<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) December 19, 1997
BA Mortgage Securities, Inc. (as depositor under a Pooling and Servicing
Agreement dated as of December 1, 1997 providing for, inter alia, the issuance
of Mortgage Pass-Through Certificates, Series 1997-3)
BA Mortgage Securities, Inc.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 333-34225 94-324470
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(STATE OR OTHER JURISDICTION (COMMISSION) (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
345 Montgomery Street, Lower Level #2, Unit #8152, San Francisco, CA 94104
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 622-3676
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Exhibit Index Located on Page 2
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Items 1 through 6 and Item 8 are not included because they are not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
Sequentially
Numbered
Exhibit Exhibit
Number Page
- ------- ------------
4.1 Pooling and Servicing Agreement dated as of
December 1, 1997 among BA Mortgage
Securities, Inc., Depositor, Bank of America,
Federal Savings Bank and Bank of America
National Trust and Savings Association,
Master Servicers, and Bankers Trust
Company of California, N.A., Trustee
(providing for, inter alia, the issuance of
Mortgage Pass-Through Certificates, Series
1997-3)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BA MORTGAGE SECURITIES, INC.
By: /s/ DAVID JAMES
-------------------------------------
Name: David James
Title: Vice President
Dated: December 19, 1997
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EXHIBIT 4.1
================================================================================
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FEDERAL SAVINGS BANK
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Master Servicers,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1997
Mortgage Pass-Through Certificates
Series 1997-3
================================================================================
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
<S> <C>
Section 1.01. Definitions................................................................. 3
Accrued Certificate Interest....................................................... 3
Advance ......................................................................... 3
Affiliate ......................................................................... 3
Agreement ......................................................................... 4
Amount Held for Future Distribution................................................ 4
Appraised Value.................................................................... 4
Assignment......................................................................... 4
Available Distribution Amount...................................................... 4
Bankruptcy Amount.................................................................. 4
Bankruptcy Code.................................................................... 5
Bankruptcy Loss.................................................................... 5
Book-Entry Certificate............................................................. 5
Business Day....................................................................... 5
Buydown Funds...................................................................... 5
Buydown Mortgage Loan.............................................................. 5
Cash Liquidation................................................................... 5
Certificate........................................................................ 5
Certificate Account................................................................ 5
Certificate Account Deposit Date................................................... 6
Certificateholder or Holder........................................................ 6
Certificate Owner.................................................................. 6
Certificate Principal Balance...................................................... 6
Certificate Register and Certificate Registrar..................................... 6
Class ......................................................................... 6
Class A Certificates............................................................... 6
Class A-1 Certificates............................................................. 6
Class A-2 Certificates............................................................. 6
Class A-3 Certificates............................................................. 7
Class A-4 Certificates............................................................. 7
Class A-5 Certificates............................................................. 7
Class A-6 Certificates............................................................. 7
Class A-7 Certificates............................................................. 7
Class A-8 Certificates............................................................. 7
Class A-6 Notional Amount.......................................................... 7
Class A-7 Notional Amount.......................................................... 7
Class A-8 Notional Amount.......................................................... 7
Class A-4 Liquidation Amount....................................................... 7
Class A-4 Percentage............................................................... 8
</TABLE>
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<TABLE>
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Class A-4 Prepayment Percentage.................................................... 8
Class A-4 Priority Amount.......................................................... 8
Class B Certificates............................................................... 8
Class B-1 Certificates............................................................. 8
Class B-2 Certificates............................................................. 8
Class B-3 Certificates............................................................. 8
Class B-4 Certificates............................................................. 8
Class B-5 Certificates............................................................. 8
Class M Certificates............................................................... 8
Class PO Certificates.............................................................. 8
Class PO Fraction.................................................................. 8
Class PO Mortgage Loan............................................................. 9
Class R-I Certificates............................................................. 9
Class R-II Certificates............................................................ 9
Closing Date....................................................................... 9
Code ......................................................................... 9
Compensating Interest.............................................................. 9
Corporate Trust Office............................................................. 9
Corresponding Class................................................................ 9
Credit Support Depletion Date...................................................... 9
Curtailment........................................................................ 10
Custodial Account.................................................................. 10
