinquent (including
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
"Pool Principal Balance": The aggregate principal balances of
the Group I Mortgage Loans and the Group II Mortgage Loans.
"Pool Rolling Three Month Delinquency Rate": As of any Payment
Date, the fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Payment Dates) immediately preceding Remittance Periods.
"Preference Amount": Either of the Group I Preference Amount
or the Group II Preference Amount.
"Pre-Funded Amount": With respect to any Determination Date,
the amount remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.2(b) hereof and maintained by the Trustee.
"Pre-Funding Account Earnings": With respect to the initial
Payment Date, the actual investment earnings earned during the period from the
Startup Day through December 31, 1997 (inclusive) on the Pre-Funding Account
during such period as calculated by the Trustee pursuant to Section 3.8(e)
hereof.
"Premium Amount": As to any Payment Date beginning on the
third Payment Date, the Group I Premium Amount and the Group II Premium Amount.
"Premium Percentage": The Group I Premium Percentage or the
Group II Premium Percentage.
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"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the 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": A Curtailment or a Paid-in-Full Mortgage Loan.
"Preservation Expenses": Expenditures made by the 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": Collectively, each principal
and interest account created by the Servicer pursuant to Section 8.8(a) hereof,
or pursuant to any Sub-Servicing Agreement.
"Principal Remittance Amount": As applicable, the Group I
Principal Remittance Amount or 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 Company's Prospectus dated September 10,
1996.
"Prospectus Supplement": The First Alliance Mortgage Loan
Trust 1997-4 Prospectus Supplement dated December 9, 1997 to the Prospectus.
"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 and the Trust Estate.
"Qualified Mortgage": The meaning set forth from time to time
in the definition thereof at Section 860G(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust and the Mortgage Loan Groups.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 3.4 or 3.6 hereof, which (i) bears a fixed rate
of interest if the Mortgage Loan to be substituted for is in Group I or bears a
variable rate of interest if the Mortgage Loan to be substituted for is in Group
II, (ii) has a Coupon Rate at least equal to the Coupon Rate of the Mortgage
Loan being replaced (which, in the case of a Mortgage Loan in Group II, shall
mean a Mortgage Loan having the same interest rate index, a margin over such
index and a maximum interest rate at least equal to those applicable to the
Mortgage Loan being replaced), (iii) is of the same or better property type and
the same or better occupancy status as the replaced Mortgage Loan, (iv) shall be
of the same or better credit quality classification (determined in accordance
with the Originators' credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than February 1, 2028 for Group I and
February 1, 2028 for Group II, (vi) has a Combined Loan-to-Value Ratio as of the
Cut-Off Date, no higher than the Combined Loan-to-Value Ratio of the replaced
Mortgage Loan at such time, (vii) has a Loan Balance as of the related
Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced
Mortgage Loan as of such Replacement Cut-Off Date, (viii) 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, all as
evidenced by an Officer's Certificate of
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the Company delivered to the Trustee and the Certificate Insurer prior to any
such substitution, (ix) is of the same lien status or better lien status (x) is
not Delinquent, (xi) meets the representations and warranties set out in Section
3.3 hereof and (xii) a valid fixed rate Mortgage Loan, if the Mortgage Loan to
be substituted for is in Group I, and is a valid variable rate Mortgage Loan, if
the Mortgage Loan to be substituted for is in Group II. In the event that one or
more mortgage loans are proposed to be substituted for one or more mortgage
loans, the Certificate Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Certificate
Insurer, as evidenced by a written approval delivered to the Trustee by the
Certificate Insurer, except that the requirement of clauses (vi) and (viii)
hereof must be satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which the Loan Balance thereof as of the date of liquidation is in
excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, the last
Business Day of the calendar month immediately preceding the calendar month in
which such Payment Date occurs.
"Reference Banks": Bankers Trust Company, Barclay's 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 Company or any affiliate thereof, (iii) whose quotations
appear on the Telerate Page 3750 on the relevant Interest Determination Date and
(iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Trustee in
accordance with Section 5.4 hereof, in which the names of the Owners are set
forth.
"Registrar": The Trustee, acting in its capacity as Trustee
appointed pursuant to Section 5.4 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by
the Company with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and Prospectus Supplement
constituting a part thereof.
"Reimbursement Amount": A Group I Reimbursement Amount or a
Group II Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"Remittance Date": Any date on which the Servicer is required
to remit moneys on deposit in the Principal and Interest Account to the
Certificate Account, which shall be the day two Business Days prior to the
related Payment Date, commencing two days prior to the first Payment Date.
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"Remittance Period": The period (inclusive) beginning on the
first day of the calendar month immediately preceding the month in which a
Remittance Date occurs and ending on the last day of such immediately preceding
calendar month.
"REO Property": A Property acquired by the Servicer or any
Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Register under the nominee name of the
Depository.
"Request for Release": The request for release in the form set
forth as Exhibit K hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 0.0625%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residual Net Monthly Excess Cashflow": With respect to any
Payment Date, the aggregate Net Monthly Excess Cashflow, if any, remaining with
respect to each of the Mortgage Loan Groups after the making of all applications
described in Sections 7.5(d)(i), 7.5(d)(ii), 7.5(d)(iii) and 7.5(d)(iv) hereof.
"Responsible Officer": When used with respect to the Trustee,
any officer assigned to the corporate trust group (or any successor thereto),
including any vice president, assistant vice president, trust officer, any
assistant secretary, any assistant treasurer, any trust officer or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Schedules of Mortgage Loans": The Schedules of Mortgage
Loans, separated by Mortgage Loan Group, with respect to the 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 Group I or Group
II as of each Subsequent Transfer Date in accordance with Sections 3.5(a) and
3.8 hereof. Such Schedules of Mortgage Loans shall identify each Mortgage Loan
by the Servicer's loan number and address (including the state) of the Property
and shall set forth as to each Mortgage Loan the lien status, the Combined
Loan-to-Value Ratio, the Loan Balance as of the Cut-Off Date or Subsequent
Cut-Off Date, as the case may be, the Coupon Rate thereof (or, with respect to
Mortgage Loans in Group II, the index, the margin) the current scheduled monthly
payment of principal and interest and the maturity of the related Note, the
property type, occupancy status, Appraised Value and the Originator of the
Mortgage Loan, all as delivered to the Trustee in physical and computer readable
form and delivered to the Certificate Insurer in physical form.
"Second Mortgage Loan": A Mortgage Loan which constitutes a
second priority mortgage lien with respect to the related Property.
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"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien.
"Servicer": First Alliance Mortgage Company, a California
corporation, and its permitted successors and assigns.
"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.
"Servicing Advance": As defined in Section 8.9(c) and Section
8.13 hereof.
"Servicing Certificate": A certificate completed by and
executed by an Authorized Officer of the Trustee as attached hereto in the form
of Exhibit J.
"Six Month LIBOR Loans": Mortgage Loans whose interest rates
adjust semi-annually based on the London interbank offered rate for six-month
United States Dollar deposits in the London Market and as published in The Wall
Street Journal.
"Specified Subordinated Amount": As applicable, the Group I
Specified Subordinated Amount or the Group II Specified Subordinated Amount.
"Standard & Poor's": Standard & Poor's Rating Services, a
Division of The McGraw-Hill Companies.
"Startup Day": December 22, 1997.
"Subordinated Amount": As applicable, the Group I Subordinated
Amount or the Group II Subordinated Amount.
"Subordination Deficiency Amount": With respect to any
Mortgage Loan Group and Payment Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Mortgage Loan Group and Payment Date over
(ii) the Subordinated Amount applicable to such Mortgage Loan Group and Payment
Date prior to taking into account the payment of any related Subordination
Increase Amounts on such Payment Date.
"Subordination Deficit": As applicable, the Group I
Subordination Deficit or the Group II Subordination Deficit.
"Subordination Increase Amount": With respect to any Mortgage
Loan Group and Payment Date, the lesser of (i) the Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amount on such Payment Date (except for any
Subordination Increase Amount)) and (ii) the aggregate amount of Net Monthly
Excess Cashflow to be allocated to such Mortgage Loan Group pursuant to Sections
7.5(d)(iii)(A) and 7.5(d)(iii)(B) on such Payment Date.
"Subordination Reduction Amount": With respect to any Mortgage
Loan Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Mortgage Loan
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Group and Payment Date and (y) the Principal Remittance Amount with respect to
such Mortgage Loan Group for the related Remittance Period.
"Subsequent Cut-Off Date": The beginning of business on the
date specified in a Subsequent Transfer Agreement with respect to those
Subsequent Mortgage Loans which are transferred and assigned to the Trust
pursuant to the related Subsequent Transfer Agreement.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust for inclusion in Group I or Group II pursuant to Section 3.8 hereof, which
shall be listed on the Schedules 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 and the
Company substantially in the form of Exhibit L hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date so specified in each
Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with whom the Servicer has entered
into a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 8.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and any Sub-Servicer relating to servicing and/or administration of
certain Mortgage Loans as permitted by Section 8.3.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on such amount calculated at the Coupon Rate net of
the Servicing Fee of the Mortgage Loan being replaced.
"Tax Matters Person": The Tax Matters Person appointed
pursuant to Section 11.17 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 Notice": As defined in Section 9.3(b) hereof.
"Termination Price": As defined in Section 9.2(a) hereof.
"Total Monthly Excess Cashflow": As defined in Section
7.5(d)(ii) hereof.
"Total Monthly Excess Spread": As applicable, the Group I
Total Monthly Excess Spread or the Group II Total Monthly Excess Spread.
"Trust": First Alliance Mortgage Loan Trust 1997-4, the trust
created under this Agreement.
"Trust Estate": Collectively, all money, instruments and other
property, to the extent such money, instruments and other property are subject
or intended to be held in trust, and in the subtrusts, for
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the benefit of the Owners, including all proceeds thereof, including, without
limitation, (i) the Mortgage Loans, (ii) such amounts, including Eligible
Investments, as from time to time may be held in all Accounts (except as
otherwise provided herein), (iii) any Property, the ownership of which has been
effected on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust, (iv) any Insurance Policies relating to the Mortgage Loans and any
rights of the Company under such Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Loan, (vi) the Certificate Insurance
Policies and (vii) the proceeds of any of the above.
"Trustee": The Bank of New York located on the date of
execution of this Agreement at 101 Barclay Street, New York, New York 10286, not
in its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": The fee payable monthly to the Trustee equal to
the sum of the Group I Trustee Fee and the Group II Trustee Fee.
"Underwriters": Prudential Securities Incorporated and First
Union Capital Markets Corp.
"Underwriting Agreement": The Underwriting Agreement dated as
of December 9, 1997 between the Underwriters and the Company.
"Variable Rate Certificate Insurance Policy": The certificate
guaranty insurance policy (number 25443) dated December 22, 1997 issued by the
Certificate Insurer to the Trustee for the benefit of the Owners of the Class
A-3 Certificates.
Section 1.2. 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 1.1 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.
Section 1.3. 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 1.4. 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.
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.1. Establishment of the Trust. The parties hereto do
hereby create and establish, pursuant to the laws of the State of New York and
this Agreement, the Trust, which, for convenience, shall be known as "First
Alliance Mortgage Loan Trust 1997-4" and which shall contain two subtrusts.
Section 2.2. Office. The office of the Trust shall be in care
of the Trustee, at 101 Barclay Street, New York, New York 10286, or at such
other address as the Trustee may designate by notice to the Company, the
Servicer, the Owners and the Certificate Insurer.
Section 2.3. Purposes and Powers. The purpose of the Trust is
to engage in the following activities and only such activities: (i) the issuance
of the Certificates and the acquiring, owning and holding of Mortgage Loans and
the Trust Estate 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 result in the loss of REMIC status for the Trust.
Section 2.4. Appointment of the Trustee; Declaration of Trust.
The Company 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 10.8 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 and the Certificate Insurer, as their interests may appear.
Section 2.5. Expenses of Trustee. The expenses of the Trust,
including (i) any portion of the Trustee Fee not paid pursuant to Section
7.5(d)(i) hereof, (ii) any reasonable expenses of the Trustee, and (iii) any
other expenses of the Trust that have been reviewed by the Servicer, which
review shall not be required in connection with the enforcement of a remedy by
the Trustee resulting from a default under this Agreement, shall be paid
directly by the Servicer. The Servicer shall pay directly the reasonable fees
and expenses of counsel to 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 Servicer on the Startup Day.
Section 2.6. Ownership of the Trust. On the Startup Day the
ownership interests in the Trust and the subtrusts shall be transferred as set
forth in Section 4.2 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 5.4 and 5.8 hereof.
Section 2.7. Situs of the Trust. It is the intention of the
parties hereto that the Trust constitute a trust under the laws of the State of
New York. The Trust will be created and administered in, the State of New York.
The Trust's only office will be at the office of the Trustee as set forth in
Section 2.2 hereof.
Section 2.8. Miscellaneous REMIC Provisions. (a) The Trust
(other than the Pre-Funding Account, the Group II Available Funds Cap
Carry-Forward Amount Account and the
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Capitalized Interest Account) shall elect to be treated as a REMIC under Section
860D of the Code, as described in Section 11.15. 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 the election of the Trust
(other than the Pre-Funding Account and the Capitalized Interest Account) to be
treated as a REMIC.
(b) The Class A Certificates are hereby designated as "regular
interests" in the REMIC and the Class R Certificates are hereby designated as
the "residual interest" in the REMIC, as defined in Section 860G(a) of the Code.
(c) The Startup Day is hereby designated as the "startup day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code.
(d) The final scheduled Payment Date for any Class of
Certificates is hereby set to be the Payment Date succeeding by one year the
latest maturity date of any Mortgage Loan in the related Mortgage Loan Group, as
follows:
Class Final Scheduled Payment Date
----- ----------------------------
Class A-1 Certificates April 20, 2024
Class A-2 Certificates April 20, 2029
Class A-3 Certificates December 20, 2027
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY AND THE SERVICER;
COVENANT OF COMPANY TO CONVEY MORTGAGE LOANS
Section 3.1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer and to the Owners as of the Startup Day that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California
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 Company has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Company is a party by the Company and
its performance and compliance with the terms of this Agreement and of
the other Operative Documents to which it is a party have been duly
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authorized by all necessary corporate action on the part of the Company
and will not violate the Company's Articles 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 the Company is a party or by which the Company 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 Company or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Company is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Company, enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement hereof and 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 Company 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 might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Company or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under the other Operative Documents to which it is a
party.
(e) No action, suit, proceeding or investigation is pending
or, to the best of the Company's knowledge, threatened against the
Company which, individually or in the aggregate, might have
consequences that would prohibit the Company from entering into this
Agreement or any other Operative Document to which it is a party or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Company or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of Mortgage Loans or the Company's performance hereunder
or under the other Operative Documents to which it is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Company
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report
not misleading.
(g) The statements contained in the Registration Statement
which describe the Company or matters or activities for which the
Company is responsible in accordance with the Operative Documents or
which are attributed to the Company 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 Company or omit
to state a material fact required to be stated therein or necessary in
order to make the statements contained therein with respect to the
Company not misleading. With respect to matters other than those
referred to in the immediately preceding sentence, to the best of the
Company's knowledge and belief, 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 required to be stated
therein or necessary to make the statements contained therein not
misleading.
(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 Company makes no such representation or warranty), that are
necessary or advisable
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in connection with the purchase and sale of the Certificates and the
execution and delivery by the Company 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 Startup Day, are not
subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Company
and the performance by the Company of its obligations under this
Agreement and such of the other Operative Documents to which it is a
party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Company.
(j) The Company received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the
Mortgage Loans evidenced by the Certificates.
(k) The Company did not sell any interest in any Mortgage Loan
evidenced by the Certificates with any intent to hinder, delay or
defraud any of its creditors.
(l) The Company is solvent and the Company will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the
Trust or the sale of the Certificates.
(m) On the Startup Day, the Trustee will have good title on
behalf of the Trust to each Initial Mortgage Loan and such other items
comprising the corpus of the Trust Estate free and clear of any lien.
(n) There has been no material adverse change in any
information submitted by the Company in writing to the Certificate
Insurer.
(o) To the best knowledge of the Company, no event has
occurred which would allow any purchaser of the Class A Certificates
not to be required to purchase the Class A Certificates on the Startup
Day.
(p) To the best knowledge of the Company, no document
submitted by or on behalf of the Company to the Certificate Insurer
contains any untrue or misleading statement of a material fact or fails
to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
(q) To the best knowledge of the Company, no material adverse
change affecting any security for the Class A Certificates has occurred
prior to delivery of and payment for the Class A Certificates.
(r) The Company is not in default under any agreement
involving financial obligations or on any outstanding obligation which
would materially adversely impact the financial condition or operations
of the Company or legal documents associated with the transaction
contemplated in this Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Trustee.
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Section 3.2. Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer and to the Owners as of the Startup Day that:
(a) The Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. The Servicer 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. The Servicer has all requisite corporate power
and authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to
enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer has
equity of at least $20,000,000, as determined in accordance with
generally accepted accounting principles.
(b) The execution and delivery of this Agreement by
the Servicer and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of
the Servicer and will not violate the Servicer's Articles 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 the Servicer is a party or by which the
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 the Servicer or any of its properties.
(c) This Agreement and the other Operative Documents
to which the Servicer is a party, assuming due authorization, execution
and delivery by the other parties hereto and thereto, each constitutes
a valid, legal and binding obligation of the Servicer, enforceable
against it in accordance with the terms hereof and thereof, except as
the enforcement hereof and 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 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 might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
(e) No action, suit, proceeding or investigation is
pending or, to the best of the Servicer's knowledge, threatened against
the Servicer which, individually or in the aggregate, might have
consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or that would
materially and adversely affect the condition (financial or otherwise)
or operations of the Servicer or its properties or might have
consequences that would materially and adversely affect the validity or
the enforceability of the Mortgage Loans or the Servicer's performance
hereunder or under the other Operative Documents to which the Servicer
is a party.
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(f) No certificate of an officer, statement
furnished in writing or report delivered pursuant to the terms hereof
by the Servicer contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration
Statement which describe the Servicer or matters or activities for
which the Servicer is responsible in accordance with the Operative
Documents or which are attributed to the Servicer therein are true and
correct in all material respects, and the Registration Statement does
not contain any untrue statement of a material fact with respect to the
Servicer or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein with respect to
the Servicer not misleading. With respect to matters other than those
referred to in the immediately preceding sentence, to the best of the
Servicer's knowledge and belief, the Registration Statement does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
(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 Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the
execution and delivery by the Servicer of the Operative Documents to
which it is a party, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Servicer
and the performance by the Servicer of its obligations under this
Agreement and such of the other Operative Documents to which it is a
party.
(i) The collection practices used by the Servicer
with respect to the Mortgage Loans directly serviced by it have been,
and are in all material respects, legal, proper, prudent and customary
in the mortgage loan servicing business.
(j) The transactions contemplated by this Agreement
are in the ordinary course of business of the Servicer.
(k) There are no Sub-Servicers as of the Startup Day.
(l) The Servicer covenants that it will terminate any
Sub-Servicer within ninety (90) days after being directed by the
Certificate Insurer to do so.
(m) There has been no material adverse change in any
information submitted by the Servicer in writing to the Certificate
Insurer.
(n) To the best knowledge of the Servicer, no event
has occurred which would allow any purchaser of the Class A
Certificates not to be required to purchase the Class A Certificates on
the Startup Day.
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(o) To the best knowledge of the Servicer, no
document submitted by or on behalf of the Servicer to the Certificate
Insurer contains any untrue or misleading statement of a material fact
or fails to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(p) To the best knowledge of the Servicer, no
material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the
Class A Certificates.
(q) The Servicer is not in default under any
agreement involving financial obligations or on any outstanding
obligation which would materially and adversely impact the financial
condition or operations of the Servicer or legal documents associated
with the transaction contemplated in this Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the Mortgage
Loans to the Trustee.
Upon discovery by any of the Originators, the Servicer, the
Company, any Sub-Servicer, the Certificate Insurer or the Trustee of a breach of
any of the representations and warranties set forth in this Section 3.2 or in
Section 3.1 hereof which materially and adversely affects the interests of the
Owners or of the Certificate Insurer, without regard to any limitation set forth
in such representation or warranty concerning the knowledge of the party making
such representation or warranty as to the facts stated therein, the party
discovering such breach shall give prompt written notice to the other parties
hereto and the Certificate Insurer. Within 30 days of its discovery or its
receipt of notice of breach, the breaching party shall cure such breach in all
material respects and, if such breaching party is the Servicer and upon the
Servicer's continued failure to cure such breach, the Servicer may be removed by
the Trustee or the Certificate Insurer pursuant to Section 8.20 hereof;
provided, however, that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing remedial
action, then the cure period may be extended with the written approval of the
Certificate Insurer.
Section 3.3. Representations and Warranties of the Company
with Respect to the Mortgage Loans. (a) The Company makes the following
representations and warranties as to the Mortgage Loans on which the Certificate
Insurer relies in issuing the Certificate Insurance Policies. Such
representations and warranties speak as of the Startup Day (with respect to the
Initial Mortgage Loans) and as of the respective Subsequent Transfer Date (with
respect to the Subsequent Mortgage Loans) but shall survive the sale, transfer,
and assignment of the related Mortgage Loans to the Trust:
(i) The information with respect to each Initial
Mortgage Loan and Subsequent Mortgage Loan set forth in the related
Schedule of Mortgage Loans is true and correct as of the Cut-Off Date
(or in the case of the Subsequent Mortgage Loans, on the related
Subsequent Transfer Date); the Group I Original Aggregate Loan Balance
in the Trust as of the Cut-Off Date is $44,699,563.80 and the Group II
Original Aggregate Loan Balance in the Trust as of the Cut-Off Date is
$35,313,006.05.
(ii) All of the original or certified documentation
set forth in Section 3.5 (including all material documents related
thereto) with respect to each Initial Mortgage Loan has been or will be
delivered to the Trustee on the Startup Day (or in the case of the
Subsequent Mortgage Loans, on the related Subsequent Transfer Date) or
as otherwise provided in Section 3.5;
(iii) Each Mortgage Loan is being serviced by the
Servicer or a Servicer Affiliate;
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(iv) The Note related to each Initial Mortgage Loan in
Group I bears a fixed Coupon Rate of at least 7.75% per annum and the
Note related to each Mortgage Loan in Group II bears a current Coupon
Rate of at least 6.99% per annum;
(v) No more than 4.40% of the Mortgage Loans were 30
or more days Delinquent;
(vi) As of the Cut-Off Date, no more than 0.897% of
the Original Aggregate Loan Balance of the Initial Mortgage Loans is
secured by Properties located within any single zip code area;
(vii) Each Mortgage Loan conforms, and all such
Mortgage Loans in the aggregate conform, in all material respects, to
the description thereof set forth in the Registration Statement;
(viii) As of the Cut-Off Date, no more than 2.07% and
2.34% of the Group I Original Aggregate Loan Balance and the Group II
Original Aggregate Loan Balance, respectively, are secured by
condominiums, townhouses, or planned unit developments;
(ix) As of the Cut-Off Date, no more than 4.01% and
2.70% of the Group I Original Aggregate Loan Balance and the Group II
Original Aggregate Loan Balance, respectively, are secured by
investor-owned Properties;
(x) The credit underwriting guidelines applicable to
each Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus;
(xi) No funds provided to borrower from a Second
Mortgage Loan originated by the Company were concurrently used as a
down payment for a First Mortgage Loan originated by the Company;
(xii) All of the Notes in Group I and Group II are
actuarial loans;
(xiii) No more than 1.27% of the Original Aggregate
Loan Balance, is secured by Second Mortgage Loans;
(xiv) As of the Cut-Off Date, 20.68% of the Mortgage
Loans in Group II had interest rates which were not fully indexed;
(xv) The gross margin range for Six Month LIBOR Loans
is 3.99% to 9.49% and, the gross margin for all Six Month LIBOR Loans
when added to the current index, creates the fully-indexed range;
(xvi) No Mortgage Loan has a remaining term in excess
of 360 months;
(xvii) With respect to each Mortgage Loan in Group II,
each Mortgagor's debt-to-income ratio will qualify for the related
Originator's underwriting guidelines for a similar credit grade
borrower when the related Mortgage Loan in Group II is at a rate equal
to the applicable initial Coupon Rate plus 2%;
(xviii)There is no proceeding pending or to the best of
the Company's knowledge threatened for the total or partial
condemnation of any Property. No Property is damaged by waste, fire,
earthquake or earth movement, windstorm, flood, other types of water
damage, tornado, or other
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casualty so as to affect adversely the value of such Property as
security for the Mortgage Loans or the use for which the premises were
intended and each Property is in good repair;
(xix) Each Mortgage Loan complies in all material
respects with all applicable federal and state laws including without
limitation the Truth-in-Lending Act, as amended;
(xx) Each Mortgage Loan is secured by a Property
having an appraised value of less than $560,000;
(xxi) The first Due Date of each Initial Mortgage Loan
is no later than March 1, 1998;
(xxii) On the Startup Day with respect to each Initial
Mortgage Loan and on the related Subsequent Transfer Date with respect
to each Subsequent Mortgage Loan, the Trustee will have good title on
behalf of the Trust to each Mortgage Loan transferred on such date; and
(xxiii)Each Mortgage Loan constitutes a qualified
mortgage under Section 860G(a)(3)(A) of the Code and Treasury
Regulations Section 1-860G-2(a)(1).