Custodial Agreement................................................................ 10
Custodian ......................................................................... 10
Cut-off Date....................................................................... 10
Cut-off Date Principal Balance..................................................... 10
DCR ......................................................................... 10
Debt Service Reduction............................................................. 10
Deficient Valuation................................................................ 10
Definitive Certificate............................................................. 10
Deleted Mortgage Loan.............................................................. 10
Depository......................................................................... 10
Depository Participant............................................................. 11
Determination Date................................................................. 11
Disqualified Organization.......................................................... 11
Distribution Date.................................................................. 11
Due Date ......................................................................... 11
Due Period......................................................................... 11
Eligible Account................................................................... 11
Event of Default................................................................... 12
Excess Bankruptcy Loss............................................................. 12
Excess Fraud Loss.................................................................. 12
Excess Special Hazard Loss......................................................... 12
Extraordinary Events............................................................... 12
Extraordinary Losses............................................................... 13
</TABLE>
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<TABLE>
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FDIC ......................................................................... 13
FHLMC ......................................................................... 13
FNMA ......................................................................... 13
Final Distribution Date............................................................ 13
Foreclosure Profits................................................................ 13
Fraud Loss Amount.................................................................. 13
Fraud Losses....................................................................... 14
Independent........................................................................ 14
Initial Certificate Principal Balance.............................................. 14
Insurance Proceeds................................................................. 14
Insurer ......................................................................... 14
Late Collections................................................................... 14
LIBOR ......................................................................... 14
LIBOR Business Day................................................................. 15
LIBOR Rate Adjustment Date......................................................... 15
Liquidated Mortgage Loan........................................................... 15
Liquidation Principal.............................................................. 15
Liquidation Proceeds............................................................... 15
Loan-to-Value Ratio................................................................ 15
Master Servicing Fee............................................................... 15
Maturity Date...................................................................... 16
Monthly Payment.................................................................... 16
Moody's ......................................................................... 16
Mortgage ......................................................................... 16
Mortgage File...................................................................... 16
Mortgage Loan Purchase Agreement................................................... 16
Mortgage Loan Schedule............................................................. 16
Mortgage Loans..................................................................... 17
Mortgage Note...................................................................... 17
Mortgage Rate...................................................................... 17
Mortgaged Property................................................................. 17
Mortgagor ......................................................................... 17
Net Mortgage Rate.................................................................. 17
Net Prepayment Interest Shortfall.................................................. 18
Non-Primary Residence Loans........................................................ 18
Non-United States Person........................................................... 18
Nonrecoverable Advance............................................................. 18
Nonrecoverable Subservicer Advance................................................. 18
Nonsubserviced Mortgage Loan....................................................... 18
Notional Amount.................................................................... 18
Notional Amount Certificates....................................................... 18
Officers' Certificate.............................................................. 18
Opinion of Counsel................................................................. 18
Outstanding Mortgage Loan.......................................................... 19
Ownership Interest................................................................. 19
</TABLE>
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<TABLE>
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Pass-Through Rate.................................................................. 19
Paying Agent....................................................................... 19
Percentage Interest................................................................ 19
Permitted Investments.............................................................. 19
Permitted Transferee............................................................... 20
Person ......................................................................... 20
Pool Stated Principal Balance...................................................... 20
Prepayment Assumption.............................................................. 20
Prepayment Interest Shortfall...................................................... 21
Primary Mortgage Insurance Policy.................................................. 21
Primary Servicing Fee.............................................................. 21
Principal Payment Amount........................................................... 21
Principal Prepayment............................................................... 21
Principal Prepayment Amount........................................................ 21
Principal Prepayment in Full....................................................... 21
Prior Period....................................................................... 21