(b) Upon the discovery by the Company, the Servicer, the
Certificate Insurer or the Trustee of a breach of any of the representations and
warranties made herein in respect of any Mortgage Loan, without regard to any
limitation set forth in such representation or warranty concerning the knowledge
of the Company or any related Originator as to the facts stated therein, which
materially and adversely affects the interests of the Owners or of the
Certificate Insurer in such Mortgage Loan the party discovering such breach
shall give prompt written notice to the other parties hereto and the Certificate
Insurer, as their interests may appear. The Servicer shall promptly notify the
related Originator of such breach and request that such Originator cure such
breach or take the actions described in Section 3.4(b) hereof within the time
periods required thereby, and if such Originator does not cure such breach in
all material respects, the Company shall cure such breach or take such actions.
Except as set forth in Section 3.4, the obligations of the Company or Servicer,
as the case may be, shall be limited to the remedies for cure set forth in
Section 3.4 with respect to any Mortgage Loan as to which such a breach has
occurred and is continuing; the remedies set forth in Section 3.4 shall
constitute the sole remedy with respect to such breach available to the Owners,
the Trustee and the Certificate Insurer.
The Company acknowledges that a breach of any representation
or warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan and (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property is a priori the breach
of a representation or warranty which "materially and adversely affects the
interests of the Owners or of the Certificate Insurer" in such Mortgage Loan.
Section 3.4. Covenants of the Company to Take Certain Actions
with Respect to the Mortgage Loans In Certain Situations. (a) With the provisos
and limitations as to remedies set forth in this Section 3.4, upon the discovery
by any Originator, the Company, the Servicer, the Certificate Insurer, any
Sub-Servicer or the Trustee that the representations and warranties set forth in
Section 3.3 of this Agreement were untrue in any material respect as of the
Startup Day (or in the case of the Subsequent Mortgage Loans, as of the
respective Subsequent Transfer Date), and that such breach of the
representations and warranties materially and adversely affects the interests of
the Owners or of the Certificate Insurer, the party discovering such breach
shall give prompt written notice to the other parties hereto and to the
Certificate Insurer.
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(b) Upon the earliest to occur of the Company's discovery, its
receipt of notice of breach from any one of the other parties hereto or from the
Certificate Insurer or such time as a breach of any representation and warranty
materially and adversely affects the interests of the Owners or of the
Certificate Insurer as set forth above, the Company hereby covenants and
warrants that it shall promptly cure such breach in all material respects or it
shall (or shall cause an affiliate of the Company to or an Originator to),
subject to the further requirements of this paragraph, on the second Remittance
Date next succeeding such discovery, receipt of notice or such other time (i)
substitute in lieu of each Mortgage Loan in the related Mortgage Loan Group
which has given rise to the requirement for action by the Company a Qualified
Replacement Mortgage and deliver the Substitution Amount applicable thereto,
together with the aggregate amount of all Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, to the Servicer
for deposit in the 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 Servicer for deposit in
the Principal and Interest Account. In connection with any such proposed
purchase or substitution, the Company, at its expense, shall cause to be
delivered to the Trustee and to the Certificate Insurer 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 Company 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. It is understood and agreed
that the obligation of the Company 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 Trustee and the Certificate Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator or by the Company to the Trust pursuant to this
Section 3.4 or Section 3.6 hereof, the related Originator and the Company shall
be obligated to take the actions described in Section 3.4(b) with respect to
such Qualified Replacement Mortgage upon the discovery by any of the Owners, the
Company, the Servicer, the Certificate Insurer, any Sub-Servicer or the Trustee
that any of the representations and warranties set forth in Section 3.3 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 or the
Certificate Insurer in the related Qualified Replacement Mortgage are materially
and adversely affected; provided, however, that for the purposes of this
subsection (c) the representations and warranties 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 date such Qualified Replacement Mortgage is
conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any
Mortgage Loan pursuant to this section or the eligibility of any Mortgage Loan
for purposes of this Agreement.
Section 3.5. Conveyance of the Mortgage Loans. (a) The
Company, concurrently with the execution and delivery hereof, hereby transfers,
assigns, sets over and otherwise conveys without recourse, to the Trustee for
the benefit of the Owners of the Certificates and the Certificate Insurer, all
right, title and interest of the Company in and to each Initial Mortgage Loan
listed on the Schedules of Mortgage Loans delivered by the Company on the
Startup Day, all right, title and interest in and to principal and
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interest due on each such Initial Mortgage Loan after the Cut-Off Date (other
than payments of principal due and interest accrued on or before the Cut-Off
Date) and all its right, title and interest in and to all Insurance Policies;
provided, however, that the Company reserves and retains all its right, title
and interest in and to principal (including Prepayments) collected and principal
and interest due on each Initial Mortgage Loan on or prior to the Cut-Off Date.
The transfer by the Company of the Initial Mortgage Loans and the Subsequent
Mortgage Loans set forth on the Schedules of Mortgage Loans is absolute and is
intended by the Owners and all parties hereto to be treated as a sale by the
Company.
It is intended that the sale, transfer, assignment and
conveyance herein contemplated constitute a sale of the Mortgage Loans conveying
good title thereto free and clear of any liens and encumbrances from the Company
to the Trust and that the Mortgage Loans not be part of the Company's estate in
the event of an insolvency. In the event that any such conveyance or a
conveyance pursuant to Section 3.8 and any Subsequent Transfer Agreement is
deemed to be a loan, the parties intend that the Company shall be deemed to have
granted to the Trustee a security interest of first priority in all of the
Company's right, title and interest in the Mortgage, Note and the File, and that
this Agreement shall constitute a security agreement under applicable law.
In connection with the sale, transfer, assignment, and
conveyance, from the Company to the Trustee, the Company has filed, in the
appropriate office or offices in the States of California and New York, a UCC-1
financing statement executed by the Company as debtor, naming the Trustee as
secured party and listing the Initial Mortgage Loans and the other property
described above as collateral, and on or prior to each Subsequent Transfer Date
the Company will file in such offices a UCC-1 financing statement listing the
Subsequent Mortgage Loans so transferred as collateral. The characterization of
the Company 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 Company's entire right, title and interest in the Mortgage Loans
and the related Files to the Trust. In connection with such filing, the Company
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' interests in the
Mortgage Loans and the related Files.
(b) In connection with the transfer and assignment of the
Mortgage Loans, the Company agrees to:
(i) cause to be delivered, on or prior to
the Startup Day (except as otherwise stated below) without recourse to
the Trustee on the Startup Day with respect to each Initial Mortgage
Loan listed on the Schedule of Mortgage Loans or on each Subsequent
Transfer Date with respect to each Subsequent Mortgage Loan:
(a) the original Notes or certified copies
thereof, endorsed without recourse by the related Originator,
"Pay to the order of ______________________________, without
recourse" or "Pay to the order of holder, without recourse."
In the event that the Mortgage Loan was acquired by the
related Originator in a merger, the endorsement must be by the
"(related Originator), successor by merger to (name of
predecessor)"; and in the event that the Mortgage Loan was
acquired or originated by the related Originator while doing
business under another name, the endorsement must be by the
"(related Originator), formerly known as (previous name)";
(b) originals of all intervening
assignments, showing a complete chain of assignment from
origination to the related Originator, if any, including
warehousing assignments, with evidence of recording thereon
(or, if an original intervening
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assignment has not been returned from the recording office, a
certified copy thereof, the original to be delivered to the
Trustee forthwith after return);
(c) originals of all assumption and
modification agreements, if any (or, if an original assumption
and/or modification agreement has not been returned from the
recording office, a certified copy thereof, the original to be
delivered to the Trustee forthwith after return);
(d) either (A) the original Mortgage with
evidence of recording thereon or a certified copy of the
Mortgage as recorded, or (B) if the original Mortgage has not
yet been returned from the recording office, a certified copy
of the Mortgage, together with a receipt from the recording
office or from a title insurance company or a certificate of
an Authorized Person of the related Originator indicating that
such Mortgage has been delivered for recording;
(e) the original assignment of Mortgage for
each Mortgage Loan conveying the Mortgage to The Bank of New
York, as Trustee of the First Alliance Mortgage Loan Trust
1997-4, which assignment shall be in form and substance
acceptable for recording in the state or other jurisdiction
where the mortgaged property is located and, within 75
Business Days following the Startup Day with respect to the
Initial Mortgage Loans, or within 75 Business Days of each
Subsequent Transfer Date with respect to the Subsequent
Mortgage Loans, a recorded assignment of each such Mortgage;
provided that in the event that the Mortgage Loan was acquired
by the related Originator in a merger, the assignment of
Mortgage must be by the "(related Originator), successor by
merger to (name of predecessor)"; and in the event that the
Mortgage Loan was acquired or originated by the related
Originator while doing business under another name, the
assignment of Mortgage must be by the "(related Originator),
formerly known as (previous name)" (subject to the foregoing,
and where permitted under the applicable laws of the
jurisdiction where the mortgaged property is located, the
assignments of Mortgage may be made by blanket assignments for
Mortgage Loans covering mortgaged properties situated within
the same county or other permitted governmental subdivision);
and
(f) evidence of title insurance with respect
to the mortgaged property in the form of a binder or
commitment.
(ii) except with respect to Mortgage Loans covered by
opinions of counsel delivered in the manner set forth below
("Assignment Opinions"), cause, as soon as possible but no more
than 75 Business Days following the Startup Day with respect to the
Initial Mortgage Loans, or within 75 Business Days of each
Subsequent Transfer Date with respect to the Subsequent Mortgage
Loans, the Originators to deliver to the Trustee copies of all
Mortgage assignments submitted for recording, together with a list
of (x) all Mortgages for which no Mortgage assignment has yet been
submitted for recording by the related Originator (y) reasons why
the related Originator has not yet submitted such Mortgage
assignments for recording; provided, however, that with respect to
Mortgage Loans subject to jurisdiction in the states of Arizona,
California, Colorado, District of Columbia, Georgia, Idaho,
Illinois, Maryland, Massachusetts, Ohio, Oregon, Pennsylvania,
Virginia and Washington an Originator shall not be required to
record an assignment of a Mortgage if the Company furnishes to the
Trustee and the Certificate Insurer, on or before the Startup Day
with respect to the Initial Mortgage Loans, or on each Subsequent
Transfer Date with respect to the Subsequent Mortgage Loans, at the
Company's expense, the Assignment Opinions which opine that
recording is not necessary to perfect the rights of the Trustee in
the
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related Mortgage (in form satisfactory to the Certificate Insurer,
Moody's and Standard & Poor's); provided further, however,
notwithstanding the delivery of any legal opinions, each assignment
of mortgage shall be recorded upon the earliest to occur of: (i)
the instructions by the Certificate Insurer to so record such
assignments (such instructions shall be given by the Certificate
Insurer using reasonable discretion) or (ii) the occurrence of an
Event of Servicing Termination. With respect to any Mortgage
assignment set forth on the aforementioned list which has not been
submitted for recording for a reason other than a lack of original
recording information or with respect to Mortgages not covered by
the Assignment Opinions, the Trustee shall make an immediate demand
on the Company to cause such Mortgage assignments to be prepared
and shall inform the Certificate Insurer of the Company's failure
to cause such Mortgage assignments to be prepared. Thereafter, the
Trustee shall cooperate in executing any documents prepared by the
Certificate Insurer and submitted to the Trustee in connection with
this provision. Following the expiration of the 75-Business Day
period following the Startup Day with respect to the Initial
Mortgage Loans, or within 75 Business Days of each Subsequent
Transfer Date with respect to the Subsequent Mortgage Loans and
except with respect to Mortgages covered by the Assignment
Opinions, the Company shall cause to be prepared a Mortgage
assignment for any Mortgage for which original recording
information is subsequently received by the related Originator and
shall promptly deliver a copy of such Mortgage assignment to the
Trustee.
All recording required pursuant to this Section 3.5 shall be
accomplished at the expense of the Originators or of the Company.
Notwithstanding anything to the contrary contained in this Section 3.5, 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 Company shall be deemed to have satisfied its obligations
hereunder upon delivery to 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 Trustee
shall be kept in the related File.
(c) In the case of Initial Mortgage Loans which have been
prepaid in full on or after the Cut-Off Date and prior to the Startup Day, the
Company, in lieu of the foregoing, will deliver within 15 Business Days after
the Startup Day to the Trustee a certification of an Authorized Officer in the
form set forth in Exhibit D.
(d) The Company shall transfer, assign, set over and otherwise
convey without recourse, to the Trustee all right, title and interest of the
Company in and to any Qualified Replacement Mortgage delivered to the Trustee on
behalf of the Trust by the Company pursuant to Section 3.4 or Section 3.6 hereof
and all its right, title and interest to principal and interest due on such
Qualified Replacement Mortgage after the applicable Replacement Cut-Off Date;
provided, however, that the Company shall reserve and retain all right, title
and interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage on and prior to the applicable Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, assign, set over and otherwise convey without recourse,
on the Company's order, all of its right, title and interest in and to such
released Mortgage Loan and all the Trust's right, title and interest to
principal and interest due on such released Mortgage Loan after the applicable
Replacement Cut-Off Date; provided, however, that the Trust shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such released Mortgage Loan on and prior to the applicable
Replacement Cut-Off Date.
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(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trustee on behalf of the Trust, the
Company agrees to cause to be delivered to the Trustee the items described in
Section 3.5(b) on the date of such transfer and assignment or if a later
delivery time is permitted by Section 3.5(b) then no later than such later
delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall deliver on the date of conveyance of such Qualified Replacement Mortgage,
and on the order of the Company (i) the original Note, or the certified copy,
relating thereto, endorsed without recourse, to the Company and (ii) 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 Company shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(i) The Company shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
Section 3.6. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver to the Company,
the Servicer and the Certificate Insurer on the Startup Day an Initial
Certification in the form annexed hereto as Exhibit E to the effect that, as to
each Mortgage Loan listed in the Schedules of Mortgage Loans (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents required
to be delivered to it pursuant to this Agreement with respect to such Mortgage
Loan are in its possession, (ii) such documents have been reviewed by it and
appear regular on their face and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth on the Schedules of Mortgage Loans as to loan number and address
accurately reflects information set forth in the File. The Trustee shall not be
under any duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face. Within 90 days of the Startup Date (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 assignment thereof) the Trustee shall deliver to the
Company, Certificate Insurer and the Servicer a Final Certification in the form
annexed hereto as Exhibit F evidencing the completeness of the Files, with any
applicable exceptions noted thereon.
(b) If in the process of reviewing the Files and preparing the
certifications referred to above the Trustee finds any document or documents
constituting a part of a File which is not properly executed, has not been
received within the specified period or is unrelated to the Mortgage Loans
identified in the Schedules of Mortgage Loans, or that any Mortgage Loan does
not conform as to loan number and address as set forth in the Schedules of
Mortgage Loans, the Trustee shall promptly notify the Company and the
Certificate Insurer. The Company shall use reasonable efforts to cure any such
defect within 60 days from the date on which the Company was notified of such
defect, and if the Company does not cure such defect in all material respects
during such period, the Company will (or will cause the related Originator or an
affiliate of the Company to) on the next succeeding Remittance
Date (i) substitute in lieu of such Mortgage Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount applicable thereto to the Servicer
for deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan at a
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purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. In connection with any such proposed purchase or substitution the
Company shall cause at the Company's expense to be delivered to the Trustee and
to the Certificate Insurer 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 Company 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.
Section 3.7. Cooperation Procedures. (a) The Company shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Trustee, provide the Trustee with the information set forth in the Schedules of
Mortgage Loans with respect to such Qualified Replacement Mortgage.
(b) The Company, the Servicer and the Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required to
be obtained by any of them in connection with their respective duties hereunder.
(c) The Servicer shall maintain such accurate and complete
accounts, records and computer systems pertaining to each File as shall enable
it and the Trustee to comply with this Agreement. In performing its
recordkeeping duties the Servicer shall act in accordance with the servicing
standards set forth in this Agreement. The Servicer shall conduct, or cause to
be conducted, periodic audits of its accounts, records and computer systems as
set forth in Sections 8.16 and 8.17 hereof. The Servicer shall promptly report
to the Trustee any failure on its part to maintain its accounts, records and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure.
(d) The Company further confirms to the Trustee that it has
caused the portions of the electronic ledger relating to the Mortgage Loans to
be clearly and unambiguously marked to indicate that such Mortgage Loans have
been sold, transferred, assigned and conveyed to the Trustee and constitute part
of the Trust Estate in accordance with the terms of the trust created hereunder
and that the Company will treat the transaction contemplated by such sale,
transfer, assignment and conveyance as a sale for accounting purposes.
Section 3.8. Conveyance of the Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Section 3.5 and
paragraphs (b), (c) and (d) below (based on the Trustee's review of such
conditions) in consideration of the Trustee's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Company of all or a
portion of the balance of funds in the Pre-Funding Account, the Company shall on
any Subsequent Transfer Date sell, transfer, assign, set over and otherwise
convey without recourse, to the Trustee, all of the Company's right, title and
interest in and to each Subsequent Mortgage Loan listed on the related Schedule
of Mortgage Loans (other than any principal and interest payments due thereon on
or prior to the relevant Subsequent Cut-Off Date) which the Company is causing
to be delivered to the Trustee herewith (and all substitutions therefor as
provided by Sections 3.3, 3.4 and 3.6) together with the related Subsequent
Mortgage Loan documents and the Company's 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,
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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 transfer by the Company of the Subsequent Mortgage Loans
set forth on the related Schedule of Mortgage Loans to the Trustee shall be
absolute and shall be intended by the Owners and all parties hereto to be
treated as a sale by the Company. Any Subsequent Mortgage Loan so transferred
will be included in one and only one of either Group I or Group II. 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 Company of the Subsequent Mortgage Loans hereunder,
such Subsequent Mortgage Loans (and all principal 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 Company 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 to less than $100,000 for each Group.
(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 Company shall have provided the Trustee and the
Certificate Insurer with an Addition Notice and shall have
provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Company shall have delivered to the Trustee a
duly executed Subsequent Transfer Agreement (including an
acceptance by the Trustee) in substantially the form of
Exhibit L, which shall include a Schedule of Mortgage Loans,
listing the Subsequent Mortgage Loans and any other exhibits
listed thereon;
(iii) the Company shall have deposited in the Principal
and Interest Account all principal collected and interest due
in respect of such Subsequent Mortgage Loans on or after the
related Subsequent Cut Off Date;
(iv) as of each Subsequent Transfer Date, the Company is
not insolvent, nor will it be made insolvent by such transfer,
nor is it aware of any pending insolvency;
(v) the Funding Period shall not have ended;
(vi) the Company shall have delivered to the Trustee and
the Certificate Insurer an Officer's Certificate confirming
the satisfaction of each condition precedent specified in
items (i) through (v) of this paragraph (b) and paragraphs (c)
and (d) below and in the related Subsequent Transfer
Agreement;
(vii) the Company shall have delivered to the Trustee,
the Rating Agencies and the Certificate Insurer opinions of
counsel with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the opinions of
counsel delivered to the Certificate Insurer and the Trustee
on the Startup Day with respect to the Initial Mortgage Loans
(bankruptcy, corporate and tax); and
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(viii) the Certificate Insurer retains the right to adjust
the loss coverage requirements, including, but not limited to
the Specified Subordinated Amount, if the final pool of
Mortgage Loans differs materially from the Initial Mortgage
Loan pool. Prior to any such adjustment, the Certificate
Insurer shall give written notice to the Rating Agencies.
(c) The obligation of the Trust to purchase Subsequent
Mortgage Loans for addition to Group I on a Subsequent Transfer Date is subject
to the following requirements: (i) such Subsequent Mortgage Loan may not be 30
or more days contractually delinquent as of the related Subsequent Cut Off Date;
(ii) the remaining term to maturity of such Subsequent Mortgage Loan may not
exceed 30 years; (iii) such Subsequent Mortgage Loan will have a Combined
Loan-to-Value Ratio of not more than 80% and (iv) following the purchase of such
Subsequent Mortgage Loans by the Trust, the Mortgage Loans (including the
Subsequent Mortgage Loans) in Group I (a) will have a weighted average Coupon
Rate of at least 9.78%; (b) will have a weighted average Combined Loan-to-Value
Ratio of not more than 54.57%; (c) will have an average current loan balance of
not greater than $91,586 and not more than 10.00% of the Mortgage Loans in Group
I may have a principal balance in excess of $200,000 and will satisfy the
representations and warranties set forth in Section 3.3 hereof. In addition, the
final pool of Mortgage Loans in Group I shall conform to the guidelines set
forth in paragraph 28 of the "Commitment to Issue a Financial Guaranty Insurance
Policy dated December 22, 1997" from the Certificate Insurer to the Company
relating to the Fixed Rate Certificate Insurance Policy.
(d) The obligation of the Trust to purchase Subsequent
Mortgage Loans for addition to Group II on a Subsequent Transfer Date is subject
to the following requirements: (i) such Subsequent Mortgage Loan may not be 30
or more days contractually delinquent as of the related Subsequent Cut Off Date;
(ii) the remaining term to maturity of such Subsequent Mortgage Loan may not
exceed 30 years; (iii) such Subsequent Mortgage Loan will have a Loan to Value
Ratio of not more than 85%; and (iv) following the purchase of such Subsequent
Mortgage Loans by the Trust, the Mortgage Loans (including the Subsequent
Mortgage Loans) in Group II (a) will have a weighted average coupon rate of at
least 8.83%; (b) will have a weighted average Loan to Value Ratio of not more
than 59.13%; and (c) will have an average current loan balance not greater than
$113,773 and not more than 10.00% of the Mortgage Loans in Group II may have a
principal balance in excess of $200,000 and (d) will satisfy the representations
and warranties set forth in Section 3.3 hereof. In addition, the final pool of
Mortgage Loans in Group II shall conform to the guidelines set forth in
paragraph 28 of the "Commitment to Issue a Financial Guaranty Insurance Policy
dated December 22, 1997 from the Certificate Insurer to the Company relating to
the Variable Rate Certificate Insurance Policy.
(e) In connection with each Subsequent Transfer Date and on
the Payment Date occurring in January 1998, the Trustee shall determine: (i) the
amount and correct dispositions 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 the Company from the Pre-Funding Account or from
the Capitalized Interest Account, such Owners or the Company shall immediately
repay such amounts to the Trustee.
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates. On the Startup Day,
upon the Trustee's receipt from the Company of an executed Delivery Order in the
form set forth as Exhibit G hereto, the Trustee shall execute, authenticate and
deliver the Certificates on behalf of the Trust in accordance with the
directions set forth in such Delivery Order.
Section 4.2. Sale of Certificates. At 10:00 a.m. Eastern
Standard Time on the Startup Date, at the offices of Arter & Hadden LLP, 1801 K
Street, N.W., Washington, D.C. 20006, the Company will sell and convey the
Mortgage Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will (i) deliver to the Underwriter the Class A
Certificates with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co. or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, and (ii) deliver to First Alliance
Residual Holding Company a Class R Certificate, with a Percentage Interest equal
to 100%. Upon the Trustee's receipt of the entire net proceeds of the sale of
the Class A Certificates the Company shall instruct the Trustee to: (a) deposit
(i) an amount equal to the Original Pre-Funded Amount in the Pre-Funding Account
and (ii) an amount equal to $78,928.95 in the Capitalized Interest Account
contributed by the Company out of such proceeds or otherwise, (b) pay any fees
and expenses identified by the Company and (c) pay to the Company the balance
after deducting such amounts. The Company shall pay directly to the Certificate
Insurer the Initial Premiums.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. 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
and except for the rights of the Trustee with respect to the Certificate
Insurance Policies). Distributions on the Certificates are payable solely from
payments received on or with respect to the Mortgage Loans (other than the
Servicing Fees), moneys in the Principal and Interest Account, except as
otherwise provided herein, moneys in the Pre-Funding Account and the Capitalized
Interest Account from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, upon the occurrence of certain events, from
Insured Payments. 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 a specified portion of such payments with respect to the
Mortgage Loans in the related Mortgage Loan Group and certain related Insured
Payments, pro rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee at the Corporate Trust Office any Certificate prior to the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement.
Section 5.2. Forms. The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class R Certificates shall be
in substantially the forms set forth in Exhibits A-1, A-2,
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A-3 and C hereof, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement or as may in the Company'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 Trustee executing such Certificates, as evidenced
by his execution thereof.
Section 5.3. Execution, Authentication and Delivery. Each
Certificate shall be executed on behalf of the Trust, by the manual or facsimile
signature of one of the Trustee's Authorized Officers and shall be authenticated
by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who
were at any time the proper officers of the Trustee shall, upon proper
authentication by the Trustee, bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day
and delivered at the Closing to the parties specified in Section 4.2 hereof.
No Certificate shall be valid until executed and authenticated
as set forth above.
Section 5.4. Registration and Transfer of Certificates. (a)
The Trustee, as registrar, 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 appointed registrar (the
"Registrar") for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Owners and the Certificate Insurer shall
have the right to inspect the Register during business hours upon reasonable
notice (but no less than 2 Business Days) and to obtain copies thereof.
(b) Subject to the provisions of Section 5.8 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount 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, tenor, aggregate original principal amount 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, 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 Trustee duly
executed by the Owner thereof or his attorney duly authorized in writing.
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(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered
so as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Class A Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A Certificate with a denomination equal to the Original
Certificate Principal Balance of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the Register
in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
On the Startup Day, no Class A Certificates shall be issued in
denominations of less than $1,000 except for one Certificate of each Class which
may be in a denomination of less than $1,000; accordingly the Trust shall not
issue tail certificates on the Startup Day.
The Company and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to Class A Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the Company,
the Servicer and the Trustee shall have no responsibility or obligation to
Direct or Indirect Participants or beneficial owners for which the Depository
holds Class A Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Company, the Servicer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
registered Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Company
advises the Trustee and the Certificate Insurer in writing that the Depository
is no longer willing or able to discharge properly its responsibilities as
nominee and depository with respect to the Class A Certificates and the Company
or the Trustee is unable to locate a qualified successor or (ii) the Company at
its sole option elects to terminate the book-entry system through the
Depository, the Class A Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Company may determine that the
Class A Certificates shall be registered in the name of and deposited with a
successor depository operating a global book-entry system, as may be acceptable
to the Company and at the Company's expense, or such depository's agent or
designee but, if the Company does
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not select such alternative global book-entry system, then the Class A
Certificates may be registered in whatever name or names registered Owners of
Class A Certificates transferring Class A Certificates shall designate, in
accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such Class
A Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.5. 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 that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section,
the 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 5.6. 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 5.7. 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 canceled by
it. No Certificate shall be authenticated in lieu of or in exchange for any
Certificate canceled as provided in this Section, except as expressly permitted
by this Agreement. All canceled Certificates may be held by the Trustee in
accordance with its standard retention policy.
Section 5.8. Limitation on Transfer of Ownership Rights. (a)
No sale or other transfer of any Class A Certificate shall be made to the
Company, any Originator or any of their respective affiliates.
(b) No sale or other transfer of record or beneficial
ownership of 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 agent of a Disqualified Organization.
The
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transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, 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 that such transferee is not a pension or
benefit plan or individual retirement arrangement that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or to
Section 4975 of the Code or an entity whose underlying assets are deemed to be
assets of such a plan or arrangement by reason of such plan's or arrangement's
investment in the entity, as determined under U.S. Department of Labor
Regulations 29 C.F.R. ss. 2510.3-101 or otherwise. 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 5.8(b).
(c) No other sale or other transfer of record or beneficial
ownership of a Class R Certificate shall be made unless such transfer is exempt
from the registration requirements of the Securities Act, as amended, and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee and the Company shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Company and
the Certificate Insurer in the event that such transfer may be made pursuant to
an exemption, describing the applicable exemption and the basis therefor, from
said Act and laws or is being made pursuant to said Act and laws, which opinion
of counsel shall not be an expense of the Trustee, the Trust Estate or the
Certificate Insurer, and (ii) the Trustee shall require the Transferee to
execute an investment letter acceptable to and in form and substance
satisfactory to the Company and the Certificate Insurer certifying to the
Trustee, the Certificate Insurer and the Company the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee, the
Trust Estate, the Certificate Insurer or the Company. The Owner of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Certificate Insurer and the Company 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.
Section 5.9. Assignment of Rights. An Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. On each Payment Date, the Trustee
will withdraw amounts from the Certificate Account and make the distributions
with respect to the Certificates in accordance with the terms of the
Certificates and this Agreement. Such distributions shall be made (i) by check
mailed on each Payment Date or (ii) if requested by any Owner, 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;
provided, however, that an Owner of a Class A Certificate shall only be entitled
to payment by wire transfer if such Owner owns Class A Certificates in the
aggregate denomination of at least $5,000,000.
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Section 6.2. 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 pursuant to Section 7.5 hereof or from Insured Payments shall be made by
and on behalf of the Trustee, and no amounts so withdrawn from the Certificate
Account for payments of the Certificates and no Insured Payment shall be paid
over to the Trustee except as provided in this Section.
(b) The Trustee on behalf of the Trust shall comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Owner of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(c) Any money held by the Trustee in trust for the payment of
any amount due with respect to any Class A Certificate and remaining unclaimed
by the Owner of such Class A Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first to the Certificate
Insurer on account of any Reimbursement Amounts and second to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Certificate
Insurer or the Owners of the Class R Certificates for payment thereof (but only
to the extent of the amounts so paid to the Certificate Insurer or the Owners of
the Class R Certificates), and all liability of the Trustee with respect to such
trust money shall thereupon cease; provided, however, that the Trustee, before
being required to make any such payment, shall 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 Certificate
Insurer or the Owners of the Class R Certificates. The Trustee shall, at the
direction of the Company, 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 Register at
the last address of record for each such Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee will
hold the Trust Estate in trust for the benefit of the Owners and, upon request
of the Certificate Insurer, or, with the consent of the Certificate Insurer, at
the request and expense of the Company, 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 Company or the Certificate
Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Company to take any action pursuant to this Section
6.3 to the other party.
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(b) The Trustee shall have the power to enforce, shall enforce
the obligations of the other parties to this Agreement and of the Certificate
Insurer, by action, suit or proceeding at law or equity and shall also have the
power to enjoin, by action or suit in equity, any acts or occurrences which may
be unlawful or in violation of the rights of the Owners; 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 to take such action by
a majority of the Percentage Interests represented by the affected Class or
Classes of Class A Certificates then Outstanding or, if there are no longer any
affected Class A 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.
Section 6.4. Performance of Obligations. The Trustee will not
take any action that would release the Company or the Certificate Insurer from
any of their respective covenants or obligations under any instrument or
document relating to the Trust Estate or 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.
Section 6.5. Negative Covenants. The Trustee will not, to the
extent within the control of the Trustee, take any of the following actions:
(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 on behalf of the Trust any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust Estate in whole or in
part, except pursuant to Article IX hereof; or
(v) (A) impair the validity or effectiveness of this
Agreement, or release any Person 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) create or extend
any lien, charge, adverse claim, security interest, mortgage or other
encumbrance to or upon the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
Section 6.6. No Other Powers. The Trustee will not, to the
extent within the control of the Trustee, permit the Trust to engage in any
business activity or transaction other than those activities permitted by
Section 2.3 hereof.
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Section 6.7. Limitation of Suits. No Owner shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Agreement or the Certificate Insurance Policies or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Owner has previously given written notice to the Company
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 affected Class or Classes of Certificates
then Outstanding or, if there are no affected Classes of Class
A Certificates then Outstanding, by such percentage of the
Percentage Interests represented by the Class R Certificates
shall have made written request to the Trustee to institute
such proceeding in respect of such Event of Default;
(3) such Owner or Owners have offered to the Trustee indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding, the
Certificate Insurer has consented in writing thereto; and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the
Certificate Insurer or by the Owners of a majority of the
Percentage Interests represented by the Class A Certificates
or, if there are no Class A Certificates then Outstanding, by
such majority of the Percentage Interests represented by the
Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners, each
representing less than a majority of the applicable Class of Certificates, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provision of this Agreement.
Section 6.8. 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 6.9. Rights and Remedies Cumulative. Except as
otherwise provided herein, no right or remedy herein conferred upon or reserved
to the Trustee, the Certificate Insurer or 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
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employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the
Trustee, the Certificate Insurer or any Owner of any Certificate to exercise any
right or remedy under this Agreement to any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article VI or by law
to the Trustee, the Certificate Insurer or the Owners may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee, the
Certificate Insurer or the Owners, as the case may be.
Section 6.11. Control by Owners. The Certificate Insurer or
the Owners of a majority of the Percentage Interests represented by the Class A
Certificates then Outstanding, with the consent of the Certificate Insurer
(which may not be unreasonably withheld), or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding, with the consent of
the Certificate Insurer (which may not be unreasonably withheld), 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 6.3, Section
8.20 and Section 10.1 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
(3) the Trustee may take any other action deemed proper by the
Trustee, which is not inconsistent with such direction;
provided, however, that the Trustee need not take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
Section 6.12. 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.
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.1. Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Servicer or by any Sub-Servicer
and (b) Insured Payments. The Trustee shall hold all such money and property
received by it, other than pursuant to or as contemplated by Section 6.2(b)
hereof, as part of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.2. Establishment of Accounts. (a) The Company shall
cause to be established, and the Trustee shall maintain, at the Corporate Trust
Office, a Certificate Account to be held by the Trustee so long as the Trustee
qualifies as a Designated Depository Institution and if the Trustee does not so
qualify, then by any Designated Depository Institution in the name of the Trust
for the benefit of the Owners of the Certificates and the Certificate Insurer,
as their interests may appear.
(b) The Company shall cause to be established, and the Trustee
shall maintain, at the corporate trust office of the Trustee, a Pre-Funding
Account and a Capitalized Interest Account to be held by the Trustee in the name
of the Trust for the benefit of the Owners of the Certificates and the
Certificate Insurer, as their interests may appear.
Section 7.3. The Certificate Insurance Policies. (a) (i) On
the Business Day prior to each Payment Date the Trustee shall determine with
respect to the immediately following Payment Date, the amount on deposit in the
Certificate Account on such Payment Date and available to be distributed to the
Owners on such Payment Date with respect to Group I (disregarding the sum of (x)
the amount of any Insured Payments and (y) the amount of any expected investment
earnings) and equal to the sum of (A) such amount excluding the amount of any
Total Monthly Excess Cashflow from Group I included in such amount plus (B) any
amount of Total Monthly Excess Cashflow from either Group to be applied on
account of Group I on such Payment Date to the Fixed Rate Certificates plus (C)
any deposit to the Certificate Account from the Pre-Funding Account or the
Capitalized Interest Account expected to be made with respect to Group I on such
Payment Date. The amount described in clause (A) of the preceding sentence with
respect to each Payment Date is the "Group I Available Funds"; the sum of the
amounts described in clauses (A), (B) and (C) of the preceding sentence with
respect to each Payment Date is the "Group I Total Available Funds."
(ii) On the Business Day prior to each Payment Date, the
Trustee shall determine with respect to the immediately following Payment Date,
the amount on deposit in the Certificate Account on such Payment Date and
available to be distributed to the Owners on such Payment Date with respect to
Group II (disregarding the sum of (x) the amount of any Insured Payments and (y)
the amount of any expected investment earnings), and equal to the sum of (A)
such amount excluding the amount of any Total Monthly Excess Cashflow from Group
II included in such amount plus (B) any amounts of Total Monthly Excess Cashflow
from either Group to be applied on account of Group II on such Payment Date to
the Class A-3 Certificates plus (C) any deposit to the Certificate Account from
the Pre-Funding Account or the Capitalized Interest Account expected to be made
with respect to Group II on such Payment Date. The amount described in clause
(A) of the preceding sentence with respect to each Payment Date is the "Group II
Available Funds"; the sum of the amounts described in clauses (A), (B) and (C)
of the preceding sentence with respect to each Payment Date is the "Group II
Total Available Funds".
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(b) If (i) the Fixed Rate Certificate Current Interest for any
Payment Date exceeds the Group I Total Available Funds for such Payment Date
after deducting amounts payable therefrom, if any, for the Group I Premium
Amount and the Group I Trustee Fee due on such Payment Date and/or (ii) a Group
I Subordination Deficit exists for such Payment Date (any such event being a
"Group I Total Available Funds Shortfall"), the Trustee shall complete a Notice
in the form of Exhibit A to the Fixed Rate Certificate Insurance Policy and
submit such notice to the Certificate Insurer no later than 12:00 noon New York
City time on the Business Day preceding such Payment Date as a claim for an
Insured Payment in an amount equal to such Group I Total Available Funds
Shortfall. Similarly, if (i) the Class A-3 Current Interest for any Payment Date
exceeds the Group II Total Available Funds for such Payment Date after deducting
amounts payable therefrom, if any, for the Group II Premium Amount and the Group
II Trustee Fee due on such Payment Date and/or (ii) the Group II Subordination
Deficit exists for such Payment Date (any such event being a "Group II Total
Available Funds Shortfall"), the Trustee shall complete a Notice in the form of
Exhibit A to the Variable Rate Certificate Insurance Policy and submit such
notice to the Certificate Insurer no later than 12:00 noon New York City time on
the Business Day preceding such Payment Date as a claim for an Insured Payment
in an amount equal to such Group II Total Available Funds Shortfall.
(c) The Certificate Insurer shall forward to the Trustee
Insured Payments at such time and in the manner specified in the related
Certificate Insurance Policy. Upon receipt of Insured Payments from the
Certificate Insurer on behalf of Owners, the Trustee shall deposit such Insured
Payments in the Certificate Account and shall distribute such Insured Payments,
or the proceeds thereof, in accordance with Section 7.5(d)(iv) to the Owners of
the Class A Certificates of the related Class.
(d) The Trustee shall (i) receive Insured Payments as
attorney-in-fact of each Owner of the Class A Certificates of the related Class
receiving any Insured Payment from the Certificate Insurer and (ii) disburse
such Insured Payment to the Owners of Offered Certificates as set forth in
Section 7.5(d)(iv). Insured Payments disbursed by the Trustee from proceeds of a
Certificate Insurance Policy shall not be considered payment by the Trust nor
shall such payments discharge the obligation of the Trust with respect to the
related Class A Certificates, and the Certificate Insurer shall be entitled to
receive the related Reimbursement Amount pursuant to Sections 7.5(d)(ii)(C) and
7.5(d)(ii)(D) hereof. Each Owner of Class A Certificates by its acceptance
thereof recognizes that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Owners of such Class A Certificates the Certificate Insurer will be entitled
to receive the related Reimbursement Amount pursuant to Sections 7.5(d)(ii)(C)
and 7.5(d)(ii)(D) hereof.
Section 7.4 Pre-Funding Account and Capitalized Interest
Account (a) On the Startup Day, the Company will deposit, on behalf of the
Owners of the Class A Certificates, in the Pre-Funding Account the Original
Pre-Funded Amount, from the proceeds of the sale of the Class A Certificates in
an amount equal to the sum of (i) the Original Group I Pre-Funded Amount, from
the proceeds of the sale of the Fixed Rate Certificates and (ii) the Original
Group II Pre-Funded Amount, from the proceeds of the sale of the Class A-3
Certificates.
(b) On any Subsequent Transfer Date, the Company 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 Company upon satisfaction of the conditions set forth in Sections 3.5 and
3.8 hereof with respect to such transfer; in connection with such instructions
the Company shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Company 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 Group I an amount in excess of the Original Group I Pre-Funded
Amount or to release from the Pre-Funding Account to the
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Certificate Account with respect to Subsequent Mortgage Loans to be transferred
to Group II an amount in excess of the Original Group II Pre-Funded Amount.
(c) On or before the January 1998 Payment Date, the Trustee
shall 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 each Group of Mortgage Loans and deposit
such amount to the Certificate Account, for the benefit of the Owners of the
related Certificates, as applicable.
(d) On or before the January 1998 Payment Date, the Trustee
shall transfer from the Pre-Funding Account to the Capitalized Interest Account,
the Pre-Funding Account Earnings, if any, applicable to such Payment Date.
(e) On or before the January 1998 Payment Date the Trustee
shall transfer from the Capitalized Interest Account to the Certificate Account,
(i) with respect to Group I, the Group I Capitalized Interest Requirement for
such Payment Date and (ii) with respect to Group II, the Group II Capitalized
Interest Requirement for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall
distribute from the Capitalized Interest Account the Overfunded Interest Amount
(calculated by the Trustee on the day prior to such Subsequent Transfer Date) to
the Company and on the Payment Date in January 1998, the Trustee shall
distribute to the Company any amounts remaining in the Capitalized Interest
Account after taking into account the transfers on such Payment Date described
in clause (e) above. Thereafter, the Capitalized Interest Account shall be
closed. All amounts, if any, remaining in the Capitalized Interest Account on
such day shall be transferred to the Company.
Section 7.5. Flow of Funds. (a) The Trustee shall deposit to
the Certificate Account with respect to Group I, without duplication, (i) upon
receipt, any Insured Payments relating to Group I, the proceeds of any
liquidation of the assets of the Trust, insofar as such assets relate to Group
I, the Group I Monthly Remittance Amount remitted by the Servicer or any
Sub-Servicer, together with any Substitution Amounts and any Loan Purchase Price
amounts received by the Trustee (each with respect to Group I), (ii) on the
first Payment Date, the Group I Capitalized Interest Requirement and any
Pre-Funding Account Earnings related to Group I to be transferred on such
Payment Date from the Capitalized Interest Account for the Payment Date,
pursuant to Section 7.4(e) hereof and (iii) the amount, if any, to be
transferred on such Payment Date from the Pre-Funding Account pursuant to
Section 7.4(c) hereof.
(b) The Trustee shall deposit to the Certificate Account with
respect to Group II, without duplication, (i) upon receipt, any Insured Payments
relating to Group II, the proceeds of any liquidation of the assets of the
Trust, insofar as such assets relate to Group II, the Group II Monthly
Remittance Amount remitted by the Servicer or any Sub-Servicer, together with
any Substitution Amounts and any Loan Purchase Price amounts received by the
Trustee (each with respect to Group II), (ii) on the first Payment Date, the
Group II Capitalized Interest Requirement and any Pre-Funding Account Earnings
related to Group II to be transferred on such Payment Date pursuant to Section
7.4(e) hereof and (iii) the amount, if any, to be transferred on such Payment
Date from the Pre-Funding Account pursuant to Section 7.4(c) hereof.
(c) [Reserved].
(d) With respect to the Certificate Account, on each Payment
Date, the Trustee shall make the following allocations, disbursements and
transfers for each Mortgage Loan Group from amounts deposited therein pursuant
to subsections (a) and (b), respectively in the following order of priority, and
each such
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allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations, transfers and disbursements have occurred:
(i) first, on each Payment Date from amounts then on deposit in the
Certificate Account (A) to the Trustee, the Trustee Fee and (B)
commencing on the third Payment Date following the Startup Day and each
Payment Date thereafter, to the Certificate Insurer, from amounts then
on deposit in the Certificate Account, (x) from amounts then on deposit
therein with respect to Group I, the Group I Premium Amount for such
Payment Date and (y) from amounts then on deposit therein with respect
to Group II, the Group II Premium Amount for such Payment Date;
(ii) second, on each Payment Date, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread with respect to
such Mortgage Loan Group and Payment Date plus (y) any Subordination
Reduction Amount with respect to such Mortgage Loan Group and Payment
Date (such sum being the "Total Monthly Excess Cashflow" with respect
to such Mortgage Loan Group and Payment Date) with respect to each
Mortgage Loan Group in the following order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related Class A Distribution Amount
pursuant to clause (iv) below on such Payment Date
with respect to the related Mortgage Loan Group in an
amount equal to the difference, if any, between (x)
the related Class A Distribution Amount (calculated
only with respect to clause (y) of the definition of
the related Group I or Group II Principal
Distribution Amount and without any Subordination
Increase Amount) for such Payment Date and (y) the
Available Funds with respect to such Mortgage Loan
Group for such Payment Date (the amount of such
difference being the "Group I or the Group II
Available Funds Shortfall" with respect to the
related Mortgage Loan Group);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the application described in clause
(A) above shall be allocated against any Available
Funds Shortfall with respect to the other Mortgage
Loan Group and to the payment of the Class A
Distribution Amount with respect to the other
Mortgage Loan Group pursuant to clause (iv) below;
(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in clauses
(A) and (B) above shall be disbursed to the
Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to
the related Mortgage Loan Group; and
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in clauses
(A), (B) and (C) above shall be paid to the
Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Mortgage Loan Group.
(iii) third, the amount, if any, of the Total Monthly Excess Cashflow with
respect to a Mortgage Loan Group on a Payment Date remaining after the
allocations described in clause (ii) above is the "Net Monthly Excess
Cashflow" with respect to such Mortgage Loan Group for such Payment
Date; such Net Monthly Excess Cashflow is required to be allocated in
the following order of priority:
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(A) first, such Net Monthly Excess Cashflow shall be used
to reduce to zero, through the allocation of a
Subordination Increase Amount to the payment of the
related Class A Distribution Amount pursuant to
clause (iv) below, any Subordination Deficiency
Amount with respect to the related Mortgage Loan
Group as of such Payment Date;
(B) second, the Net Monthly Excess Cashflow remaining
after the application described in clause (A) above
shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to the
payment of the related Class A Distribution Amount
pursuant to clause (iv) below, any Subordination
Deficiency Amounts with respect to the other Mortgage
Loan Group;
(C) third, an amount equal to the lesser of (i) any
portion of the Net Monthly Excess Cashflow remaining
after the applications described in clauses (A) and
(B) above and (ii) the excess of (a) the Group II
Available Funds Cap CarryForward Amount for such
Payment Date over (b) the amount then on deposit in
the Group II Available Funds Cap Carry-Forward Amount
Account shall be allocated to the Group II Available
Funds Cap Carry-Forward Amount Account.
(D) fourth, any Net Monthly Excess Cashflow remaining
after the applications described in clauses (A), (B)
and (C) above shall be paid to the Servicer to the
extent of any unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued and
unpaid Servicing Fees, in each case as certified to
the Trustee by the Servicer to be owing to it as of
such Payment Date;
(iv) fourth, following the making by the Trustee of all allocations,
transfers and disbursements described above under Section 7.3 hereof
and the prior clauses of this Section 7.5, from amounts (including any
related Insured Payment which shall be paid only to the Owners of the
Class A Certificates) then on deposit in the Certificate Account with
respect to the related Mortgage Loan Group, the Trustee shall
distribute in the following order of priority:
(A) from the amounts then on deposit in the Certificate
Account with respect to Group I, to the Owners of the
Fixed Rate Certificates, the related Fixed Rate
Certificate Current Interest thereon until the
related Class A Certificate Termination Date on a pro
rata basis based on each such Class of Fixed Rate
Certificate's Current Interest without any priority
among the related Fixed Rate Certificates;
(B) from the amounts then on deposit in the Certificate
Account with respect to Group I, as a distribution of
principal to the Owners of the related Class of Fixed
Rate Certificates, the Group I Principal Distribution
Amount shall be distributed sequentially as follows:
(1) first, to the Owners of the Class A-1
Certificates until the Class A-1 Certificate
Termination Date; and
(2) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Termination Date;
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(C) from the amounts then on deposit in the Certificate
Account with respect to Group II, to the Owners of
the Class A-3 Certificates, the Class A-3 Current
Interest until the Class A-3 Certificate Termination
Date; and
(D) from the amounts then on deposit in the Certificate
Account with respect to Group II, to the Owners of
the Class A-3 Certificates, the Group II Principal
Distribution Amount until the Class A-3 Certificate
Termination Date;
Notwithstanding anything to the contrary herein, the amounts described
in Section 7.5(d)(iv)(A) and (C) shall be distributed prior to all
other allocations, distributions and transfers described in Section 7.3
and 7.5 hereof (other than the amount described in Section 7.5(d)(i)).
(v) fifth, following the making by the Trustee of all allocations,
transfers and disbursements described above under Section 7.3 hereof
and the prior clauses of this Section 7.5, from amounts then on deposit
in the Certificate Account for both Mortgage Loan Groups, the Trustee
shall distribute to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for such Payment Date.
(e) On each Payment Date the Trustee shall distribute to the Owners of
the Class A-3 Certificates the amount, if any, then on deposit in the Group II
Available Funds Cap Carry-Forward Amount Account.
(f) On any Payment Date during the continuance of any Certificate
Insurer Default, if there is a Subordination Deficit, then the Group I Principal
Distribution Amount for such Payment Date shall be distributed pro rata to the
Owners of any Outstanding Fixed Rate Certificates on such Payment Date.