Purchase Price..................................................................... 22
Qualified Substitute Mortgage Loan................................................. 22
Rating Agency...................................................................... 22
Realized Loss...................................................................... 22
Record Date........................................................................ 23
Regular Certificate................................................................ 23
REMIC ......................................................................... 23
REMIC I ......................................................................... 23
REMIC I Regular Interest T......................................................... 23
REMIC I Regular Interest U......................................................... 23
REMIC I Regular Interest V......................................................... 23
REMIC I Regular Interest W......................................................... 23
REMIC I Regular Interest X......................................................... 23
REMIC I Regular Interest Y......................................................... 23
REMIC I Regular Interest Z......................................................... 24
REMIC I Regular Interests.......................................................... 24
REMIC II ......................................................................... 24
REMIC Administrator................................................................ 24
REMIC Provisions................................................................... 24
REO Acquisition.................................................................... 24
REO Disposition.................................................................... 24
REO Imputed Interest............................................................... 25
REO Proceeds....................................................................... 25
REO Property....................................................................... 25
Request for Release................................................................ 25
Required Insurance Policy.......................................................... 25
Residual Certificates.............................................................. 25
Responsible Officer................................................................ 25
Seller ......................................................................... 25
</TABLE>
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<TABLE>
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Senior Certificates................................................................ 25
Senior Liquidation Amount.......................................................... 25
Senior Percentage.................................................................. 26
Senior Prepayment Percentage....................................................... 26
Senior Principal Distribution Amount............................................... 27
Servicing Accounts................................................................. 27
Servicing Advances................................................................. 27
Servicing Officer.................................................................. 27
Special Hazard Amount.............................................................. 27
Special Hazard Loss................................................................ 28
Stated Principal Balance........................................................... 28
Step Down Percentage............................................................... 28
Stripped Interest Rate............................................................. 28
Subordinate Certificate............................................................ 28
Subordinate Liquidation Amount..................................................... 28
Subordinate Percentage............................................................. 28
Subordinate Prepayment Percentage.................................................. 28
Subordinate Principal Distribution Amount.......................................... 28
Subordination Level................................................................ 29
Subserviced Mortgage Loan.......................................................... 29
Subservicer........................................................................ 29
Subservicer Servicing Advances..................................................... 29
Subservicing Account............................................................... 29
Subservicing Agreement............................................................. 29
Tax Returns........................................................................ 29
Transfer ......................................................................... 29
Transferee......................................................................... 30
Transferor......................................................................... 30
Trust Fund......................................................................... 30
Underwriter........................................................................ 30
Uninsured Cause.................................................................... 30
United States Person............................................................... 30
Unpaid Accrued Certificate Interest................................................ 30
Voting Rights...................................................................... 30
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans............................................. 31
Section 2.02. Acceptance by Trustee.................................................... 35
Section 2.03. Representations, Warranties and Covenants of the Master Servicers........ 36
Section 2.04. Representations and Warranties of Sellers................................ 37
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund.......... 39
</TABLE>
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers..................................... 39
Section 3.02. Subservicing Agreements Between Master Servicers and Subservicers;
Enforcement of Subservicers' and Sellers' Obligations.................... 40
Section 3.03. Successor Subservicers................................................... 41
Section 3.04. Liability of the Master Servicers........................................ 42
Section 3.05. No Contractual Relationship Between Subservicer and Trustee or
Certificateholders....................................................... 42
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee.......... 42
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Accounts....................................................... 43
Section 3.08. Subservicing Accounts; Servicing Accounts................................ 45
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage
Loans.................................................................... 46
Section 3.10. Permitted Withdrawals.................................................... 46
Section 3.11. Maintenance of the Primary Insurance Policies; Collections Thereunder.... 47
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage........ 48
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments.......................................... 49
Section 3.14. Realization Upon Defaulted Mortgage Loans................................ 51