(g) Notwithstanding clause (d)(iv) above, the aggregate amounts
distributed on all Payment Dates to the Owners of the related Class A
Certificates on account of principal shall not exceed the Original Certificate
Principal Balance for the related Class A Certificates.
Section 7.6. Investment of Accounts. (a) So long as no event
described in Sections 8.20(a) or (b) hereof shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of the Accounts held by the Trustee shall be invested and reinvested by the
Trustee in the name of the Trustee for the benefit of the Owners and the
Certificate Insurer, as their interests may appear, directed in writing by the
Servicer on the Closing Date and from time to time thereafter, in one or more
Eligible Investments bearing interest or sold at a discount. During the
continuance of an event described in Sections 8.20(a) or (b) hereof and
following any removal of the Servicer, the Certificate Insurer shall direct such
investments. No investment in any Account shall mature later than the second
Business Day preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any
Account held by the Trustee and sufficient uninvested funds are not available to
make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
(c) Subject to Section 10.1 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.
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(d) The Trustee shall hold funds in the Accounts held by the
Trustee uninvested upon the occurrence of either of the following events:
(i) the Servicer or the Certificate Insurer, as the
case may be, shall have failed to give investment directions to the
Trustee within ten days after receipt of a written request for such
directions from the Trustee; or
(ii) the Servicer or the Certificate Insurer, as the
case may be, shall have failed to give investment directions to the
Trustee with respect to any investment by the Trustee that shall mature
during the ten-day period described in clause (i).
(e) For purposes of investment, the Trustee shall aggregate
all amounts on deposit in each Account. All income or other gain from
investments in any Account shall be deposited in such Account immediately on
receipt, and any loss resulting from such investments shall be charged to the
Company, and upon request by the Trustee, the Company shall reimburse the Trust
Estate for such losses.
(f) Each institution at which the Certificate Account is
maintained shall invest the funds therein in Eligible Investments, which shall
mature not later than the Business Day next preceding the related Payment Date
(except that if such Eligible Investment is an obligation of the institution
that maintains such account, then such Eligible Investment shall mature not
later than such Payment Date) and, in each case, shall not be sold or disposed
of prior to its maturity. All such Eligible Investments shall be made in the
name of the Trustee, for the benefit of the Owners and the Certificate Insurer.
All income and gain (net of any losses) realized from any such investment of
funds on deposit in the Certificate Account shall be for the benefit of the
Servicer as servicing compensation and shall be remitted to it monthly as
provided herein. The amount of any realized losses in the Certificate Account
incurred in any such account in respect of any such investments shall promptly
be deposited by the Servicer in the Certificate Account or paid to the Trustee
as applicable. The Trustee in its fiduciary capacity shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Certificate Account and made in accordance with this
Section 7.6(f).
(g) The Servicer shall give notice to the Trustee, the
Company, each Rating Agency, and the Certificate Insurer of any proposed change
of the location of the Certificate Account not later than 30 days and not more
than 45 days prior to any change thereof.
Section 7.7. Eligible Investments. The following are Eligible
Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States fully and
unconditionally guaranteed, the timely payment or the guarantee of which
constitutes a full faith and credit obligation of the United States.
(b) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of which have
been rated A-1 or better by Standard & Poor's and P-1 by Moody's.
(c) Investment agreements approved by the Certificate Insurer
provided:
1. The agreement is with a bank or insurance company which has
an unsecured, uninsured and unguaranteed obligation (or claims-paying
ability) rated Aa2 or better by Moody's and AA or better by Standard &
Poor's,
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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),
3. The agreement is not subordinated to any other obligations
of such insurance company or bank,
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an opinion
of counsel that such agreement is an enforceable obligation of such
insurance company or bank.
(d) Commercial paper (having original maturities of not more
than 365 days) rated A-1 or better by Standard & Poor's and P-1 or better by
Moody's.
(e) Investments in no load money market funds rated AAAm or
AAAm-G by Standard & Poor's and Aaa by Moody's.
(f) Investments approved in writing by the Certificate Insurer
and acceptable to Moody's and Standard & Poor's.
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to 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 no instrument described above may be purchased at a price greater than par.
Section 7.8. Reports by Trustee. (a) On each Payment Date the
Trustee shall provide to each Owner, the Servicer, the Certificate Insurer, each
of the Underwriters, the Company, Standard & Poor's and Moody's a written report
(based solely upon the information contained in the Monthly Servicing Report) in
substantially the form set forth as Exhibit J hereto with respect to each
Mortgage Loan Group, as such form may be revised by the Trustee, the Servicer,
Moody's and Standard & Poor's from time to time, but in every case setting forth
the information requested on Exhibit J hereto and the following information:
(i) the amount of the distribution with respect to
the related Class of the Class A Certificates and the Class R
Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or Prepaid Installments of principal included therein, any
Pre-Funded Amounts distributed as a prepayment (based on a Certificate
in the original principal amount of $1,000) and separately identifying
any Subordination Increase Amounts with respect to the related Mortgage
Loan Group;
(iii) the amount of such distributions allocable to
interest;
(iv) the Certificate Principal Balance for each Class
of Class A Certificates as of such Payment Date together with the
principal amount of such Class of Class A Certificates
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(based on a Certificate in an original principal amount of $1,000) then
outstanding, in each case after giving effect to any payment of
principal on such Payment Date;
(v) the amount of any Insured Payment included in the
amounts distributed with respect to the Class A Certificates on such
Payment Date;
(vi) information to the extent and in the form
furnished by the Company pursuant to Section 6049(d)(7)(C) of the Code
and the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(vii) the total of any Substitution Amounts and any
Loan Purchase Price amounts included in such distribution;
(viii) the amount of any Subordination Reduction
Amount with respect to each Mortgage Loan Group;
(ix) the amounts, if any, of any Realized Losses in
each Mortgage Loan Group for the related Remittance Period and the
cumulative amount of Realized Losses in each Mortgage Loan Group since
the Startup Day;
(x) for the related Remittance Period and
cumulatively since the Startup Day, the number and aggregate Loan
Balance of Mortgage Loans in each Group bought back by the Servicer or
the Company pursuant to Sections 3.4, 3.6 and 8.10 (identified
separately for each such section);
(xi) the amount of any Group II Available Funds Cap
Carry-Forward Amount;
(xii) a number with respect to each Class (the "Pool
Factor" for such Class) computed by dividing the Certificate Principal
Balance for such Class (after giving effect to any distribution of
principal to be made on such Payment Date) by the Original Certificate
Principal Balance for such Class on the Startup Day; and,
(xiii) for Payment Dates during the Funding Period,
the remaining Pre- Funded Amount.
Items (i) through (iii) above shall, with respect to each
Class of Class A Certificates, be presented on the basis of a Certificate having
a $1,000 denomination. In addition, by January 31 of each calendar year
following any year during which the Certificates are outstanding, the Trustee
shall furnish a report to each Owner of record at any time during each calendar
year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii)
with respect to the Certificates for such calendar year.
(b) In addition, on each Payment Date the Trustee will
distribute to each Owner, the Certificate Insurer, each of the Underwriters, the
Servicer, the Company, Standard & Poor's and Moody's, together with the
information described in Subsection (a) preceding, the following information
with respect to each Mortgage Loan Group as of the last day of the related
Remittance Period, which is hereby required to be prepared by the Servicer and
furnished to the Trustee for such purpose on or prior to the related Remittance
Date:
(i) the total number of Mortgage Loans in each
Mortgage Loan Group and the aggregate Loan Balances thereof, together
with the number, aggregate principal balances of such
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Mortgage Loans in such Mortgage Loan Group and the percentage (based on
the aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90
or more days Delinquent;
(ii) the number and aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) in foreclosure proceedings (and whether any such Mortgage Loans
are also included in any of the statistics described in the foregoing
clause (i));
(iii) the number, aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) relating to Mortgagors in bankruptcy proceedings (and whether
any such Mortgage Loans are also included in any of the statistics
described in the foregoing clause (i));
(iv) the number, aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) relating to REO Properties (and whether any such Mortgage Loans
are also included in any of the statistics described in the foregoing
clause (i));
(v) the aggregate Loan Balance of all Mortgage Loans,
the aggregate Loan Balance of the Mortgage Loans in each Group and the
aggregate Loan Balance of the Initial Mortgage Loans and the Subsequent
Mortgage Loans in each Group in each case after giving effect to any
payment of principal on such Payment Date; and
(vi) the book value of any REO Property in each
Mortgage Loan Group.
(c) The foregoing reports shall be sent to an Owner only
insofar as such Owner owns a Certificate with respect to the related Mortgage
Loan Group.
Section 7.9. Additional Reports by Trustee. (a) The Trustee
shall report to the Company, the Servicer, Standard & Poor's, Moody's and the
Certificate Insurer with respect to the amount then held in each Account
(including investment earnings accrued or scheduled to accrue) held by the
Trustee and the identity of the investments included therein, as the Company,
the Servicer or the Certificate Insurer may from time to time request.
(b) Not later than 20 days after each Payment Date, the
Trustee shall forward to the Company, the Servicer and the Certificate Insurer a
statement, setting forth the status of the Certificate Account as of the close
of business on the last Business Day of the related Remittance Period showing,
for the period covered by such statement, the aggregate of deposits into and
withdrawals from the Certificate Account.
Section 7.10. Group II Available Funds Cap Trust. (a) The
parties hereto do hereby create and establish a trust for the benefit of the
Owners of the Class A-3 Certificates, the "First Alliance Available Funds Cap
Trust 1997-4" (the "Group II Available Funds Cap Trust"). The Group II Available
Funds Cap Trust shall include the Group II Available Funds Cap Carry-Forward
Amount Account which is held by the Trustee in the name of the Group II
Available Funds Cap Trust for the benefit of the Owners of the Class A-3
Certificates.
(b) On each Payment Date the Trustee shall receive the
distributions, if any, made to the Group II Available Funds Cap Carry-Forward
Amount Account pursuant to Section 7.5(d)(iii)(C) hereof on
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such Payment Date and deposit such payment to the Group II Available Funds Cap
CarryForward Amount Account.
(c) On each Payment Date the Trustee shall pursuant to Section
7.5(e) withdraw from the Group II Available Funds Cap Carry-Forward Amount
Account and distribute to the Owners of the Class A-3 Certificates the amount,
if any, then on deposit in the Group II Available Funds Cap CarryForward Amount
Account.
(d) It is the intention of the parties that the Group II
Available Funds Cap Trust constitute a trust under the laws of the State of New
York. The Group II Available Funds Cap Trust will be created and administered
in, and the Group II Available Funds Cap Carry-Forward Amount Account maintained
by the Trustee on behalf of the Group II Available Funds Cap Trust will be
located in, the State of New York. Payments will be received by the Group II
Available Funds Cap Trust only in the State of New York, and payments from the
Group II Available Funds Cap Trust will be made only from the State of New York.
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS
Section 8.1. Servicer and Sub-Servicers. (a) Acting directly
or through one or more Sub-Servicers as provided in Section 8.3, the Servicer,
as servicer, shall service and administer the Mortgage Loans in accordance with
this Agreement and with reasonable care, and using that degree of skill and
attention that the 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.
(b) The duties of the Servicer shall include 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 and annual statements to the Trustee with respect to
distributions, paying Compensating Interest and making Delinquency Advances and
Servicing Advances pursuant hereto. The Servicer shall follow its customary
standards, policies and procedures in performing its duties as Servicer. The
Servicer shall cooperate with the Trustee and furnish 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.
The Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(c) Without limiting the generality of the foregoing, the
Servicer (i) shall continue, and is hereby authorized and empowered by the
Trustee, to execute and deliver, on behalf of itself, the Owners and the Trustee
or any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the related Properties; (ii)
may consent to any modification of the terms of any Note not expressly
prohibited hereby if the effect of any such modification (x) will not be to
affect materially and adversely the security afforded by the related Property,
the timing of receipt of any payments required hereby or the interests of the
Certificate Insurer and (y) will not cause the Trust to fail to qualify as a
REMIC.
(d) The parties intend that the Trust (other than the
Pre-Funding Account and the Capitalized Interest Account) shall constitute and
that the affairs of Trust shall (other than the Pre-Funding Account and the
Capitalized Interest Account) shall be conducted so as to qualify it as a REMIC.
In
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furtherance of such intention, the Servicer covenants and agrees that it shall
act as agent (and the Servicer is hereby appointed to act as agent) on behalf of
the Trust and that in such capacity it shall: (i) use its best efforts to
conduct the affairs of the Trust at all times that any Class of Certificates are
outstanding so as to maintain the status of the Trust as a REMIC under the REMIC
Provisions; (ii) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of the Trust or
that would subject the Trust to tax and (iii) exercise reasonable care not to
allow the Trust to receive income from the performance of services or from
assets not permitted under the REMIC Provisions to be held by a REMIC.
(e) The Servicer may, and is hereby authorized to, perform any
of its servicing responsibilities with respect to all or certain of the Mortgage
Loans through a Sub-Servicer as it may from time to time designate but no such
designation of a Sub-Servicer shall serve to release the Servicer from any of
its obligations under this Agreement. Such Sub-Servicer shall have all the
rights and powers of the Servicer with respect to such Mortgage Loans under this
Agreement.
(f) Without limiting the generality of the foregoing, but
subject to Sections 8.13 and 8.14, the Servicer in its own name or in the name
of a Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Trustee to execute and deliver, on behalf
of itself, the Owners and the Trustee or any of them, (i) any and all
instruments of satisfaction or cancellation or of partial or full release or
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Properties, (ii) to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of
any Property on behalf of the Trustee and (iii) to hold title to any Property
upon such foreclosure or deed in lieu of foreclosure on behalf of the Trustee;
provided, however, that Section 8.14(a) shall constitute a power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of mortgage without recourse) with respect to any Mortgage Loan paid
in full (or with respect to which payment in full has been escrowed). Subject to
Sections 8.13 and 8.14, the Trustee shall execute a power of attorney to the
Servicer and any Sub-Servicer and furnish them with any other documents as the
Servicer or such Sub-Servicer shall reasonably request to enable the Servicer
and such Sub-Servicer to carry out their respective servicing and administrative
duties hereunder.
(g) The Servicer shall give prompt notice to the Trustee and
the Certificate Insurer of any action, of which the Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.
(h) Servicing Advances incurred by the Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Servicer or such
Sub-Servicer to the extent described in Section 8.9(c) and in Section
7.5(d)(iii)(D) hereof.
Section 8.2. Collection of Certain Mortgage Loan Payments. (a)
The 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 the Servicer shall always at least follow collection
procedures that are consistent with or better than standard industry practices.
Consistent with the foregoing, the Servicer may in its discretion (i) waive any
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, 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; provided, however, the
Servicer shall not reschedule the payment of delinquent payments more than one
time in any
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twelve (12) consecutive months with respect to any Mortgagor 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 the Servicer's general policies of the comparable mortgage
loans subject to such Act.
(b) The Servicer shall hold in escrow on behalf of the related
Mortgagor 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.
Section 8.3. Sub-Servicing Agreements Between Servicer and
Sub-Servicers. The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution which is
acceptable to the Certificate Insurer and which is in compliance with the laws
of each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement and (x) has (i) been designated an approved
seller-servicer by FHLMC or Fannie Mae for Mortgage Loans and (ii) has equity of
at least $5,000,000, as determined in accordance with generally accepted
accounting principles or (y) is a Servicer Affiliate. The Servicer shall give
notice to the Certificate Insurer and the Trustee of the appointment of any
Sub-Servicer and shall furnish to the Certificate Insurer and the Trustee a copy
of such Sub-Servicing Agreement. For purposes of this Agreement, the Servicer
shall be deemed to have received payments on Mortgage Loans when any
Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
Section 8.4. Successor Sub-Servicers. The Servicer may
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and either itself directly service
the related Mortgage Loans or enter into a Sub-Servicing Agreement with a
successor Sub-Servicer that qualifies under Section 8.3.
Section 8.5. Liability of Servicer. The Servicer shall not be
relieved of its obligations under this Agreement notwithstanding any
Sub-Servicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Sub-Servicer or otherwise,
and the Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans. The Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in such Sub-Servicing Agreement shall be deemed to limit or
modify this Agreement. The Trust shall not indemnify the Servicer for any losses
due to the Servicer's negligence.
Section 8.6. No Contractual Relationship Between Sub-Servicer
and Trustee or the Owners. Any Sub-Servicing Agreement and any other
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
shall be deemed to be between the Sub-Servicer and the Servicer alone and the
Certificate Insurer, the Trustee and the Owners shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Sub-Servicer except as set forth in Section 8.7.
Section 8.7. Assumption or Termination of Sub-Servicing
Agreement by Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Servicer
hereunder by the Trustee pursuant to Section 8.20, it is understood and agreed
that the Servicer's rights and obligations under any Sub-Servicing Agreement
then in force between the Servicer and a Sub-Servicer may be assumed or
terminated by the Trustee at its option without the payment of a fee
notwithstanding any contrary provision in any Sub-Servicing Agreement.
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The Servicer shall, upon reasonable request of the Trustee,
but at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
Section 8.8. Principal and Interest Account.
(a) The Servicer shall establish in the name of the Trust for
the benefit of the Owners of the Certificates and the Certificate Insurer and
maintain at one or more Designated Depository Institutions the Principal and
Interest Account. The funds held in the Principal and Interest Account shall not
be commingled with any other funds.
Subject to Subsection (c) below, the Servicer and any
Sub-Servicer shall deposit all receipts related to the Mortgage Loans into the
Principal and Interest Account on a daily basis (but no later than the first
Business Day after receipt).
Subject to Subsection (c) below, within one Business Day
following the Startup Day, the Company and/or the Servicer shall deposit into
the Principal and Interest Account all receipts related to the related Mortgage
Loans received after the Cut-Off Date.
(b) Any investment of funds in the Principal and Interest
Account shall mature or be withdrawable at par on or prior to the immediately
succeeding Remittance Date. All funds in the Principal and Interest Account may
only be held (i) uninvested, up to the limits insured by the FDIC or (ii)
invested in Eligible Investments. The Principal and Interest Account shall be
held in trust in the name of the Trust and for the benefit of the Owners of the
Certificates. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Servicer and may only be
withdrawn from the Principal and Interest Account by the Servicer on the second
Business Day of the month for the investment earnings for the previous calendar
month. The Servicer shall withdraw from the Principal and Interest Account, on
the second Business Day of the month, investment earnings for the previous
calendar month. The Servicer shall deposit into the Principal and Interest
Account the amount of all losses on investment of funds in the Principal and
Interest Account upon request from the Trustee. Any references herein to amounts
on deposit in the Principal and Interest Account shall refer to amounts net of
investment earnings.
(c) The Servicer shall deposit to the Principal and Interest
Account all principal and interest collections on the Mortgage Loans received
after the Cut-Off Date, including any Prepayments and Net Liquidation Proceeds,
all Loan Purchase Prices and Substitution Amounts received or paid by the
Servicer with respect to the Mortgage Loans, other recoveries or amounts related
to the Mortgage Loans received by the Servicer, Compensating Interest and
Delinquency Advances together with any amounts which are reimbursable from the
Principal and Interest Account but net of (i) the Servicing Fee with respect to
each Mortgage Loan and other servicing compensation to the Servicer as permitted
by Section 8.15 hereof, (ii) principal (including Prepayments) due on the
related Mortgage Loans on or prior to the Cut-Off Date, (iii) interest accruing
on the related Mortgage Loans on or prior to the Cut-Off Date and (iv) Net
Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the Loan
Balance of the related Mortgage Loan.
(d) (i) The Servicer may make withdrawals from the Principal
and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the
Monthly Remittance Amounts due on the Remittance
Date;
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(B) to reimburse itself pursuant to Section 8.9(a) hereof
for unrecovered Delinquency Advances and Servicing
Advances;
(C) to withdraw investment earnings on amounts on deposit
in the Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and Interest
Account following the termination of the Trust Estate
pursuant to Article IX hereof.
(ii) On the Determination Date of each month, commencing in
January 1998 the Servicer shall send to the Trustee the Monthly Exception Report
detailing the payments on the Mortgage Loans during the prior Remittance Period
and certifying the amounts and purpose of withdrawals permitted pursuant to (d)
above from the Principal and Interest Account. Such report shall contain the
specified data, as described in Section 8.26 hereof, and shall be in the form
and have the specifications as may be agreed to between the Servicer, the
Certificate Insurer and the Trustee from time to time.
(iii) On each Remittance Date, commencing in January 1998 the
Servicer shall remit to the Trustee by wire transfer, or otherwise make funds
available in immediately available funds for deposit to the Certificate Account,
(x) for Group I, the Group I Interest Remittance Amount and the Group I
Principal Remittance Amount and (y) for Group II, the Group II Interest
Remittance Amount and the Group II Principal Remittance Amount.
Section 8.9. Delinquency Advances, Compensating Interest and
Servicing Advances. (a) The Servicer is required, not later than each Remittance
Date, to deposit into the Principal and Interest Account an amount equal to the
sum of (i) the interest due (net of the Servicing Fees due) but not collected,
(ii) on the Remittance Date in January 1998, interest accrued on each Subsequent
Mortgage Loan transferred to the Trust during the related Due Period from the
related Subsequent Cut Off Date to the last day of the related Remittance Period
and (iii) scheduled principal due, but not collected, with respect to Delinquent
Mortgage Loans during the related Due Period but only if, in its good faith
business judgment, the Servicer reasonably believes that such amount will
ultimately be recovered from the related Mortgage Loan. Such amounts are
"Delinquency Advances".
The Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Servicer's own funds, from collections on any
Mortgage Loan deposited to the Principal and Interest Account subsequent to the
related Due Period and shall deposit into the Principal and Interest Account
with respect thereto (i) collections from the Mortgagor whose Delinquency gave
rise to the shortfall which resulted in such Delinquency Advance and (ii) Net
Liquidation Proceeds recovered on account of the related Mortgage Loan to the
extent of the amount of aggregate Delinquency Advances related thereto. If not
thereto recovered from the related Mortgagor or the related Net Liquidation
Proceeds, Delinquency Advances shall be recoverable pursuant to Section
7.5(d)(iii)(D).
(b) On or prior to each Remittance Date, the Servicer shall
deposit in the Principal and Interest Account with respect to any Paid-in-Full
Mortgage Loan during the related Remittance Period out of its own funds without
any right of reimbursement therefor an amount equal to the difference between
(x) 30 days' interest at such 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 and (y) to the extent not previously
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advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Servicer, "Compensating Interest"). The Servicer shall in no event be
required to pay Compensating Interest with respect to any Remittance Period in
an amount in excess of the aggregate Servicing Fee received by the Servicer with
respect to all Mortgage Loans for such Remittance Period. Further, the Servicer
is not obligated to cover shortfalls in collections in interest due to
Curtailments.
(c) The Servicer will pay all "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, and (iii) the management and
liquidation of REO Property, but is only required to pay such costs and expenses
to the extent the Servicer reasonably believes such costs and expenses will
increase Net Liquidation Proceeds on the related Mortgage Loan. Each such amount
so paid will constitute a "Servicing Advance". The Servicer may recover
Servicing Advances (x) from the Mortgagors to the extent permitted by the
Mortgage Loans, from Liquidation Proceeds realized upon the liquidation of the
related Mortgage Loan, and (y) as provided in Section 7.5(d)(iii)(D) hereof. In
no case may the Servicer recover Servicing Advances from principal and interest
payments on any Mortgage Loan or from any amounts relating to any other Mortgage
Loan except as provided pursuant to Section 7.5(d)(iii)(D) hereof.
Section 8.10. Purchase of Mortgage Loans. The Servicer may,
but is not obligated to, purchase for its own account any Mortgage Loan which
becomes Delinquent, in whole or in part, as to four consecutive monthly
installments or any Mortgage Loan as to which enforcement proceedings have been
brought by the Servicer or by any Sub-Servicer pursuant to Section 8.13. Any
such Loan so purchased shall be purchased by the Servicer not later than the
related Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the Principal and Interest
Account.
Section 8.11. Maintenance of Insurance. (a) The Servicer shall
cause to be maintained with respect to each Mortgage Loan a hazard insurance
policy with a generally acceptable carrier that provides for fire and extended
coverage, and which provides for a recovery by the 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 at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the 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 the 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. The Servicer shall indemnify the Trust
and the Certificate Insurer out of the Servicer's own funds for any loss to the
Trust and the Certificate Insurer resulting from the Servicer's failure to
maintain the insurance required by this Section.
(c) In the event that the 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 the 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, the Servicer shall be
deemed conclusively to have satisfied its obligations with respect
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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 the 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 Principal and Interest Account
from the 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 or the Certificate Insurer, the Servicer shall cause to
be delivered to the Trustee or the Certificate Insurer a certified true copy of
such policy.
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 Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law or (ii) the Servicer
reasonably believes that to permit an assumption of the Mortgage Loan would not
materially and adversely affect the interest of the Owners or of the Certificate
Insurer. In such event, the Servicer shall 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 related Mortgage Loan
documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for mortgage loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Mortgage Loan,
as assumed, shall conform in all respects to the requirements, representations
and warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement,
which copy shall be added by the Trustee to the related File and which shall,
for all purposes, be considered a part of such File to the same extent as all
other documents and instruments constituting a part thereof. The Servicer shall
be responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. Realization Upon Defaulted Mortgage Loans. (a)
The Servicer shall foreclose upon or otherwise comparably effect 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 Servicer has not purchased pursuant to Section 8.10. In
connection with such foreclosure or other conversion, the Servicer shall
exercise such of the rights and powers vested in it
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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 for
the payment of taxes, amounts due with respect to Senior Liens and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances" within
the meaning of Section 8.9(c) hereof. The Servicer shall sell any REO Property
within 23 months of its acquisition by the Trust, unless the Servicer obtains
for the Trustee and the Certificate Insurer an opinion of counsel experienced in
federal income tax matters and reasonably acceptable to the Certificate Insurer,
addressed to the Trustee, the Certificate Insurer and the 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, in which case the Servicer shall sell any REO Property by the
end of any extended period specified in any such opinion.
Notwithstanding the generality of the foregoing provisions,
the Servicer shall manage, conserve, protect and operate each REO Property for
the Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to 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 Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Owners, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Owners for the period prior to the sale
of such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Property.
(b) The Servicer shall determine, with respect to each
defaulted Mortgage Loan, 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, whereupon such Mortgage Loan shall
become a "Liquidated Loan".
Section 8.14. Trustee 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 Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the Servicer shall
deliver to the Trustee a Request for Release. Upon receipt of such Request for
Release, the Trustee shall promptly release the related File, in trust to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee, in each case pending its release by the 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, the 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 Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
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requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the 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 the Servicer and
delivery to the Trustee of a Request for Release, release the related File to
the Servicer and shall execute such documents as shall be necessary to the
prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Servicer; provided
that there shall not be released and unreturned at any one time more than 10% of
the entire number of Files. The Trustee shall complete in the name of the
Trustee any endorsement in blank on any Note prior to releasing such Note to the
Servicer. Such receipt shall obligate the Servicer to return the File to the
Trustee when the need therefor by the 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, the Request for Release shall be
released by the Trustee to the Servicer.
(c) The 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 the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Combined Loan-to-Value Ratio (which may, for this purpose, be determined at the
time of any such action in a manner reasonably acceptable to the Certificate
Insurer) after any release does not exceed the Combined Loan-to-Value Ratio as
of the Cut-Off Date or Subsequent Cut-Off Date, as the case may be, and the
Mortgagor's debt-to-income ratio after any release does not exceed the
debt-to-income ratio as of the Cut-Off Date or Subsequent Cut-Off Date, as the
case may be, and in no event exceeds the maximum debt-to-income 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
the Servicer setting forth the action proposed to be taken in respect of a
particular Mortgage Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Servicer the consent or partial release so requested by the
Servicer. A proposed form of consent or partial release, as the case may be,
shall accompany any Officer's Certificate delivered by the Servicer pursuant to
this paragraph.
(d) No costs associated with the procedures described in this
Section 8.14 shall be an expense of the Trust.
Section 8.15. Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to retain the amount of the
Servicing Fee with respect to each Mortgage Loan. Additional servicing
compensation in the form of prepayment charges, release fees, bad check charges,
assumption fees, late payment charges, prepayment penalties, any other
servicing-related fees, Net Liquidation Proceeds not required to be deposited in
the Principal and Interest Account pursuant to Section 8.8(c)(iv) and similar
items shall, to the extent collected from Mortgagors, be retained by the
Servicer.
Section 8.16. Annual Statement as to Compliance. (a) The
Servicer, at its own expense, will deliver to the Trustee, the Certificate
Insurer, Standard & Poor's and Moody's, on or before the last day of December of
each year, commencing in 1998, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
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knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such defaults.
(b) The Servicer shall deliver to the Trustee, the Certificate
Insurer, the Owners and the Rating Agencies, promptly after having obtained
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, would become an Event of Servicing
Termination.
Section 8.17. Annual Independent Certified Public Accountants'
Reports. On or before the last day of March of each year, commencing in 1998,
the Servicer, at its own expense, shall cause to be delivered to the Trustee,
the Certificate Insurer, Standard & Poor's and Moody's a letter or letters of a
firm of independent, nationally- recognized certified public accountants
reasonably acceptable to the Certificate Insurer stating that such firm has,
with respect to the Servicer's overall servicing operations during the preceding
calendar year, examined such operations in accordance with the requirements of
the Uniform Single Audit Program for Mortgage Bankers, and in either case
stating such firm's conclusions relating thereto.
Section 8.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Servicer shall provide to the Trustee, the
Certificate Insurer, the FDIC and the supervisory agents and examiners of each
of the foregoing access to the documentation regarding the Mortgage Loans
required by applicable state and federal regulations, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
Upon any change in the format of the computer tape maintained
by the Servicer in respect of the Mortgage Loans, the Servicer shall deliver a
copy of such computer tape to the Trustee and in addition shall provide a copy
of such computer tape to the Trustee, and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19. Assignment of Agreement. The Servicer may not
assign its obligations under this Agreement, in whole or in part, unless it
shall have first obtained the written consent of the Trustee and the Certificate
Insurer, 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 the Servicer to the Trustee, the Certificate Insurer and the
Rating Agencies.
Section 8.20. Events of Servicing Termination. (a) The Trustee
or the Certificate Insurer (or the Owners pursuant to Section 6.11 hereof) may
remove the Servicer (including any successor entity serving as the Servicer)
upon the occurrence of any of the following events:
(i) The Servicer shall fail to deliver to the Trustee
any proceeds or required payment, which failure continues unremedied
for five Business Days following written notice to an Authorized
Officer of the Servicer from the Trustee or from any Owner;
(ii) The Servicer shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition
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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 the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the 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 the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
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
seventy-five (75) consecutive days;
(iv) The Servicer shall fail to perform any one or
more of its obligations hereunder (other than the obligations set out
in (i) above) and shall continue in default thereof for a period of
sixty (60) days after the earlier of (x) notice by the Trustee or the
Certificate Insurer of said failure or (y) actual knowledge of an
officer of the Servicer; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Certificate Insurer;
or
(v) The Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.2 which
materially and adversely affects the interests of the Owners or
Certificate Insurer for a period of sixty (60) days after the
Servicer's discovery or receipt of notice thereof; provided, however,
that if the Servicer can demonstrate to the reasonable satisfaction of
the Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer.
(b) The Certificate Insurer may remove the Servicer upon the
occurrence of any of the following events:
(i) a Group I Total Available Funds Shortfall or a
Group II Total Available Funds Shortfall; provided, however, that the
Certificate Insurer shall have no right to remove the Servicer under
this clause (i) if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that such event was due to
circumstances beyond the control of the Servicer;
(ii) the failure by the Servicer to make any required
Servicing Advance;
(iii) the failure by the Servicer to perform any one
or more of its obligations hereunder, which failure materially and
adversely affects the interests of the Certificate Insurer, and the
continuance of such failure for a period of 30 days or such longer
period as agreed to in writing by the Certificate Insurer.
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest;
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(v) if on any Payment Date the Pool Rolling Three
Month Delinquency Rate exceeds 7.0%;
(vi) if on any Payment Date occurring in December of
any year, commencing in December 1998, the aggregate Pool Cumulative
Realized Losses over the prior twelve month period exceed 2.0% of the
average Pool Principal Balance as of the close of business on the last
day of each of the twelve preceding Remittance Periods; or
(vii) (a) if on any of the first 60 Payment Dates
from the Startup Day the aggregate Pool Cumulative Expected Losses for
all prior Remittance Periods since the Startup Day exceed 5.0% of the
Pool Principal Balance as of the Cut-Off Date and (b) if on any Payment
Date thereafter the aggregate Pool Cumulative Expected Losses for all
prior Remittance Periods from the Startup Day exceed 6.5% of the Pool
Principal Balance as of the Cut-Off Date, provided, however, with
respect to clauses (v), (vi) and (vii), if the Servicer can demonstrate
to the reasonable satisfaction of the Certificate Insurer that any such
event was due to circumstances beyond the control of the Servicer, such
event shall not be considered an event of termination of the Servicer.
Upon the Trustee's determination that a required Delinquency Advance or payment
of Compensating Interest has not been made by the Servicer, the Trustee shall so
notify in writing an Authorized Officer of the Servicer and the Certificate
Insurer as soon as is reasonably practical.
(c) In the case of clauses (i), (ii), (iii), (iv) or (v) of
Subsection (b) the Owners of Certificates evidencing not less than 33 1/3% of
the aggregate Class A Certificate Principal Balance (with the consent of the
Certificate Insurer) by notice then given in writing to the Servicer (and a copy
to the Trustee) may terminate all of the rights and obligations of the Servicer
under this Agreement; provided, however, that the responsibilities and duties of
the initial Servicer with respect to the repurchase of Mortgage Loans pursuant
to Section 3.4 shall not terminate. The Trustee shall mail a copy of any notice
given by it hereunder to the Rating Agencies. On or after the receipt by the
Servicer of such written notice, all authority and power of the 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
(for this purpose, the term includes an affiliate thereof) 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 Servicer for deposit or shall thereafter be received with respect to
a Mortgage Loan. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
Section 8.20 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.
(d) If any event described in subsections (a) or (b) above
occurs and is continuing, during the 30 day period following receipt of notice,
the Trustee and the Certificate Insurer shall cooperate with each other to
determine if the occurrence of such event is more likely than not the result of
the acts or omissions of the Servicer or more likely than not the result of
events beyond the control of the Servicer. If the Trustee and the Certificate
Insurer conclude that the event is the result of the latter, the Servicer may
not
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be terminated, unless and until some other event set forth in subsection (a) or
(b) has occurred and is continuing. If the Trustee and the Certificate Insurer
conclude that the event is the result of the former, the Certificate Insurer may
terminate the Servicer in accordance with this Section, and the Trustee shall
act as successor Servicer.
If the Trustee and the Certificate Insurer cannot agree, and
the basis for such disagreement is not arbitrary or unreasonable, as to the
cause of the event, the decision of the Certificate Insurer shall control;
provided, however, that if the Certificate Insurer decides to terminate the
Servicer, the Trustee shall be relieved of its obligation to assume the
servicing or to appoint a successor, which shall be the exclusive obligation of
the Certificate Insurer.
The Certificate Insurer agrees to use its best efforts to
inform the Trustee of any materially adverse information regarding the
Servicer's servicing activities that comes to the attention of the Certificate
Insurer from time to time.
Section 8.21. Resignation of Servicer and Appointment of
Successor. (a) Upon the Servicer's receipt of notice of termination pursuant to
Section 8.20 or the 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, 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
Certificate Insurer and 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 the
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 the Servicer's resignation or termination hereunder, the Trustee
shall appoint a successor Servicer and the successor Servicer shall accept its
appointment by a written assumption in form acceptable to the Trustee and the
Certificate Insurer, with copies to the Certificate Insurer and the Rating
Agencies. Pending such appointment, the Trustee shall act as the Servicer
hereunder.
(b) The Servicer shall not 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 the Servicer so causing such a conflict being of a type
and nature carried on by the Servicer at the date of this Agreement or (ii) upon
written consent of the Certificate Insurer and the Trustee. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of counsel to such effect which shall be delivered to the Trustee and
the Certificate Insurer.
(c) No removal or resignation of the Servicer shall become
effective until the Trustee or a successor Servicer shall have assumed the
Servicer's responsibilities and obligations in accordance with this Section.
(d) Upon removal or resignation of the Servicer, the Servicer
also shall promptly deliver or cause to be delivered to a successor Servicer or
the Trustee all the books and records (including, without limitation, records
kept in electronic form) that the Servicer has maintained for the Mortgage
Loans, including all tax bills, assessment notices, insurance premium notices
and all other documents as well as all original documents then in the Servicer's
possession.
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(e) Any collections received by the 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.
(f) Upon removal or resignation of the Servicer, the Trustee
(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. 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 seller-servicer by Fannie Mae or FHLMC for second
mortgage loans and having equity of not less than $15,000,000 or such lower
level as may be acceptable to the Certificate Insurer as determined in
accordance with generally accepted accounting principles as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder and (II) give notice thereof to
the Certificate Insurer and Rating Agencies. The compensation of any successor
Servicer (including, without limitation, the Trustee) so appointed shall be the
Servicing Fee, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 8.8
and 8.15; provided, however, that if the Trustee acts as successor Servicer,
then the former Servicer agrees to pay to the Trustee at such time that the
Trustee becomes such successor Servicer a set-up fee of fifteen dollars ($15.00)
for each Mortgage Loan then included in the Trust Estate. The Trustee shall be
obligated to serve as successor Servicer whether or not the fee described in the
preceding sentence is paid by the Company, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the former Servicer.
(g) In the event the Trustee solicits bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.8 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain such servicing. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder. After such deductions, the remainder of such sum
shall be paid by the Trustee to the Servicer at the time of such sale.
(h) The Trustee and such successor 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 the Servicer as required by
subsection (j) below. The Servicer agrees to cooperate with the Trustee and any
successor Servicer in effecting the termination of the 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 the 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 Principal and Interest Account by the 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 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 the Servicer.
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(i) The Trustee or any other successor Servicer, upon assuming
the duties of Servicer hereunder, shall immediately make all Delinquency
Advances and pay all Compensating Interest which the Servicer has theretofore
failed to remit 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 Delinquency Advances (including the Delinquency Advances described in
this clause (i)) if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the Mortgage Loans.
(j) The 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 8.23 and shall be entitled to the Monthly Servicing Fee and all of the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement. The appointment of a successor Servicer 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 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 shall give notice to the Certificate Insurer,
Moody's and Standard & Poor's and the Owners 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 Certificate Insurer pursuant to Section 8.20 to
terminate all of the rights and obligations of the Servicer under this
Agreement, the Owners of at least 51% of the Class A Certificate Principal
Balance may, on behalf of all Owners of Certificates, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from the
Principal and Interest Account in accordance with this Agreement. 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
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. Inspections by Certificate Insurer; Errors and
Omissions Insurance. (a) At any reasonable time and from time to time upon
reasonable notice, the Certificate Insurer, the Trustee, or any agents or
representatives thereof may inspect the Servicer's servicing operations and
discuss the servicing operations of the Servicer with any of its officers or
directors. The costs and expenses incurred by the Servicer or its agents or
representatives in connection with any such examinations or discussions shall be
paid by the Servicer.
(b) The Servicer agrees to maintain errors and omissions
coverage and a fidelity bond, each at least to the extent generally maintained
by prudent mortgage loan servicers having servicing portfolios of a similar
size.
Section 8.24. Merger, Conversion, Consolidation or Succession
to Business of Servicer. Any corporation into which the Servicer may be merged
or converted or with which it may be consolidated, or corporation resulting from
any merger, conversion or consolidation to which the Servicer shall be a party
or any corporation succeeding to all or substantially all of the business of the
Servicer shall be the successor
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of the 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 8.25. Notices of Material Events. The Servicer shall
give prompt notice to the Certificate Insurer, the Trustee, Moody's and Standard
& Poor's of the occurrence of any of the following events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the occurrence of a
default by the Company, any Originator or the 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 the
Company or the Servicer 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 the Company's or the
Servicer's ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings by or against the
Company or the 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 the Company or
the Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Company's or the Servicer's
business that the Company or the Servicer is to cease and desist, or to
undertake any practice, program, procedure or policy employed by the Company or
the Servicer in the conduct of the business of any of them, and such cessation
or undertaking will materially and adversely affect the conduct of the Company's
or the Servicer's business or its ability to perform under the Operative
Documents or materially and adversely affect the financial affairs of the
Company or the Servicer.
Section 8.26. Monthly Servicing Report and Servicing
Certificate. (a) The Servicer shall, not later than the related Determination
Date, deliver to the Trustee and the Certificate Insurer a Monthly Servicing
Report relating to the Group I Mortgage Loans and a Monthly Servicing Report
relating to the Group II Mortgage Loans stating the following:
(i) As to the related Due Period, the Interest
Remittance Amount (in both cases specifying the (a) scheduled interest
collected; (b) Delinquency Advances relating to interest; and (c)
Compensating Interest paid) and the Principal Remittance Amount (in
both cases specifying the (1) scheduled principal collected; (2)
Delinquency Advance relating to Mortgage principal; (3) Prepayments;
(4) Loan Balance of Loans repurchased; (5) Substitution Amounts; and
(6) Net Liquidation Proceeds (related to principal));
(ii) With respect to the related Remittance Period,
the Servicing Fee payable to the Servicer;
(iii) With respect to the related Remittance Period,
the net scheduled principal and interest payments remitted by the
Servicer to the Principal and Interest Account;
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(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 Mortgage Loans Delinquent, if any, (i)
30-59 days, (ii) 60-89 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 book value (within the
meaning of 12 Code of Federal Regulations Section 571.13 or any
comparable provision) of any real estate acquired through foreclosure
or deed in lieu of foreclosure, including REO Properties as of the last
day of the related Remittance Period;
(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 with respect to such Determination 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 Determination Date;
(xi) Net Liquidation Proceeds as of the last day of
the related Remittance Period;
(xii) Insurance payments received from Insurance
Policies during the related Remittance Period;
(xiii) The number of Mortgage Loans and the
aggregate scheduled Loan Balances as of the last day of the Due Period
relating to the Payment Date;
(xiv) The Group I Total Available Funds and the
Group II Total Available Funds for each Remittance Date;
(xv) The number and aggregate Loan Balances and
Loan Purchase Prices of Mortgage Loans required to be repurchased by
the Company or purchased by the Servicer as of the Replacement Cut-Off
Date occurring during the Remittance Period preceding such Date;
(xvi) The number and aggregate Loan Balances of
Mortgage Loans (at the time they became Defaulted Mortgage Loans) which
are being carried as REO Properties;
(xvii) The amount of any Delinquency Advances made
by the Servicer during the related Remittance Period and any
unreimbursed Delinquency Advances as of such Payment Date;
(xviii) The weighted average Coupon Rates of the
Group I and Group II Mortgage Loans, respectively;
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(xix) The Monthly Exception Report;
(xx) The amount of any Substitution Amounts
delivered by the Company;
(xxi) The number and aggregate Loan Balances of
Mortgage Loans, if any, in bankruptcy proceedings as of the last day of
related Remittance Period;
(xxii) The amount of unreimbursed Delinquency
Advances made by the Servicer;
(xxiii) The amounts, if any, of the Realized Losses
in each Mortgage Loan Group for the related Remittance Period and the
cumulative amount of Realized Losses in each Mortgage Loan Group since
the Startup Date.
(xxiv) The amount of unreimbursed Servicing
Advances made by the Servicer;
(xxv) Unpaid Servicing Fees;
(xxvi) The amount of Compensating Interest to be
paid by the Servicer during the related Remittance Period;
(xxvii) The weighted average net Coupon Rate of the
Mortgage Loans;
(xxviii) For the related Remittance Period and
cumulatively since the Startup Day, the number and aggregate Loan
Balance of Mortgage Loans bought back by the Servicer or the Company
pursuant to Section 3.4, 3.6 and 8.10 hereof (identified separately for
each such section).
(xxix) Any other information reasonably requested
by the Certificate Insurer or the Trustee; and
(xxx) The aggregate actual Loan Balance as of the
last day of the Due Period relating to the Payment Date.
(b) On each Payment Date, the Trustee shall provide to the
Certificate Insurer, each of the Underwriters, the Company, Standard & Poor's
and Moody's a written report in substantially the form set forth as Exhibit J
hereto (the "Servicing Certificate") with respect to each Mortgage Loan Group,
as such form may be revised by the Trustee, the Servicer, Moody's and Standard &
Poor's from time to time, but in every case setting forth the information
required under Section 7.8 hereof, based solely on information contained in the
Monthly Servicing Report.
Section 8.27. Indemnification by the Company. The Company
agrees to indemnify and hold the Trustee, the Certificate Insurer and each Owner
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 Trustee, the Certificate Insurer and any Owner may sustain in any way
related to the failure of the Company to perform its duties under this
Agreement. A party against whom a claim is brought shall immediately notify the
other parties and the Rating Agencies if a claim is made by a third party with
respect to this Agreement, and the Company shall assume (with the consent of the
Certificate Insurer and 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 Certificate Insurer, the Servicer, the Company, the Trustee and/or
Owner in respect of such claim.
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Section 8.28. Indemnification by the Servicer. The Servicer
agrees to indemnify and hold the Trustee, the Certificate Insurer and each Owner
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 Trustee, the Certificate Insurer and any Owner may sustain in any way
related to the failure of the Servicer to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement. A party against
whom a claim is brought shall immediately notify the other parties and the
Rating Agencies if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Certificate Insurer, the
Servicer, the Trustee and/or Owner in respect of such claim.
ARTICLE IX
TERMINATION OF TRUST
Section 9.1. Termination of Trust. The Trust created hereunder
and all obligations created by this Agreement will terminate upon the earliest
of (i) the payment to the Owners of all Certificates from amounts other than
those available under the Certificate Insurance Policies 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
or (b) the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate, (ii) at any time when a Qualified Liquidation of
both Mortgage Loan Groups included within the Trust is effected as described
below or (iii) as described in Section 9.2, 9.3 and 9.4 hereof; provided, that
the Trust created hereunder shall not terminate at any time that the Certificate
Principal Balance of any Class of Class A Certificates is greater than zero. To
effect a termination of this Agreement pursuant to clause (ii) above, the Owners
of all Certificates then Outstanding shall (x) unanimously direct the Trustee on
behalf of the Trust to adopt a plan of complete liquidation for both Mortgage
Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (y) provide
to the Trustee an opinion of counsel experienced in federal income tax matters
to the effect that 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 based
on their interests in the Trust, 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 United Kingdom, 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 11.5 hereof.
Section 9.2. Termination Upon Option of Servicer. (a) On any
Remittance Date on or after the Clean-Up Call Date, the Servicer acting directly
or through one or more affiliates may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Mortgage Loans in the
Trust Estate and all property theretofore acquired in respect of any such
Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate at a price equal to the sum of (v) the greater of
(i) 100% of the aggregate Loan Balances of the related Mortgage Loans as of the
Due Date which immediately follows the last day of the related Remittance Period
immediately preceding the day of purchase minus the amount actually remitted by
the Servicer representing collections of principal on the Mortgage Loans during
the related Remittance Period and Due Period and (ii) the greater of (A) the
fair market value
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of such Mortgage Loans (disregarding accrued interest) and (B) the aggregate
outstanding Certificate Principal Balance, (w) one month's interest on the
purchase price computed at the weighted average Pass-Through Rate for the Class
A Certificates, (x) any available Funds Cap Carry-Forward Amount at such time,
(y) the related Reimbursement Amount, if any, as of such Remittance Date and (z)
the aggregate amount of any Delinquency Advances and Servicing Advances
remaining unreimbursed, together with any accrued and unpaid Servicing Fees, as
of such Remittance Date (such amount, the "Termination Price"). 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) In connection with any such purchase, the Servicer shall
provide to the Trustee an opinion of counsel experienced in federal income tax
matters and reasonably acceptable to the Certificate Insurer to the effect that
such purchase constitutes a Qualified Liquidation of the Trust Estate.
(c) Promptly following any such purchase, the Trustee will
release the Files to the Servicer, or otherwise upon their order, in a manner
similar to that described in Section 8.14 hereof.
(d) If the Servicer does not exercise its option pursuant to
this Section 9.2 with respect to the Trust Estate, then the Certificate Insurer
may do so on the same terms.
Section 9.3. Termination Upon Loss of REMIC Status. (a)
Following a final determination by the Internal Revenue Service, or by a court
of competent jurisdiction, in either case from which no appeal is taken within
the permitted time for such appeal, or if any appeal is taken, following a final
determination of such appeal from which no further appeal can be taken, to the
effect that the Trust does not and will no longer qualify as a "REMIC" pursuant
to Section 860D of the Code (the "Final Determination"), at any time on or after
the date which is 30 calendar days following such Final Determination, (i) the
Certificate Insurer or the Owners of a majority in Percentage Interest
represented by the Class A Certificates then Outstanding with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) 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 and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Mortgage
Loans in the Trust Estate 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 price equal to the Termination Price. 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 in the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Upon receipt of such direction from the Certificate
Insurer, the Trustee shall notify the holders of the Class R Certificates of
such election to liquidate or such determination to purchase, as the case may be
(the "Termination Notice"). The Owner of a majority of the Percentage Interest
of the Class R Certificates then Outstanding may, on any Remittance Date, 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 in the Trust Estate, 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.