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.......................... 54
Section 3.16. Servicing and Other Compensation......................................... 55
Section 3.17. Annual Statement as to Compliance........................................ 56
Section 3.18. Annual Independent Public Accountants' Servicing Report.................. 56
Section 3.19. Rights of the Depositor in Respect of the Master Servicers............... 57
Section 3.20. Administration of Buydown Funds.......................................... 57
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account...................................................... 58
Section 4.02. Distributions............................................................ 58
Section 4.03. Statements to Certificateholders......................................... 63
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances
by the Master Servicers.................................................. 65
Section 4.05. Allocation of Realized Losses............................................ 67
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property............ 68
Section 4.07. Compliance with Withholding Requirements................................. 68
Section 4.08. REMIC I Distributions.................................................... 68
</TABLE>
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates......................................................... 69
Section 5.02. Registration of Transfer and Exchange of Certificates.................... 71
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates........................ 76
Section 5.04. Persons Deemed Owners.................................................... 76
Section 5.05. Appointment of Paying Agent.............................................. 76
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer.......... 77
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicers;
Assignment of Rights and Delegation of Duties by Master Servicers........ 77
Section 6.03. Limitation on Liability of the Depositor, the Master Servicers and Others. 78
Section 6.04. Depositor and Master Servicers Not to Resign............................. 79
ARTICLE VII
DEFAULT
Section 7.01. Events of Default........................................................ 79
Section 7.02. Trustee to Act; Appointment of Successor................................. 81
Section 7.03. Notification to Certificateholders....................................... 82
Section 7.04. Waiver of Events of Default.............................................. 82
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee........................................................ 82
Section 8.02. Certain Matters Affecting the Trustee.................................... 84
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.................... 86
Section 8.04. Trustee May Own Certificates............................................. 86
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses; Indemnification..... 86
Section 8.06. Eligibility Requirements for Trustee..................................... 87
Section 8.07. Resignation and Removal of the Trustee................................... 88
Section 8.08. Successor Trustee........................................................ 89
Section 8.09. Merger or Consolidation of Trustee....................................... 89
Section 8.10. Appointment of Co-Trustee or Separate Trustee............................ 89
Section 8.11. Appointment of Custodians................................................ 90
Section 8.12. Appointment of Office or Agency.......................................... 91
</TABLE>
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ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or Liquidation of All
Mortgage Loans........................................................... 91
Section 9.02. Additional Termination Requirements...................................... 93
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration..................................................... 94
Section 10.02. Master Servicer and Trustee Indemnification.............................. 97
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment................................................................ 98
Section 11.02. Recordation of Agreement; Counterparts...................................100
Section 11.03. Limitation on Rights of Certificateholders...............................101
Section 11.04. Governing Law............................................................101
Section 11.05. Notices..................................................................102
Section 11.06. Notices to Rating Agency.................................................102
Section 11.07. Severability of Provisions...............................................103
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Exhibit A: Form of Class A and Class PO Certificate
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Residual Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, Federal Savings Bank
Mortgage Loan Schedule
Exhibit F: [Reserved]
Exhibit G: Form of Mortgage Loan Purchase Agreement
Exhibit H: Form of Request for Release
Exhibit I-1: Form of Transfer Affidavit and Agreement
Exhibit I-2: Form of Transferor Certificate
Exhibit J: Form of Investor Representation Letter
Exhibit K: Form of Transferor Representation Letter
Exhibit L: Form of Rule 144A Investment Representation Letter
Exhibit M: Form of Lender Certification for Assignment of Mortgage Loan
Exhibit N: [Reserved]
Exhibit O: Information Available for Reports to Certificateholders
Exhibit P: Form of Custodial Agreement
Exhibit Q: Form of Trustee's Certification
</TABLE>
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This is a Pooling and Servicing Agreement, effective as of December 1,
1997, among BA MORTGAGE SECURITIES, INC., as the depositor (together with its
permitted successors and assigns, the "Depositor"), BANK OF AMERICA, FEDERAL
SAVINGS BANK and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
master servicers (each together with their respective permitted successors and
assigns, a "Master Servicer" and together, the "Master Servicers"), and BANKERS
TRUST COMPANY OF CALIFORNIA, N.A., as Trustee (together with its permitted
successors and assigns, the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund, the assets of which will consist primarily of the Mortgage
Loans.
As provided herein, Bank of America, Federal Savings Bank, as Master
Servicer, will make an election to treat the assets consisting of the Mortgage
Loans and certain other related assets described herein as a "real estate
mortgage investment conduit" for federal income tax purposes and such pool of
assets will be designated as "REMIC I." The REMIC I Regular Interests will be
the "regular interests" in REMIC I and the Class R-I Certificates will be the
sole class of "residual interest" in REMIC I for federal income tax purposes.
Bank of America, Federal Savings Bank, as Master Servicer, will make an
election to treat the pool of assets consisting of the REMIC I Regular Interests
as a "real estate mortgage investment conduit" for federal income tax purposes
and such pool of assets will be designated as "REMIC II."
The Class A, Class PO, Class M and Class B Certificates will represent
"regular interests" in REMIC II and the Class R-II Certificate will represent
the sole class of "residual interest" in REMIC II for federal income tax
purposes.