(c) If, during the Purchase Option Period, the Owners of the
Class R Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period (i)
in the event that the Certificate Insurer or the Owners of the Class A
Certificates, with the consent of the Certificate Insurer have given the Trustee
the direction described in clause (a)(i)
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above, the Trustee shall sell the Mortgage Loans and distribute the proceeds of
the liquidation of the Trust Estate, each in accordance with the plan of
complete liquidation, such that, if so directed, the liquidation of the Trust
Estate, the distribution of the proceeds of such liquidation and the termination
of this Agreement occur no later than the close of the 60th day, or such later
day as the Certificate Insurer or the Owners of the Class A Certificates, with
the consent of the Certificate Insurer shall permit or direct in writing, after
the expiration of the Purchase Option Period and (ii) in the event that the
Certificate Insurer has given the Trustee notice of the Certificate Insurer's
determination to purchase the Mortgage Loans in the Trust Estate described in
clause (a)(ii) preceding, the Certificate Insurer shall, on any Remittance Date
within 60 days, purchase all (but not fewer than all) Mortgage Loans in the
Trust Estate, 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. 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.
(d) Following a Final Determination, the Owners of a majority
of the Percentage Interest of the Class R Certificates then Outstanding may, at
their option on any Remittance Date and upon delivery to the Owners of the Class
A Certificates and the Certificate Insurer of an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer selected by
the Owners of such Class R Certificates which opinion shall be reasonably
satisfactory in form and substance to the Certificate Insurer, to the effect
that the effect of the Final Determination is to increase substantially the
probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Mortgage Loans in
the Trust Estate, 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. 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. The foregoing opinion shall be deemed satisfactory
unless the Certificate Insurer 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 9.4. 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; provided, however, that
any amounts representing Servicing Fees, unreimbursed Delinquency Advances or
unreimbursed Servicing Advances theretofore funded by the Servicer from the
Servicer's own funds shall be paid by the Trustee to the Servicer from the
proceeds of the Trust Estate.
Section 9.5. Netting of Amounts. If any Person paying the
Termination Price would receive a portion of the amount so paid, such Person may
net any such amount against the Termination Price otherwise payable.
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ARTICLE X
THE TRUSTEE
Section 10.1. Certain Duties and Responsibilities. (a) The
Trustee (i) 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 (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) Following the termination of the Servicer hereunder and
pending the appointment of any other Person as successor Servicer, the Trustee
(for this purpose, the term includes an affiliate thereof) is hereby obligated
to perform the duties of the Servicer hereunder and shall, for such period, have
all of the rights of the Servicer; it being expressly understood, however, by
all parties hereto, and the Owners, agree, prior to any termination of the
Servicer pursuant to Section 8.21, the Servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee shall upon
termination or resignation of the Servicer, 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 Mortgage 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 hereof;
(v) to make Delinquency Advances and Servicing Advances
and to pay Compensating Interest, and
(vi) to enforce the Mortgage Loans.
(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 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;
(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
Certificate Insurer or of the Owners of a majority in
Percentage Interest of the Certificates of the
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affected Class or Classes and the Certificate Insurer
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;
(iv) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability
for the performance of any of its duties hereunder or
the exercise of any of its rights or powers if there
is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it, and
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 Servicer under this
Agreement except during such time, if any, as the
Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this
Agreement;
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section 10.1,
the Trustee shall have no duty (A) to see any
recording, filing, or depositing of this Agreement or
any agreement referred to herein or any financing
statement or continuation statement evidencing a
security interest, or to see to the maintenance of
any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance (C) to see to the payment
or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds
available in the Certificate Account, (D) to confirm
or verify the contents of any reports or certificates
of the Servicer delivered to the Trustee pursuant to
this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper
party or parties;
(vi) The Trustee shall not be accountable for the use or
application of any funds paid to the Company or the
Servicer in respect of the Mortgage Loans or
withdrawn from the Principal and Interest Account or
the Certificate Account by the Company or the
Servicer; and
(vii) The Trustee shall not be required to take notice or
be deemed to have notice or knowledge of any default
or any of the events described in Section 8.20 unless
a Responsible Officer of the Trustee shall have
received written notice thereof or a Responsible
Officer has actual knowledge thereof. In the absence
of receipt of such notice, the Trustee may
conclusively assume that no default or event
described in Section 8.20 has occurred.
(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.
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(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, 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.
Section 10.2. 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
thereto on any Payment Date amounts available for distribution
received by the Trustee in accordance with the terms hereof;
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 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 Company, the Certificate Insurer or by the
Owners of at least 25% of the aggregate Percentage Interests
represented by the Class A Certificates then Outstanding, or,
if there are no Class A 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 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the
Trustee or relating to all or substantially all of its
property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due,
file or consent to the filing of a petition to take advantage
of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or take corporate action
for the purpose of any of the foregoing.
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The Company shall give to Moody's and Standard & Poor's notice
of the occurrence of any such event of which the Company is aware.
(b) If any event described in Paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate Insurer or (ii) with
the prior written consent (which shall not be unreasonably withheld) of the
Certificate Insurer (x) the Company or (y) the Owners of a majority of the
Percentage Interests represented by the Class A Certificates may, whether or not
the Trustee resigns pursuant to Section 10.9 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 10.9 hereof.
Section 10.3. Certain Rights of the Trustee. Except as
otherwise provided in Section 10.1 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 Company, the Certificate
Insurer or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate;
(d) the Trustee may consult with counsel of its selection, and
the written advice of such counsel 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; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to taking any such action.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be repaid by the Servicer
upon demand by the Trustee from the Servicer's own funds;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be
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responsible for any misconduct or negligence on the part of any agent
or attorney appointed and supervised with due care by it hereunder;
(h) the Trustee shall not be personally liable for any action
it takes or omits to take in good faith which it reasonably believes to
be authorized by the Authorized Officer of any Person or within its
rights or powers under this Agreement;
(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; and
(j) 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 10.4. Not Responsible for Recitals or Issuance of
Certificates. The recitals and representations contained herein and in the
Certificates, except any such recitals relating to the Trustee, shall be taken
as the statements of the Company, 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, of the Mortgage Loans or any
document relating thereto other than as to validity and sufficiency of its
authentication of the Certificates.
Section 10.5. May Hold Certificates. The Trustee or any 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 or such agent.
Section 10.6. 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 Company 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 and income or other gain actually received by the
Trustee on Eligible Investments.
Section 10.7. No Lien for Fees. The Trustee shall have no lien
on the Trust Estate for the payment of any fees and expenses.
Section 10.8. 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 $100,000,000, subject
to supervision or examination by the United States of America or any such State
having a rating or ratings acceptable to the Certificate Insurer and having a
long-term deposit rating of at least BBB from Standard & Poor's (or such lower
rating as may be acceptable to Standard & Poor's) and at least Baa2 from Moody's
(or such lower rating as may be acceptable to Moody's). If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Company with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) or of the
Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
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Section 10.9. 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
Company and by mailing notice of resignation by registered mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee to
Moody's and Standard & Poor's. Upon receiving notice of resignation, the Company
shall promptly appoint a successor trustee or trustees reasonably acceptable to
the Certificate Insurer evidenced by its written consent by written instrument,
in duplicate, executed on behalf of the Trust by an Authorized Officer of the
Company, 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 by the Company and have accepted appointment
within 30 days after the giving of such notice of resignation, the Trustee shall
give notice to the Certificate Insurer of such failure and the Certificate
Insurer shall have an additional 30 days to appoint a successor trustee. If
after such time no successor has been appointed and accepted then the resigning
trustee may 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, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.8 hereof and shall fail to resign after written request
therefor by the Company or by the Certificate Insurer, the Certificate Insurer
or the Company with the written consent of the Certificate Insurer 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 Company, 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 Class A Certificates, or, if there are no Class A
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 Company and to the Certificate Insurer,
copies of the record of the act taken by the Owners, as provided for in Section
11.3 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement or becomes ineligible to serve as Trustee, the
Certificate Insurer may remove the Trustee and appoint a successor trustee by
written instrument, in triplicate, signed by the Certificate Insurer duly
authorized, one complete set of which instruments shall be delivered to the
Company, one complete set to the Trustee so removed and one complete set to the
successor Trustee so appointed. If no successor is appointed, then the removed
trustee may 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.
(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 Company 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 Owners of a
majority of the Percentage Interests represented by the Class A Certificates
then Outstanding or, if there are no Class A Certificates then Outstanding, by
such majority of the Percentage Interest of the Class R Certificates delivered
to the Company and the retiring Trustee, 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
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Company. If no successor Trustee shall have been so appointed by the Company or
the Owners and shall have accepted appointment in the manner hereinafter
provided, any Owner may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Trustee.
(g) The Company shall give notice of any removal of the
Trustee by mailing notice of such event by registered mail, postage prepaid, to
the Certificate Insurer 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 Company on behalf of the Trust, to the Certificate Insurer 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 Company, the Certificate Insurer
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 Company 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 Company shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register and to the Certificate Insurer. The Company shall send a copy of such
notice to Moody's and Standard & Poor's. If the Company 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, 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. 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
Company 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
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withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
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 any Account, the Company, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee or any such
Person against any liability which would otherwise be imposed by reason of
negligent action, negligent failure to act or bad faith in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Subject to the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in any Account (except for any losses on obligations on
which the bank serving as Trustee is the obligor). In addition, the Company and
Servicer covenant and agree to indemnify the Trustee and the Certificate
Insurer, and when the Trustee is acting as Servicer, the Servicer, from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including legal fees and expenses) other than those resulting from the
negligence or bad faith of the Trustee. The Trustee and the Certificate Insurer
and any director, officer, employee or agent thereof 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. Provisions of this Section 10.13 shall survive the termination of
this Agreement.
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 Servicer and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee and the
Certificate Insurer to act as co-Trustee or co-Trustees, jointly with the
Trustee, of all or any part of the Trust Estate or separate Trustee or separate
Trustees of any part of the Trust Estate and to vest in such Person or Persons,
in such capacity and for the benefit of the Owners, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case any event indicated in Sections 8.20(a) or
8.20(b) shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment (with the written consent of the Certificate
Insurer). No co-Trustee or separate Trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 10.8 and no notice
to Owner of the appointment of any co-Trustee or separate Trustee shall be
required under Section 10.8.
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
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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 Servicer 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 Servicer.
Any separate Trustee or co-Trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate Trustee
or co- Trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
The Trustee shall give to Moody's, the Company and the
Certificate Insurer notice of the appointment of any Co-Trustee or separate
Trustee.
Section 10.15 Reserved.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates and Opinions. Upon any
application or request by the Company, the Certificate Insurer or the Owners to
the Trustee to take any action under any provision of this Agreement, the
Company, the Certificate Insurer or the Owners, as the case may be, shall
furnish to the Trustee a certificate stating that all conditions precedent, if
any, provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of any 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 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;
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(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 11.2. 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 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 is erroneous. Any such certificate of an
Authorized Officer of the Trustee or any opinion of counsel may be based,
insofar as it relates to factual matter upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Company or of the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Company or of the 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 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 11.3. 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 an 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 Company. 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
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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 11.4. Notices, etc. to Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Owners or other
documents provided or permitted by this Agreement to be made upon, given or
furnished to or filed with the Trustee by any Owner, the Certificate Insurer or
by the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Trustee at its
corporate trust office as set forth in Section 2.2 hereof.
Section 11.5. 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.
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 11.6. Rules by Trustee and the Company. The Trustee
may make reasonable rules for any meeting of Owners. The Company may make
reasonable rules and set reasonable requirements for its functions.
Section 11.7. 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.
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Section 11.8. 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 11.9. Benefits of Agreement. Nothing in this Agreement
or in the Certificates, expressed or implied, shall give to any Person, other
than the Owners, the Certificate Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10. Legal Holidays. In any case where the date of
any 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 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. 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.
Section 11.12. Counterparts. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts \shall together constitute but one and
the same instrument.
Section 11.13. Usury. The amount of interest payable or paid
on any Certificate under the terms of this Agreement shall be limited to an
amount which shall not exceed the maximum nonusurious rate of interest allowed
by the applicable laws of the State of New York or any applicable law of the
United States permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid to the Owner of such Certificate
as a result of an error on the part of the Trustee acting on behalf of the Trust
and the Owner receiving such excess payment shall promptly, upon discovery of
such error or upon notice thereof from the Trustee on behalf of the Trust,
refund the amount of such excess or, at the option of such Owner, apply the
excess to the payment of principal of such Certificate, if any, remaining
unpaid. In addition, all sums paid or agreed to be paid to the Trustee for the
benefit of Owners of Certificates for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Certificates.
Section 11.14. Amendment. (a) The Trustee, the Company and the
Servicer, may at any time and from time to time, with the prior approval of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement for the purposes of (i) removing the
restriction against the transfer of a Class R Certificate to a Disqualified
Organization (as such term is defined in the Code) if accompanied by an opinion
of counsel experienced in federal income tax matters addressed to the
Certificate Insurer and the Trustee that there is or will be no adverse effect
as a result of such
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amendment, (ii) complying with the requirements of the Code including any
amendments necessary to maintain REMIC status of the assets of the Trust treated
as a REMIC hereunder, (iii) curing any ambiguity and (iv) correcting or
supplementing any provisions of this Agreement which are inconsistent with any
other provisions of this Agreement; or (v) for any other purpose, provided that
in the case of clause (v), (A) prior to the effectiveness of such amendment, the
Company delivers an opinion of counsel acceptable to the Trustee and the
Certificate Insurer that such amendment will not adversely affect in any
material respect the interest of the Owners and the Certificate Insurer and (B)
delivers a letter from each Rating Agency stating that such amendment will not
result in a withdrawal or reduction of the rating of the Class A Certificates
without regard to the Certificate Insurance Policy. Notwithstanding anything to
the contrary, no such amendment shall (a) change in any manner the amount of, or
delay the timing of, payments which are required to be distributed to any Owner
without the consent of the Owner of such Certificate, (b) change the percentages
of Percentage Interest 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 or (c) which affects in any manner the terms or
provisions of the related Certificate Insurance Policy.
(b) This Agreement may be amended from time to time by the
Servicer, the Company and the Trustee with the consent of the Certificate
Insurer (which consent shall not be withheld if, in an opinion of counsel
addressed to the Trustee and the Certificate Insurer, failure to amend would
adversely affect the interests of the Owners) and the Owners of 66 2/3% of the
Class A Certificates for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Owners; provided, however, that no
such amendment shall be made that no such amendment shall reduce in any manner
the amount of, or delay the timing of, payments received on Mortgage Loans which
are required to be distributed on any Certificate without the consent of the
Owner of such Certificate or reduce the percentage for each Class the Owners of
which are required to consent to any such amendment without the consent of the
Owners of 100% of each Class of Certificates affected thereby.
(c) Each proposed amendment to this Agreement shall be
accompanied by an opinion of counsel nationally recognized in federal income tax
matters and reasonably acceptable to the Certificate Insurer addressed to the
Trustee and to the Certificate Insurer to the effect that such amendment would
not adversely affect the status of the Trust (other than the Pre-Funding
Account, the Group II Available Funds Cap Carry-Forward Amount Account or the
Capitalized Interest Account) as a REMIC.
(d) The Certificate Insurer, the Owners, Moody's and Standard
& Poor's 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. REMIC Status; Taxes. (a) The Tax Matters Person
shall prepare and file or cause to be filed with the Internal Revenue Service
federal tax or information returns with respect to the Trust and the
Certificates containing such information and at the times and in such manner as
may be required by the Code or applicable Treasury regulations and shall furnish
to Owners such statements or information at the times and in such manner as may
be required thereby. For this purpose, the Tax Matters Person may, but need not,
rely on any proposed regulations of the United States Department of the
Treasury. The Tax Matters Person shall indicate the election to treat the Trust
as a REMIC (which election shall apply to the taxable period ending December 31,
1997 and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe. First Alliance Residual Holding Company, as
Tax Matters Person appointed pursuant to Section 11.17 hereof, shall sign all
tax information returns filed pursuant to this Section 11.15. The Tax Matters
Person shall provide information necessary for the computation of tax imposed on
the transfer of a Class R Certificate to a Disqualified Organization, an agent
of a Disqualified Organization or a pass-through entity in which a Disqualified
Organization is the record
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holder of an interest. The Tax Matters Person shall provide the Trustee with
copies of any Federal tax or information returns filed, or caused to be filed,
by the Tax Matters Person with respect to the Trust or the Certificates.
(b) The Tax Matters Person shall timely file all reports
required to be filed by the Trust with any federal, state or local governmental
authority having jurisdiction over the Trust, including other reports that must
be filed with the Owners, such as the Internal Revenue Service's Form 1066 and
Schedule Q and the form required under Section 6050K of the Code, if applicable
to REMICs. Furthermore, the Tax Matters Person shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212 of
the Code in accordance with the specific instructions to the Tax Matters Person
by the Company with respect to such allocation of expenses. The Tax Matters
Person shall collect any forms or reports from the Owners determined by the
Company to be required under applicable federal, state and local tax laws.
(c) The Tax Matters Person shall provide to the Internal
Revenue Service and to persons described in Section 860E(e)(3) and (6) of the
Code the information described in Proposed Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will
be provided in the manner described in Proposed Treasury Regulation Section
1.860E(2)(a)(5), or any successor regulation thereto.
(d) The Company covenants and agrees that within ten Business
Days after the Startup Day it shall provide to the Tax Matters Person any
information necessary to enable the Tax Matters Person to meet its obligations
under subsections (b) and (c) above.
(e) The Trustee, the Company and the Servicer each covenants
and agrees for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of "REMIC" status for the Trust
(other than the Pre-Funding Account, the Group II Available Funds Cap
Carry-Forward Amount Account or the Capitalized Interest Account) (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.
(f) The Trust shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(g) Except as otherwise permitted by Section 7.6(b) hereof, 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).
(h) Neither the Company 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, which fee or other compensation is
paid from the Trust Estate, other than as expressly contemplated by this
Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the
Trustee or the Company 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 and reasonably acceptable to the
Certificate Insurer, which opinion shall not be at the expense of the Trustee,
to the effect that such transaction does not result in a tax imposed on the
Trustee or cause a termination of REMIC status for the Trust; provided, however,
that such transaction is otherwise permitted under this Agreement.
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Section 11.16. Additional Limitation on Action and Imposition
of Tax. (a) Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters and reasonably acceptable to the Certificate Insurer,
which opinion shall not be at the expense of the Trustee, 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 Trust, (i) sell any assets in the Trust
Estate, (ii) accept any contribution of assets after the Startup Day or (iii)
agree to any modification of this Agreement.
(b) In the event that any tax is imposed on "prohibited
transactions" of the Trust as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" as defined in Section 860G(c) of the
Code, on any contribution to the Trust after the Startup Day pursuant to Section
860G(d) of the Code or any other tax (other than any minimum tax imposed by
Sections 23151(a) or 23153(a) of the California Revenue and Taxation Code) is
imposed, such tax shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Servicer, if such tax arises out of or results from a breach
by the Servicer of any of its obligations under this Agreement or (iii) the
Owners of the Class R Certificates in proportion to their Percentage Interests.
To the extent such tax is chargeable against the Owners of the Class R
Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Owners of the Class R Certificates on any Payment Date sufficient funds to
reimburse the Trustee for the payment of such tax (to the extent that the
Trustee has not been previously reimbursed or indemnified therefor). The Trustee
agrees to first seek indemnification for any such tax payment from any
indemnifying parties before reimbursing itself from amounts otherwise
distributable to the Owners of the Class R Certificates.
Section 11.17. Appointment of Tax Matters Person. A Tax
Matters Person will be appointed for the Trust for all purposes of the Code, and
such Tax Matters Person will perform, or cause to be performed through agents,
such duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the Code. The Tax Matters
Person for the Trust shall be First Alliance Residual Holding Company as long as
it owns a Class R Certificate or, if First Alliance Residual Holding Company
does not own a Class R Certificate, may be any other entity selected by First
Alliance Residual Holding Company that owns a Class R Certificate.
Section 11.18. The Certificate Insurer. The Certificate
Insurer is a third-party beneficiary of this Agreement. Any right conferred to
the Certificate Insurer shall be suspended during any period in which the
Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policies. During any period of suspension the Certificate
Insurer's rights hereunder shall vest in the Owners of the Class A Certificates
and shall be exercisable by the Owners of at least a majority in Percentage
Interest of the Class A Certificates then Outstanding. At such time as the Class
A Certificates are no longer Outstanding hereunder and the Certificate Insurer
has been reimbursed for all Insured Payments to which it is entitled hereunder,
the Certificate Insurer's rights hereunder shall terminate.
Section 11.19. Maintenance of Records. Each Owner of a Class R
Certificate shall each continuously keep an original executed counterpart of
this Agreement in its official records.
Section 11.20. Notices. All notices hereunder shall be given
as follows, until any superseding instructions are given to all other Persons
listed below:
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The Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Structured Finance/MBS
Tel: (212) 815-2297
Fax: (212) 815-5309
The Company: First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614-6203
Attention: Director, Secondary Marketing
Tel: (714) 224-8357
Fax: (714) 224-8366
The Servicer: First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614-6203
Attention: Manager, Investor Reporting
Tel: (714) 224-8357
Fax: (714) 224-8366
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio
Management-SF (First Alliance
Mortgage Loan Trust 1997-4)
Tel: (914) 765-3781
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring
Department
Standard & Poor's: Standard & Poor's, A Division of
The McGraw-Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage
Surveillance Dept.
Underwriters: Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10292-2015
Attention: Director, Asset-Backed Finance
Tel: (212) 778-1000
Fax: (212) 778-5099
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First Union Capital Markets Corp.
One First Union Center
Charlotte, North Carolina 28288-0166
Attention: Director, Asset-Backed Finance
Tel: (704)
Fax: (704)
101
<PAGE>
IN WITNESS WHEREOF, the Company, the 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.
FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Mark Mason
------------------------------------
Name: Mark Mason
Title: Executive Vice President, CFO
FIRST ALLIANCE MORTGAGE COMPANY,
as Servicer
By: /s/ Mark Mason
------------------------------------
Name: Mark Mason
Title: Executive Vice President, CFO
THE BANK OF NEW YORK,
as Trustee
By: /s/ Franklin B. Austin
------------------------------------
Name: Franklin B. Austin
Title: Assistant Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 22nd day of December, 1997, before me, personally came Franklin
B. Austin, to me known, who being by me duly sworn did depose and say that his
office is located at 450 W. 33rd St., New York, NY; that he is an Assistant Vice
President of The Bank of New York, the New York banking corporation described
herein and that he executed the above instrument as Trustee; and that he signed
his name thereto under the authority granted by the Board of Directors of said
New York 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 D. Austin
- - --------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 22nd day of December, 1997, before me, a Notary Public,
personally appeared Mark Mason, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
[NOTARIAL SEAL]
/s/ Micheyle D. Grillo
- - --------------------------
Notary Public
Exhibit 10.1
SUBSEQUENT TRANSFER AGREEMENT
First Alliance Mortgage Company, the "Company", and in its capacity as
servicer of the Trust, the "Servicer", and First Alliance Mortgage Loan Trust
1997-4, as the "Purchaser", pursuant to the Pooling and Servicing Agreement
dated as of December 1, 1997, (the "Pooling and Servicing Agreement") among the
Company, the Servicer, and The Bank of New York, a New York banking corporation,
in its capacity as Trustee (the "Trustee"), hereby confirm their understanding
with respect to the sale by the Company and the purchase by the Purchaser of
those Mortgage Loans (the "Subsequent Mortgage Loans") listed on the attached
Schedules of Mortgage Loans.
Conveyance of Subsequent Mortgage Loans. As of December 1, 1997 (the
"Subsequent Cut-Off Date"), the Company does hereby irrevocably transfer,
assign, setover 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 which
are delivered to the Trustee herewith (and all substitutions therefor as
provided by Sections 3.3, 3.4 and 3.6 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 Company 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 3.5 and 3.8 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 Company.
The Company hereby affirms the representations and warranties set forth
in the Pooling and Servicing Agreement that relate to the Company and the
Subsequent Mortgage Loans as of the date hereof. The Company hereby delivers
notice and confirms that each of the conditions set forth in Section 3.8(b),
3.8(c) and 3.8(d) 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.
<PAGE>
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
FIRST ALLIANCE MORTGAGE THE BANK OF NEW YORK
COMPANY, as the Company as Trustee for First Alliance Mortgage
Loan Trust 1997-4
By: /s/ Mark Mason By: /s/ Franklin B. Austin
- - ----------------------------------- -----------------------------------------
Name: Mark Mason Name: Franklin B. Austin
Title: Executive Vice President Title: Assistant Vice President
FIRST ALLIANCE MORTGAGE Dated: December 31, 1997
COMPANY, as Servicer
By: /s/ Mark Mason
- - -----------------------------------
Name: Mark Mason
Title: Executive Vice President
<PAGE>
EXHIBIT B
LOAN SCHEDULE - GROUP 1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt Prop Occup Appraised Orig
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type Type Type Value Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
304358 12223 224TH STREET HAWAIIAN GARDENS CA 90716 1 55,387.00 9.90 591.81 1/1/13 A F I 135,000 F
304371 1207 WEST 58TH PLACE LOS ANGELES CA 90044 1 63,960.00 9.45 535.48 1/1/28 A S P 115,000 F
304378 1972 EAST 112TH STREET LOS ANGELES CA 90059 1 44,850.00 8.99 360.55 2/1/28 A S P 110,000 F
304382 19609 EDDINGTON DRIVE CARSON CA 90746 1 100,093.00 10.15 889.50 2/1/28 A S P 184,000 F
304389 425 EAST 43RD PLACE LOS ANGELES CA 90011 1 54,111.00 8.99 435.00 2/1/28 A S P 123,000 F
405614 1555 VAN DYKE AVE SAN FRANCISCO CA 94124 1 69,605.00 9.75 598.01 2/1/28 A S I 130,000 F
405621 5624 HIGHLAND AVENUE RICHMOND CA 94804 1 28,745.00 9.40 239.61 2/1/28 A S P 145,000 F
405623 424 TREGASKIS AVENUE VALLEJO CA 94591 1 87,015.00 8.99 699.52 2/1/28 A S P 130,000 F
405626 279 TOPEKA AVE SAN FRANCISCO CA 94124 1 136,490.00 9.95 1,192.76 2/1/28 A S P 190,000 F
505589 3841 CRESTVIEW ROAD CULVER CITY CA 90232 1 124,290.00 8.99 999.17 2/1/28 A S P 245,000 F
505592 2505 SELROSE LANE SANTA BARBARA CA 93109 1 182,165.00 9.25 1,498.63 2/1/28 A S P 315,000 F
505593 17200 HORACE ST. GRANADA HILLS AREA CA 91344 1 94,795.00 8.99 762.06 2/1/28 A S P 146,000 F
505600 7385 DARNOCH WAY (Canoga
Park area) LOS ANGELES CA 91307 1 70,445.00 8.99 566.31 2/1/28 A S P 275,000 F
505601 6023 COMEY AVE LOS ANGELES CA 90034 1 61,038.00 9.99 535.20 2/1/28 A S P 146,000 F
701504 1071 LARK ROAD WRIGHTWOOD CA 92397 2 6,299.61 14.95 409.73 5/1/99 A S P 77,000 F
707224 17010 EAST ORKNEY STREET AZUSA AREA CA 91702 1 55,911.00 9.99 490.25 2/1/28 A S P 135,000 F
707228 2236 FELBERG AVENUE,DUARTE
AREA LOS ANGELES COUNTY CA 91010 1 37,077.00 10.15 329.49 2/1/28 A S P 130,000 F
707236 2553 BARTLETT AVENUE ROSEMEAD CA 91770 1 76,919.00 8.99 618.35 2/1/28 A S P 130,000 F
806470 118 MEIDL AVE., WATSONVILLE CA 95076 1 107,990.00 10.90 1,020.26 2/1/28 A S P 163,000 F
806476 2348 THOMPSON PL. SANTA CLARA CA 95050 1 37,344.00 9.90 324.96 2/1/28 A S P 243,000 F
806479 582 CRYSTALBERRY TERRACE SAN JOSE CA 95129 1 40,199.00 9.40 417.35 2/1/13 A P P 228,000 F
806481 3304 MT MCKINLEY DR SAN JOSE CA 95127 1 129,406.00 9.40 1,197.80 2/1/18 A S P 218,000 F
1301552 1136 OXFORD RD. N.E. ATLANTA GA 30306 1 267,969.00 8.99 2,154.21 2/1/28 A S P 361,000 F
1301560 1113 BROOK AVE. MARIETTA GA 30062 1 36,340.00 9.99 318.64 2/1/28 A S P 73,000 F
1602686 10636 RUSTIC RD S SEATTLE WA 98178 1 99,209.00 9.25 816.17 2/1/28 A S P 148,000 F
1602692 1106 32ND AVE EAST SEATTLE WA 98112 1 56,194.00 10.49 513.61 2/1/28 A S P 95,000 F
1602697 8213 118TH AVE SE RENTON WA 98056 1 22,198.00 9.25 228.46 1/1/13 A S P 140,000 F
1602699 17830 33RD AVE NE SEATTLE WA 98155 1 109,789.00 8.99 882.60 1/1/28 A S P 222,000 F
1602700 517 PAMELA DR SE OLYMPIA WA 98503 1 32,808.00 8.99 332.57 2/1/13 A S P 100,000 F
1602705 229 DEL MONTE AVE FIRCREST WA 98466 1 79,235.00 9.95 692.42 2/1/28 A S P 119,000 F
1602706 311 21ST AVE SEATTLE WA 98122 1 120,695.00 9.95 1,054.73 1/1/28 A S P 161,000 F
1602709 17237 SE 262ND ST KENT WA 98042 1 53,762.00 8.99 432.19 1/1/28 A S P 117,000 F
1602711 3524 E. DENNY WAY SEATTLE WA 98122 1 128,251.00 9.69 1,096.23 1/1/28 A S P 178,000 F
1702941 582 SOUTH GRANT STREET DENVER CO 80209 1 105,990.00 9.40 883.50 2/1/28 A S P 180,000 F
1702953 3055 KEARNEY STREET DENVER CO 80207 1 71,707.00 8.89 571.30 2/1/28 A S P 97,000 F
1803452 9052 S CHAPPEL AVENUE CHICAGO IL 60617 1 58,090.00 9.40 484.22 2/1/28 A S P 83,000 F
1803474 5690 ALABAMA AVENUE CLARENDON HILLS IL 60514 1 107,240.00 10.65 993.01 2/1/28 A S P 165,000 F
1902021 5831 SW 50TH TERRACE MIAMI FL 33155 1 23,217.00 9.75 245.95 12/1/12 A S P 185,000 F
1902058 2020 SW 97TH AVENUE MIAMI FL 33165 1 47,507.00 8.99 381.91 2/1/28 A S P 159,000 F
1902064 7430 CENTER BAY DRIVE NORTH BAY VILLAGE FL 33141 1 35,005.00 9.70 299.46 2/1/28 A S P 145,000 F
2101313 21334 SE MAIN STREET GRESHAM OR 97030 1 83,314.71 7.75 605.98 4/1/26 A S P 121,000 F
2101869 6675 ORVILLE RD SOUTH SALEM OR 97306 1 50,488.00 9.99 442.70 1/1/28 A S P 142,000 F
2101886 33140 SE COUPLAND RD ESTACADA OR 97023 1 29,375.00 9.99 257.57 1/1/28 A S P 150,000 F
2101891 3031 NE 7TH AVE PORTLAND OR 97212 1 73,490.00 10.49 671.69 1/1/28 A S P 105,000 F
2101896 110 NE MORGAN ST PORTLAND OR 97211 1 55,601.00 10.15 494.11 2/1/28 A S P 112,000 F
2101900 2055 N WYGANT ST PORTLAND OR 97217 1 20,020.00 10.65 185.38 2/1/28 A S P 110,000 F
2101901 5525 NE 17TH AVE PORTLAND OR 97211 1 36,720.00 9.40 381.23 2/1/13 A S P 85,000 F
2101904 2051 NE 137TH AVE PORTLAND OR 97230 1 91,563.00 9.49 769.24 1/1/28 A S P 127,000 F
2500305 9301 BEECH AVENUE BROOKLYN OH 44144 1 64,089.00 9.65 545.92 2/1/28 A S P 97,000 F
2600464 3635 E HAZELWOOD ST PHOENIX AZ 85018 1 38,898.00 9.99 341.07 2/1/28 A S P 100,000 F
2600465 10397 E. DESERT COVE AVE. SCOTTSDALE AZ 85260 1 198,912.00 9.99 2,136.30 2/1/13 A S P 292,000 F
2600474 1407 E DEL RIO DR TEMPE AZ 85282 1 82,590.00 9.99 724.18 2/1/28 A S P 115,000 F
2700468 7106 SOUTH 2870 EAST SALT LAKE CITY UT 84121 1 115,990.00 9.75 996.53 2/1/28 A S P 145,000 F
2700469 5674 SOUTH 2650 WEST ROY UT 84067 1 28,342.00 9.40 262.34 2/1/18 A S P 97,000 F
2900708 3937 TOWNSHIP LINE RD. COLLEGEVILLE PA 19426 1 97,822.00 8.99 991.59 1/1/13 A S P 123,000 F
2900711 219 W. CHESTNUT ST. SOUDERTON PA 18964 1 85,390.00 10.40 774.72 1/1/28 A S P 122,000 F
3100644 165 CENTRAL AVE ENGLEWOOD NJ 07631 1 27,855.00 10.75 260.02 1/1/28 A S P 77,000 F
3100678 204 RICHELIEU TERR NEWARK NJ 07106 1 77,295.00 9.90 672.61 1/1/28 A S P 111,000 F
3100687 102 WOODLAWN AVE. JERSEY CITY NJ 07305 1 33,963.00 11.90 346.74 2/1/28 A S P 66,000 F
3200794 52 LONG BEACH AVENUE ROOSEVELT NY 11575 1 80,588.00 10.15 716.17 1/1/28 A S P 124,000 F
3200796 520 WEST BROADWAY PORT JEFFERSON NY 11777 1 91,701.00 9.90 797.97 1/1/28 A S P 165,000 F
3200802 39 CONE AVENUE CENTRAL ISLIP NY 11722 1 59,970.00 8.90 478.22 1/1/28 A S P 125,000 F
3200806 24 S. 12TH ST NEW HYDE PARK NY 11040 1 115,924.00 9.65 987.46 1/1/28 A S P 225,000 F
3200814 167 LAWRENCE STREET UNIONDALE NY 11553 1 99,990.00 9.40 833.48 1/1/28 A S P 148,000 F
3200825 11 PILGRIM LANE WESTBURY NY 11590 1 119,697.00 9.40 997.76 2/1/28 A S P 160,000 F
3200828 352 GIBBS POND ROAD NESCONSET NY 11767 1 66,850.00 10.40 606.51 2/1/28 A S P 134,000 F
3200849 169 SCOOTER LANE HICKSVILLE NY 11801 1 35,531.00 9.40 296.18 2/1/28 A S P 158,000 F
3300388 649 BRADFORD STREET BROOKLYN NY 11207 1 81,895.00 9.40 682.65 1/1/28 A F P 175,000 F
3300393 492 HANCOCK STREET BROOKLYN NY 11233 1 91,758.00 11.15 884.25 1/1/28 A F P 163,000 F
3300401 829 MAPLE STREET BROOKLYN NY 11203 1 88,368.00 9.40 736.61 1/1/28 A F P 171,000 F
3300409 3403 AVENUE D BROOKLYN NY 11203 1 131,240.00 9.40 1,093.97 2/1/28 A F P 175,000 F
3300429 38-02 LITTLE NECK PARKWAY LITTLE NECK NY 11363 1 64,372.00 9.40 536.58 2/1/28 A S P 130,000 F
3300434 87-12 88 STREET WOODHAVEN NY 11421 1 85,317.00 8.80 674.24 2/1/28 A F P 172,000 F
3300438 2821 BRIGHTON 7TH ST BROOKLYN NY 11235 1 43,600.00 9.40 452.65 2/1/13 A F P 165,000 F
3300445 1735 66TH STREET BROOKLYN NY 11204 1 137,231.00 9.40 1,143.91 2/1/28 A F P 240,000 F
3400311 8 RACHEL TERRACE PISCATAWAY NJ 08854 1 41,755.00 9.20 428.49 1/1/13 A S P 116,000 F
3400316 737-39 HUNTINGTON AVE PLAINFIELD NJ 07060 1 87,490.00 11.49 865.74 2/1/28 A S P 125,000 F
3400322 1991 AMWELL ROAD SOMERSET NJ 08873 1 41,950.00 11.99 431.18 2/1/28 A S P 162,000 F
3500236 200 HUNNEWELL STREET NEEDHAM MA 02194 1 142,618.00 9.49 1,198.17 1/1/28 A S P 240,000 F
3500240 918 SUMNER STREET STOUGHTON MA 02072 1 106,590.00 9.54 899.38 2/1/28 A S P 168,000 F
3600161 14100 DUB DRIVE LAUREL MD 20708 1 46,822.00 9.65 398.84 1/1/28 A S P 140,000 F
</TABLE>
Page 1
<PAGE>
EXHIBIT B
LOAN SCHEDULE - GROUP 1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt Prop Occup Appraised Orig
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type Type Type Value Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3600166 522 SOMERSET PLACE NW WASHINGTON DC 20011 1 34,324.00 10.90 324.28 2/1/28 A S P 105,000 F
3600171 1015 EAST WEST HIGHWAY TAKOMA PARK MD 20912 1 57,066.00 8.25 699.93 2/1/08 A S P 126,000 F
3800151 651 IRVING ST NW WASHINGTON DC 20010 1 83,288.00 9.90 724.76 1/1/28 A S P 119,000 F
3800169 1281 DELAWARE AVE SW #70 WASHINGTON DC 20024 1 40,366.00 10.90 381.37 2/1/28 A C P 111,000 F
3900073 7910 BON AIR RD BALTIMORE MD 21234 1 60,716.00 9.68 518.53 1/1/28 A S P 98,000 F
3900075 176 INLET DRIVE PASADENA MD 21122 1 66,391.00 9.49 618.42 2/1/18 A S P 129,000 F
3900101 140 SIPPLE AVE. BALTIMORE MD 21236 1 67,446.00 9.40 562.21 2/1/28 A S P 90,000 F
3900102 1701 PINEWOOD DR BALTIMORE MD 21222 1 57,102.00 11.49 565.04 2/1/28 A S P 84,000 F
3900108 2913 PAPER MILL RD PHOENIX MD 21131 1 127,490.00 9.60 1,081.32 2/1/28 A S P 170,000 F
3900127 7898 CHALICE CT. SEVERN MD 21144 1 61,289.00 9.65 522.07 2/1/28 A S P 136,000 F
3900135 2214 SPRING LAKE DR TIMONIUM MD 21093 1 62,224.00 9.90 541.47 2/1/28 A S P 207,000 F
4400006 2119 CLIFF HILL LANE EAGAN MN 55122 1 76,979.00 10.40 846.16 2/1/13 A S P 110,000 F
4400008 1485 PRAIRIELAND AVENUE MAPLE PLAIN MN 55359 1 48,152.00 9.40 499.91 2/1/13 A S P 132,000 F
4400021 1952 203 RD AVENUE NW CEDAR MN 55011 1 74,085.00 9.99 795.67 2/1/13 A S P 100,000 F
4400024 23915 SEELYE BROOK
DRIVE NW ST. FRANCIS MN 55070 1 24,806.00 9.90 265.05 2/1/13 A S P 95,000 F
4400027 8323 CREDIT RIVER
BOULEVARD PRIOR LAKE MN 55372 1 186,364.00 9.99 1,634.10 2/1/28 A S P 309,000 F
8302311 18127 132ND PLACE
SOUTH EAST SNOHOMISH WA 98290 1 101,500.00 8.25 762.54 12/1/27 A S P 145,000 C
8302383 10278 COLD HARBOR AVE CUPERTINO CA 95014 1 282,000.00 8.25 2,118.57 12/1/27 A S P 453,000 C
8302405 8839 BRADFORD STREET PHILADELPHIA PA 19115 1 49,657.31 8.25 485.07 12/1/12 A S P 82,000 C
8302422 520 W. ELLET STREET PHILADELPHIA PA 19119 1 73,500.00 8.75 578.22 12/1/27 A S P 105,000 C
8302430 21040 N. 21ST STREET BARRINGTON IL 60010 1 79,000.00 8.99 635.08 12/1/27 A S P 147,000 C
8302459 6719 S. 1620 E. SALT LAKE CITY UT 84121 1 106,500.00 8.99 856.16 1/1/28 A S P 142,000 C
8302504 5399 GANTZFIELD COURT CINCINNATI OH 45241 1 119,000.00 8.25 894.01 1/1/28 A P P 170,000 C
8900653 14717 EAST 12TH AVENUE VERADALE WA 99037 1 27,854.75 9.25 288.18 10/1/12 A S P 84,000 C
8900654 2623 NORTH ST. LOUIS
AVENUE CHICAGO IL 60647 1 49,955.58 10.75 466.75 10/1/27 A S P 92,000 C
8900655 10021 LINCOLN VILLAGE
DRIVE SACRAMENTO CA 95827 1 44,957.84 9.75 386.62 10/1/27 A S P 87,000 C
8900656 4035 EAST PAULINE STREET COMPTON AREA CA 90221 1 91,898.89 8.99 739.60 10/1/27 A S P 160,000 C
8900658 14518 SOUTH GIBSON AVENUE COMPTON CA 90221 1 67,675.56 8.99 544.65 10/1/27 A S P 123,500 C
8900659 6901 SW 2ND STREET PEMBROKE PINES FL 33024 1 61,658.20 11.49 611.53 10/1/27 A S P 103,000 C
8900660 6015 LONG STREET LOS ANGELES CA 90043 1 49,936.00 8.25 375.64 10/1/27 A S P 149,000 C
8900661 4847 WEST 140TH STREET HAWTHORNE AREA CA 90250 1 64,924.93 8.75 511.36 10/1/27 A S P 150,000 C
8900662 15970 WEST ELLENDALE DALLAS OR 97338 1 84,889.43 10.25 761.69 10/1/27 A S P 170,000 C
8900665 171 PEARL STREET PATERSON NJ 07544 1 47,973.47 14.00 568.74 3/21/12 A F P 85,000 C
8900666 708 EAST 24TH STREET PATERSON NJ 07504 1 57,444.50 10.40 521.69 10/6/12 A S P 100,000 C
8900669 206-02 EMILY ROAD UNIT 36L BAYSIDE NY 11360 1 58,782.85 14.99 743.03 10/2/27 A C P 150,000 C
8900670 8600 BOTLEY DRIVE FORT WASHINGTON MD 20744 1 79,297.90 11.25 921.88 7/2/12 A S P 168,500 C
8900671 6975 WINKFIELD PLACE COLLEGE PARK GA 30349 1 48,770.76 12.99 619.02 10/1/12 A S P 89,000 C
8900672 687 CENTERWOOD STREET NORTH BABYLON NY 11703 1 67,692.58 13.25 765.53 9/16/27 A S P 130,000 C
8900673 10 NORTHWOOD DRIVE PITTSTOWN NJ 08867 1 99,321.69 10.50 998.38 9/30/17 A S P 260,000 C
8900674 26 EAST LINCOLN AVENUE ROSELLE PARK NJ 07204 1 59,961.46 11.50 594.18 9/30/27 A S P 153,000 C
8900675 181 GIBSON AVENUE BRENTWOOD NY 11717 1 56,487.25 11.50 801.40 10/3/07 A S P 134,000 C
8900676 13 PINE RIDGE DRIVE BRANCHBURG TWP NJ 08876 1 149,757.42 9.10 1,217.75 9/29/27 A S P 250,000 C
8900677 917 WILLOUGHBY AVENUE BROOKLYN NY 11221 1 79,953.87 11.99 822.28 10/3/27 A F P 180,000 C
8900679 7 NEW JERSEY AVENUE BELLPORT NY 11713 1 39,835.98 11.80 474.94 10/7/12 A S P 124,000 C
8900680 88-25 90TH STREET WOODHAVEN NY 11421 1 123,361.97 11.25 1,295.84 10/3/17 A S P 190,000 C
8900681 77 SKYLINE VIEW FRONT ROYAL VA 22630 1 103,693.41 9.25 952.51 9/4/17 A S P 240,000 C
8900683 402 S. YALE VILLA PARK IL 60181 1 49,148.56 8.50 492.37 9/4/12 A S P 186,000 C
8900684 19 HIGH STREET WAYNE NJ 07470 1 124,726.94 11.99 1,284.81 9/30/27 A S P 218,000 C
8900688 148 YORK AVENUE STATEN ISLAND NY 10301 1 96,733.11 11.50 962.56 10/18/26 A S P 130,000 C
8900702 127 ELMORE AVENUE ENGLEWOOD NJ 07631 1 61,985.79 12.99 685.36 11/1/27 A S P 136,000 C
8900703 823 MADRID AVENUE TORRANCE CA 90501 1 64,978.06 11.25 631.32 11/1/27 A S I 231,000 C
8900704 3739 WEST 111TH STREET INGLEWOOD CA 90303 1 49,984.02 11.50 495.15 11/1/27 A S I 90,000 C
8900705 231 SOUTH NINTH STREET CONNELLSVILLE PA 15425 1 33,526.10 11.00 381.90 11/1/12 A S S 72,500 C
8900706 9941 SOUTH BENSLEY AVENUE CHICAGO IL 60617 1 39,905.68 10.25 435.99 11/1/12 A S P 81,000 C
8900708 23 CHARLES STREET JERSEY CITY NJ 07307 1 103,885.72 8.99 836.06 10/1/27 A F P 200,000 C
8900710 576 MOHAWK ROAD WEST HEMSTEAD NY 11552 1 74,588.10 9.99 657.63 10/20/27 A S P 259,000 C
8900711 211 OCEAN AVENUE BROOKLYN NY 11225 1 34,834.25 10.25 381.48 10/8/12 A F P 227,000 C
8900712 9 BROOKVALE LANE LAKE GROVE NY 11755 1 49,746.44 9.50 522.11 10/8/12 A S P 204,000 C
8900713 826 PUTNAM AVENUE BROOKLYN NY 11221 1 69,919.02 10.99 722.06 10/21/17 A F P 210,000 C
8900714 909 GREENE AVENUE BROOKLYN NY 11221 1 22,967.69 9.50 214.39 10/1/17 A F P 183,000 C
8900715 153-28 118TH AVENUE JAMAICA NY 11434 1 41,480.87 12.99 458.75 9/22/27 A S I 90,000 C
8900716 31 HARMON DRIVE LARCHMONT DRIVE NY 10538 2 49,673.16 10.50 552.70 10/6/12 A S P 250,000 C
8900717 115 EAST 52ND STREET BROOKLYN NY 11203 1 59,946.58 9.99 526.10 9/24/27 A F P 200,000 C
8900720 111-29 172ND STREET JAMAICA NY 11433 1 71,436.33 9.99 626.94 10/6/27 A F P 170,000 C
8900721 93 ASTER COURT BROOKLYN NY 11229 2 49,854.42 9.25 457.93 10/23/17 A F P 210,000 C
8900722 2479 RUGBY STREET EAST MEADOW NY 11554 1 64,953.33 10.99 618.52 10/1/27 A S P 160,000 C
8900723 94 BEAVER RUN ROAD OTTSVILLE PA 18942 1 54,726.10 9.70 580.98 10/3/12 A S I 255,000 C
8900793 6120 TENNYSON STREET ARVADA CO 80003 1 89,062.63 10.25 798.43 11/1/27 A S P 155,000 C
8900801 974 CAPSTAN DRIVE LACEY TWP NJ 08734 1 114,933.96 11.75 1,361.76 10/14/12 A S S 220,000 C
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE LOANS 150 11,300,643.78
</TABLE>
Page 2
<PAGE>
EXHIBIT B
LOAN SCHEDULE - GROUP 1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt Prop Occup Appraised Orig
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type Type Type Value Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
304381 3052 MARWICK AVENUE LONG BEACH CA 90808 1 106,574.00 10.50 974.87 2/1/28 A S P 176,000 F
405617 515 FOERSTER STREET SAN FRANCISCO CA 94127 1 138,037.00 7.25 941.66 2/1/28 A S P 215,000 F
405618 1241 BIRCH AVENUE SO. SAN FRANCISCO CA 94080 1 60,804.00 8.75 478.35 2/1/28 A S P 228,000 F
405619 148 ORIOLE COURT HERCULES CA 94547 1 161,236.00 7.65 1,143.99 2/1/28 A S P 210,000 F
505588 728 COLDBROOK PLACE SIMI VALLEY CA 93065 1 233,990.00 8.99 1,881.05 2/1/28 A S P 325,000 F
505590 6239 ANASTASIA STREET SIMI VALLEY CA 93063 1 140,990.00 7.99 1,033.55 2/1/28 A S P 188,000 F
707222 1342 HEATHDALE AVENUE COVINA CA 91722 1 56,205.00 9.75 482.89 2/1/28 A S P 145,000 F
707231 15318 YORBA AVENUE CHINO HILLS CA 91709 1 103,990.00 8.49 798.86 2/1/28 A S P 160,000 F
707235 1208 WEST SHORB STREET ALHAMBRA CA 91803 1 116,240.00 7.65 824.74 2/1/28 A S P 155,000 F
806464 1541 PETERSEN AVE SAN JOSE CA 95129 1 232,550.00 7.25 1,586.40 2/1/28 A S P 375,000 F
806471 653 BRENDA LEE DRIVE SAN JOSE CA 95123 1 239,419.00 7.65 1,698.71 2/1/28 A S P 327,000 F
806475 3179 PERCIVALE DR SAN JOSE CA 95127 1 90,700.00 8.49 696.76 2/1/28 A S P 209,000 F
806477 1300 ANTWERP LN SAN JOSE CA 95118 1 132,427.00 7.75 948.72 2/1/28 A S P 236,000 F
806485 25 VIA MESA SAN JOSE CA 95139 1 129,681.00 9.99 1,137.09 2/1/28 A S P 230,000 F
806491 908 FARIS DR SAN JOSE CA 95111 1 143,129.00 8.25 1,075.28 2/1/28 A S P 217,000 F
1301557 2629 HENDERSON RD. TUCKER GA 30084 1 30,270.00 7.99 253.00 2/1/18 A S P 60,000 F
1602688 7511 23RD ST W UNIVERSITY PLACE WA 98466 1 37,643.00 9.49 392.85 2/1/13 A S P 110,000 F
1602689 22621 23RD PL W BRIER WA 98036 1 96,697.00 7.75 910.19 2/1/13 A S P 151,000 F
1602690 17712 SE 332ND PL AUBURN WA 98092 1 79,790.00 8.40 607.87 2/1/28 A S P 114,000 F
1602691 23572 27TH PL W BRIER WA 98036 1 104,236.00 9.40 868.88 2/1/28 A S P 149,000 F
1602698 30124 RAMSTAD RD ARLINGTON WA 98223 1 42,270.00 8.99 339.81 2/1/28 A S P 100,000 F
1602710 6821 119TH PL SE BELLEVUE WA 98006 1 85,428.00 7.79 614.38 2/1/28 A S P 203,000 F
1602715 7931 DENSMORE AVE N SEATTLE WA 98103 1 98,395.00 8.25 739.21 2/1/28 A S I 230,000 F
1602716 23028 35TH AVE SE BOTHELL WA 98021 1 122,105.00 8.99 981.61 2/1/28 A S P 204,000 F
1803419 7416 S. BENNETT AVENUE CHICAGO IL 60649 1 47,430.00 8.99 381.29 1/1/28 A S P 76,000 F
1803440 8330 S. MICHIGAN AVENUE CHICAGO IL 60619 1 72,090.00 7.25 491.78 1/1/28 A S P 125,000 F
1803454 12755 PONDEROSA DRIVE PALOS HEIGHTS IL 60463 1 152,506.00 8.75 1,199.77 2/1/28 A S P 240,000 F
1803465 4703 WEST 89TH STREET HOMETOWN IL 60456 1 51,990.00 9.49 436.78 2/1/28 A S P 93,000 F
1803466 1145 S. 4TH STREET AURORA IL 60505 1 67,880.00 8.90 684.45 2/1/13 A S P 97,000 F
1803485 11916 S. PERRY AVENUE CHICAGO IL 60628 1 20,011.00 7.75 188.36 2/1/13 A F P 95,000 F
2101885 2200 SW FAIRVIEW AVE DALLAS OR 97338 1 92,890.00 9.75 798.07 1/1/28 A S P 215,000 F
2101906 11341 NE FREMONT CT PORTLAND OR 97220 1 83,239.00 7.75 596.33 2/1/28 A S P 111,000 F
2201757 1928 THORNWOOD AVE. WILMETTE IL 60091 1 124,362.00 8.99 999.75 2/1/28 A S P 320,000 F
2201760 94 LAKE LANE RD FOX LAKE IL 60020 1 59,698.00 8.84 599.83 2/1/13 A S P 120,000 F
2201762 1710 HIGHLAND BLVD. HOFFMAN ESTATES IL 60195 1 99,989.00 8.75 786.61 2/1/28 A S P 170,000 F
2201765 6820 N. SACRAMENTO AVE. CHICAGO IL 60645 1 66,590.00 7.49 465.15 2/1/28 A P P 115,000 F
2201769 7990 NORTHWAY DR. HANOVER PARK IL 60103 1 68,286.00 8.50 672.44 2/1/13 A S P 140,000 F
2401553 12860 S.W. 8TH COURT DAVIE FL 33325 1 59,923.00 8.99 481.72 1/1/28 A P P 160,000 F
2401557 10445 154TH ROAD NORTH JUPITER FL 33478 1 105,404.00 9.99 924.22 1/1/28 A S P 164,000 F
2401568 5850 SW 188TH AVENUE DAVIE FL 33332 1 108,167.00 7.75 774.92 2/1/28 A S P 175,000 F
2500291 3850 EAKINS ROAD CUYAHOGA FALLS OH 44223 1 67,998.00 8.25 510.85 2/1/28 A S P 131,000 F
2500299 6226 BONETA ROAD MEDINA OH 44256 1 65,660.00 8.49 504.40 2/1/28 A S P 170,000 F
2500303 565 MINER ROAD HIGHLAND HEIGHTS OH 44143 1 67,670.00 7.49 626.92 2/1/13 A S P 119,000 F
2600457 8538 E. HACKAMORE DR. SCOTTSDALE AZ 85255 1 204,090.00 7.99 1,496.12 2/1/28 A S P 314,000 F
2700384 5372 WEST PEGGY CT WEST VALLEY CITY UT 84120 1 71,915.08 9.25 592.24 10/1/27 A S P 96,000 F
2700474 4122 SOUTH 1045 EAST SALT LAKE CITY UT 84124 1 46,228.00 7.49 428.28 2/1/13 A S P 136,000 F
2700476 1073 EAST FALLBROOK WAY SANDY UT 84094 1 101,250.00 7.49 707.26 2/1/28 A S P 140,000 F
2900716 1561 YELLOW SPRINGS RD. MALVERN PA 19355 1 184,525.00 7.99 1,352.69 2/1/28 A S P 472,000 F
2900725 9186 RYERSON RD. PHILADELPHIA PA 19114 1 46,790.00 7.99 343.00 2/1/28 A S P 72,000 F
2900732 308 WALNUT ST. JENKINTOWN PA 19046 1 73,490.00 8.15 708.69 2/1/13 A S P 105,000 F
2900733 321 EAST COUNTY LINE RD. ARDMORE PA 19003 1 39,765.00 9.75 421.26 2/1/13 A S P 83,000 F
2900736 865 CORNWELLS AVE. BENSALEM PA 19020 1 72,790.00 8.99 585.16 2/1/28 A S P 112,000 F
3100680 39 SUMMIT ROAD HAMBURG NJ 07419 1 46,641.00 10.50 515.57 2/1/13 A S P 124,000 F
3100699 72 HIGHLAND AVE GARFIELD NJ 07026 1 84,046.00 7.99 616.11 2/1/28 A S P 195,000 F
3200782 294 WEST 22 STREET DEER PARK NY 11729 1 107,095.00 9.25 881.04 1/1/28 A S P 147,000 F
3200812 25 BOXWOOD LANE HICKSVILLE NY 11801 1 97,108.00 7.99 711.87 1/1/28 A S P 165,000 F
3200813 36 WACHUSETT STREET ROCKVILLE CENTRE NY 11570 1 76,895.00 7.75 550.89 1/1/28 A S P 326,000 F
3200820 27 NORTHCOTE ROAD WESTBURY NY 11590 1 119,709.00 8.75 941.75 2/1/28 A S P 206,000 F
3200844 10 PARK AVENUE KINGS PARK NY 11754 1 90,800.00 8.49 697.53 2/1/28 A S I 158,000 F
3200845 22 ALBERTSON PARKWAY ALBERTSON NY 11507 1 99,427.00 8.99 799.30 2/1/28 A S P 219,000 F
3200850 3595 ROANOKE STREET SEAFORD NY 11783 1 87,121.00 7.75 624.15 2/1/28 A S P 190,000 F
3200853 1131 GERALD STREET UNIONDALE NY 11553 1 77,304.00 9.75 664.16 2/1/28 A S P 150,000 F
3200855 51 JUDSON PLACE ROCKVILLE CENTRE NY 11570 1 243,565.00 8.80 1,924.83 2/1/28 A S P 348,000 F
3300375 111 - 25 178TH PLACE ST ALBANS NY 11433 1 109,990.00 7.89 798.65 12/1/27 A S P 164,000 F
3300394 12 CRAGMERE ROAD SUFFERN NY 10901 1 106,172.00 7.49 741.64 2/1/28 A S P 230,000 F
3300403 4761 COLDEN STREET FLUSHING NY 11355 1 118,193.00 7.99 866.43 1/1/28 A F P 184,000 F
3300411 90-18 210TH STREET QUEENS VILLAGE NY 11428 1 101,390.00 9.39 844.42 2/1/28 A S P 169,000 F
3300412 89-20 163RD AVENUE HOWARD BEACH NY 11414 1 61,686.00 7.99 589.15 1/1/13 A S P 330,000 F
3300413 188-35 120TH ROAD ST ALBANS NY 11412 1 71,130.00 9.49 597.58 1/1/28 A S P 150,000 F
3300414 243 BRISTOL STREET BROOKLYN NY 11212 1 31,882.00 10.75 297.61 1/1/28 A S P 131,000 F
3300416 109 EAST 32ND STREET BROOKLYN NY 11226 1 100,640.00 9.99 882.44 1/1/28 A F P 183,000 F
3300420 518 EAST 49TH STREET BROOKLYN NY 11203 1 59,427.00 7.75 559.37 1/1/13 A S P 147,000 F
3300427 88-58 AUBREY AVENUE GLENDALE NY 11385 1 139,620.00 9.75 1,199.55 2/1/28 A F P 265,000 F
3300428 48 FULLER PLACE BROOKLYN NY 11215 1 169,389.00 8.75 1,332.58 2/1/28 A F P 295,000 F
3300435 206-02 EMILY ROAD BAYSIDE NY 11360 1 87,146.00 8.75 685.58 2/1/28 A C P 142,000 F
3300437 475 EVERGREEN AVENUE BROOKLYN NY 11221 1 46,879.00 9.75 402.76 2/1/28 A F P 130,000 F
3300446 6922 16TH AVENUE BROOKLYN NY 11204 1 59,530.00 7.75 426.48 2/1/28 A F P 198,000 F
3300451 643 JEROME STREET BROOKLYN NY 11207 1 67,799.00 8.49 520.84 2/1/28 A F P 158,000 F
</TABLE>
Page 3
<PAGE>
EXHIBIT B
LOAN SCHEDULE - GROUP 1 (ADJUSTABLE)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt Prop Occup Appraised Orig
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type Type Type Value Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3300459 45-62 167 STREET FLUSHING NY 11358 1 162,926.00 7.65 1,155.98 2/1/28 A S P 220,000 F
3400301 1252-54 E. 2ND ST PLAINFIELD NJ 07062 1 72,379.00 8.25 543.76 1/1/28 A S P 120,000 F
3400317 129 HAMILTON BLVD SOUTH PLAINFIELD NJ 07080 1 77,668.00 7.99 569.36 2/1/28 A S P 100,000 F
3400320 2309 ORCHARD DR SOUTH PLAINFIELD NJ 07080 1 99,440.00 7.25 678.36 2/1/28 A S P 153,000 F
3400326 44 ARTHUR AVE CARTERET NJ 07008 1 32,427.00 8.25 314.59 2/1/13 A S P 92,000 F
3400327 64 FRIEDA LANE COLONIA
(WOODBRIDGE TWP) NJ 07067 1 81,000.00 8.99 651.16 2/1/28 A S P 137,000 F
3400329 1215-17 CLINTON PLACE PLAINFIELD NJ 07063 1 33,552.00 9.99 294.19 2/1/28 A S P 83,000 F
3400333 28 HARMAN ROAD EDISON NJ 08837 1 156,726.00 7.75 1,122.80 2/1/28 A S P 210,000 F
3400334 37 RIDGEDALE AVE MORRISTOWN NJ 07960 1 89,342.00 8.65 696.48 2/1/28 A S P 128,000 F
3400341 2 NEW DOVER RD EAST BRUNSWICK NJ 08816 1 148,072.00 7.49 1,371.80 2/1/13 A S P 290,000 F
3400348 36 APPLEMAN RD SOMERSET NJ 08873 1 64,384.00 8.99 517.59 2/1/28 A S P 153,000 F
3400350 166 VICTOR ST SOMERSET NJ 08873 1 68,068.00 8.99 547.20 2/1/28 A S P 114,000 F
3400352 216 LIBERTY STREET FORDS
(WOODBRIDGE TWP) NJ 08863 1 66,475.00 7.75 476.24 2/1/28 A S P 105,000 F
3500223 41 TREMLETT ST DORCHESTER MA 02124 1 110,485.00 8.49 848.75 1/1/28 A S P 170,000 F
3500237 49 CAROLINA ST MEDFORD MA 02155 1 83,620.00 7.75 599.06 1/1/28 A S P 145,000 F
3500243 7 SUMMIT RD. MEDFORD MA 02155 1 119,399.00 7.99 875.28 2/1/28 A S P 224,000 F
3500248 6 BENTLEY LN CHELMSFORD MA 01824 1 44,851.00 9.25 368.98 2/1/28 A S P 172,000 F
3500251 23 PINE STREET CAMBRIDGE MA 02139 1 140,046.00 8.99 1,125.83 2/1/28 A F P 225,000 F
3500255 60 RONALD DR. TEWKSBURY MA 01876 1 62,900.00 8.75 494.83 2/1/28 A S P 200,000 F
3500258 15 WINSLOW RD NATICK MA 01760 1 70,735.00 8.25 531.41 2/1/28 A S P 145,000 F
3600156 4605 EDMONSTON ROAD HYATTSVILLE MD 20781 1 88,832.00 7.45 618.09 2/1/28 A S P 122,000 F
3600160 4708 BANNER ST HYATTSVILLE MD 20781 1 100,790.00 7.95 736.05 2/1/28 A S P 140,000 F
3800156 6523 OLD DOMINION DR MCLEAN VA 22101 1 142,464.00 7.25 1,300.50 1/1/13 A S P 296,000 F
3800157 808 N. GARFIELD ST ARLINGTON VA 22201 1 52,240.00 7.99 382.95 1/1/28 A S P 211,000 F
3800168 4232 SOUTHERN AVE SE WASHINGTON DC 20019 1 34,512.00 8.49 265.12 2/1/28 A S P 101,000 F
3800172 2822 JOSEPH MAKELL CT ALEXANDRIA VA 22306 1 104,236.00 8.80 823.75 2/1/28 A S P 139,000 F
3900069 8 COEN ROAD STREET MD 21154 1 66,275.00 9.99 581.12 1/1/28 A S P 152,000 F
3900079 805 DAVID DRIVE ARNOLD MD 21012 1 103,329.00 8.55 798.18 1/1/28 A S P 135,000 F
3900095 142 CIRCLE RD. PASADENA MD 21122 1 37,537.00 8.49 288.36 1/1/28 A S P 176,000 F
3900100 341 CHESTNUT HILL RD. FOREST HILL MD 21050 1 58,441.00 7.49 541.42 1/1/13 A S P 159,000 F
3900125 131 BOURBON CT BALTIMORE MD 21234 1 64,952.00 8.60 504.04 2/1/28 A P P 94,000 F
4400007 2209 EDINBROOK TERRACE BROOKLYN PARK MN 55444 1 116,150.00 7.40 1,070.14 1/1/13 A S P 155,000 F
4400015 1033 SUMTER AVENUE GOLDEN VALLEY MN 55426 1 92,095.00 8.35 698.36 2/1/28 A S P 123,000 F
4400020 2445 FLAG AVENUE SOUTH ST. LOUIS PARK MN 55426 1 106,389.00 8.25 799.27 2/1/28 A S P 133,000 F
8302322 8912 REVERE ST PHILADELPHIA PA 19152 1 41,476.12 8.75 326.48 11/1/27 A S P 83,000 C
8302330 2790 FERBER DR COLORADO SPRINGS CO 80916 1 39,894.20 8.99 405.47 11/1/12 A S P 95,000 C
8302390 1809 LA PORTE AVE SAN JOSE CA 95122 1 92,000.00 10.50 841.56 12/1/27 A S P 166,500 C
8302410 3659 SOUTH 2000 EAST SALT LAKE CITY UT 84109 1 78,000.00 8.25 585.99 1/1/28 A S P 195,000 C
8302439 10425 OWL CIRCLE FOUNTAIN VALLEY CA 92708 1 143,000.00 8.99 1,149.58 12/1/27 A S P 275,000 C
8410383 3372 MOORE STREET LOS ANGELES CA 90066 1 192,000.00 8.71 1,504.30 12/1/27 A S P 335,000 C
8410385 7 FIFTH AVENUE MINE HILL TOWNSHIP NJ 07801 1 99,750.00 8.25 749.39 12/1/27 A S P 133,000 C
8410386 275 NORUMBEGA DRIVE MONROVIA CA 91016 1 111,000.00 7.50 1,028.98 1/1/13 A F P 190,000 C
8410396 20590 SOUTHWEST TILE FLAT
ROAD BEAVERTON OR 97007 1 162,400.00 7.50 1,135.52 1/1/28 A S P 235,000 C
8410402 2437 PROSPECT AVENUE MONTROSE AREA CA 91020 1 163,000.00 8.35 1,236.04 1/1/28 A S P 242,000 C
8900628 8345 S.W. 81ST LANE MIAMI FL 33143 1 94,885.76 10.99 903.99 10/1/27 A S P 219,000 C
8900629 11524 SOUTH HARVARD AVENUE CHICAGO IL 60628 1 24,982.04 10.99 237.90 10/1/27 A S P 60,000 C
8900630 2 ENTRANCE COURT YONKERS NY 10710 1 39,971.27 10.99 380.63 10/1/27 A S P 190,000 C
8900633 23231 CAROLDALE AVENUE CARSON CA 90745 1 97,929.64 10.99 932.54 10/1/27 A S P 166,000 C
8900636 4247 WEST POTOMAC AVENUE CHICAGO IL 60651 1 34,973.52 10.75 326.72 10/1/27 A F P 85,000 C
8900637 13020 WEST 61ST CIRCLE ARVADA CO 80004 1 53,447.05 9.49 449.47 10/1/27 A S P 230,000 C
8900639 4731 WEST ORAIBI DRIVE GLENDALE AZ 85308 1 37,958.23 8.99 305.49 10/1/27 A S P 107,000 C
8900640 444 EAST 140TH STREET LOS ANGELES CA 90061 1 69,914.70 8.49 537.75 10/1/27 A S P 125,000 C
8900641 1936 WHITINGHAM LANE HOFFMAN ESTATES IL 60195 1 36,487.05 10.75 345.39 10/1/27 A S P 91,000 C
8900643 1443 SOUTH LINCOLN STREET SALT LAKE CITY UT 84105 1 83,938.30 10.99 799.32 10/1/27 A S P 143,000 C
8900644 4312 NORTH POST STREET SPOKANE WA 99205 1 19,985.63 10.99 190.32 10/1/27 A S P 72,000 C
8900645 5437 WILSON MILLS ROAD HIGHLAND OH 44143 1 149,818.31 10.99 1,427.36 10/1/27 A S P 300,000 C
8900648 25 OLTENDORF ROAD STREAMWOOD IL 60107 1 67,433.18 9.49 567.09 10/1/27 A S P 125,000 C
8900651 1206 LOGAN AVENUE NORTH MINNEAPOLIS MN 55411 1 24,947.24 8.25 187.82 10/1/27 A S P 65,000 C
8900652 7516 SOUTH PEORIA CHICAGO IL 60620 1 49,945.16 9.00 402.32 10/1/27 A F I 95,000 C
8900663 147 MARY STREET ARLINGTON MA 02174 1 171,067.25 10.50 1,573.36 9/24/27 A S P 285,000 C
8900689 19223 WEST CLARENDON
AVENUE LITCHFIELD AZ 85340 1 29,985.24 9.50 252.26 11/1/27 A S S 113,000 C
8900690 120 WINESAP ROAD CHERRY HILL NJ 08003 1 74,965.01 9.75 644.37 11/1/27 A S P 130,000 C
8900691 5076 SOUTH WOODMONT STREET SALT LAKE CITY UT 84117 1 93,218.41 10.99 887.82 11/1/27 A S P 156,000 C
8900693 236 OAKLAND STREET SPRINGFIELD MA 01108 1 51,953.79 10.00 456.34 11/1/27 A F I 94,000 C
8900694 3339 WEST 34TH AVENUE DENVER CO 80211 1 24,967.93 8.24 187.65 11/1/27 A S I 68,000 C
8900695 6689 SOUTH DALE PARK
CIRCLE WEST JORDAN UT 84084 1 114,937.05 8.99 924.49 11/1/27 A S P 300,000 C
8900696 2373 KEARNEY STREET DENVER CO 80207 1 24,987.70 9.50 210.22 11/1/27 A S P 127,000 C
8900697 9531 SOUTH PRINCETON CHICAGO IL 60628 1 21,993.32 11.74 221.91 11/1/27 A S S 65,000 C
8900698 10035 SW 12TH TERRACE MIAMI FL 33174 1 84,969.62 10.99 808.84 11/1/27 A S P 145,000 C
8900699 14738 SOUTHWEST 175 STREET MIAMI FL 33187 1 59,916.14 8.99 482.35 10/1/27 A S P 109,000 C
8900700 7730 SOUTH EAST END AVENUE CHICAGO IL 60649 1 60,961.10 8.25 458.28 11/1/27 A F P 155,000 C
8900775 1650 MEADOWBROOK ROAD MERRICK NY 11566 1 89,318.36 10.99 856.42 11/1/27 A S P 185,000 C
8900777 490 BRADFORD STREET BROOKLYN NY 11207 1 99,964.26 10.99 951.57 11/1/27 A F P 187,000 C
8900778 6 SHEEHAN DRIVE LAKE VILLA IL 60046 1 84,958.10 9.49 714.11 11/1/27 A S P 175,000 C
8900779 9327 NORTH TRUMBULL AVENUE PORTLAND OR 97203 1 59,978.55 10.99 570.95 11/1/27 A S P 115,000 C
8900780 3626 DICKWOOD ROAD CHARLOTTESVILLE VA 22903 1 34,986.53 10.99 333.05 11/1/27 A S P 124,000 C
8900781 3955 TWIN ARCH ROAD MOUNT AIRY MD 21771 1 133,952.11 10.99 1,275.11 11/1/27 A S P 260,000 C
8900782 315 COLUMBIA PLACE BROOMALL PA 19008 1 95,965.69 10.99 913.51 11/1/27 A S P 192,000 C
8900783 6 WALNUT CREEK LANE OSWEGO IL 60543 1 72,964.09 9.50 613.83 11/1/27 A S P 160,000 C
</TABLE>
Page 4
<PAGE>
EXHIBIT B
LOAN SCHEDULE - GROUP 1 (ADJUSTABLE)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt Prop Occup Appraised Orig
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type Type Type Value Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8900784 26 OAK HILL DRIVE NORTH BRANFORD CT 06471 1 29,986.00 9.75 257.75 11/1/27 A S P 132,000 C
8900785 8462 MAIN AVENUE PASSADENA MD 21122 1 24,991.06 10.99 237.90 11/1/27 A S P 136,000 C
8900786 5029-31 WEST CONCORD PLACE CHICAGO IL 60639 1 99,950.70 9.49 840.13 11/1/27 A F P 177,000 C
8900787 875 N. OAKLAND AVENUE RUNNEMEDE NJ 08078 1 49,981.13 10.74 466.37 11/1/27 A S P 117,000 C
8900788 4885 JARVIS AVENUE SAN JOSE CA 95118 1 107,934.57 8.50 830.43 11/1/27 A S P 218,000 C
8900789 79 SIERRA VISTA PLACE SAN JOSE CA 95116 1 118,938.30 9.25 978.99 11/1/27 A S P 210,000 C
8900790 1324 NORTH SPAULDING
AVENUE LOS ANGELES CA 90046 1 96,608.36 10.13 857.12 11/1/27 A S I 315,000 C
8900791 489 MONTAUK AVENUE BROOKLYN NY 11208 1 79,960.64 9.50 672.69 11/1/27 A F I 150,000 C
8900792 7 FRANK STREET VALLEY STREAM NY 11580 1 64,971.24 10.00 570.43 11/1/27 A S P 151,000 C
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE LOANS: 166 14,687,222.73
</TABLE>
Page 5