The following table sets forth the designation, type, initial
Pass-Through Rate, aggregate Initial Certificate Principal Balance, Maturity
Date and initial ratings for each Class of Certificates comprising the interests
in the Trust Fund created hereunder.
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<TABLE>
<CAPTION>
Aggregate Initial
Certificate Initial Ratings
Pass-Through Principal Maturity --------------------
Designation Type Rate(1) Balance Date DCR Moody's
- ------------- --------- ------------ ----------------- ---------------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Regular 7.000% $238,406,000.00 January 25, 2028 AAA Aaa
Class A-2 Regular 7.000% $34,027,000.00 January 25, 2028 AAA Aaa
Class A-3 Regular 7.000% $27,305,000.00 January 25, 2028 AAA Aaa
Class A-4 Regular 7.000% $35,051,000.00 January 25, 2028 AAA Aaa
Class A-5 Regular (2) $47,827,000.00 January 25, 2028 AAA Aaa
Class A-6 Regular (3) (3) January 25, 2028 AAA Aaa
Class A-7 Regular (4) (4) January 25, 2028 AAA Aaa
Class A-8 Regular (5) (5) January 25, 2028 AAA Aaa
Class PO Regular 0.000%(6) $1,153,596.47 January 25, 2028 AAA Aaa
Class M Regular 7.250% $7,015,000.00 January 25, 2028 AA -
Class B-1 Regular 7.250% $4,609,000.00 January 25, 2028 A -
Class B-2 Regular 7.250% $2,004,000.00 January 25, 2028 BBB -
Class B-3 Regular 7.250% $1,403,000.00 January 25, 2028 BB -
Class B-4 Regular 7.250% $1,002,000.00 January 25, 2028 B -
Class B-5 Regular 7.250% $1,002,403.96 January 25, 2028 - -
Class R-I Residual 7.250% $50.00 January 25, 2028 AAA Aaa
Class R-II Residual 7.250% $50.00 January 25, 2028 AAA Aaa
</TABLE>
(1) Interest distributed to the Certificates on each Distribution Date will
have accrued during the preceding calendar month, except for (i) the
Class A-5, Class A-6, Class A-7 and Class A-8 Certificates which will
accrue interest during the period from the 25th of the month prior to
each Distribution Date to the 24th of the month of such Distribution
Date and (ii) the Class PO Certificates which will not be entitled to
receive interest.
(2) The initial Pass-Through Rate for the Class A-5 Certificates will be
6.18750% per annum. Thereafter, the Class A-5 Certificates will accrue
interest at a per annum rate equal to LIBOR plus 0.500%, subject to a
minimum and maximum Pass-Through Rate of 0.500% and 9.000% per annum,
respectively.
(3) The initial Pass-Through Rate for the Class A-6 Certificates will be
2.81250% per annum. Thereafter, the Class A-6 Certificates will accrue
interest at a per annum rate equal to 8.500% minus LIBOR, subject to a
minimum and maximum Pass-Through Rate of 0.000% and 8.500% per annum,
respectively. The Class A-6 Certificates will not receive distributions
of principal and will accrue interest on the Class A-6 Notional Amount
which will equal the Class A-5 Certificate Principal Balance at the time
of determination.
(4) The initial Pass-Through Rate for the Class A-7 Certificates will be
3.06667% per annum. Thereafter, the Class A-7 Certificates will accrue
interest at a per annum rate equal to the sum of -9.06667 and the
product of 2.13333 and LIBOR, subject to a minimum and maximum
Pass-Through Rate of 0% and 8.000% per annum, respectively. The Class
A-7 Certificates will accrue interest on the Class A-7 Notional Amount.
For each Premium Rate Mortgage Loan the foregoing rate reduces to
interest on the principal balance of such Mortgage Loan at a per annum
rate equal to the product of (a) the Stripped Interest Rate for such
Mortgage Loan divided by 0.08 and (b) the excess, if any, of (i) 2.13333
times LIBOR (expressed as a fraction) over (ii) 0.0906667, subject to a
minimum rate of 0% and a maximum rate equal to the Stripped Interest
Rate for such Mortgage Loan. The Class A-7 Certificates will not be
entitled to receive distributions of principal.
(5) The initial Pass-Through Rate for the Class A-8 Certificates will be
4.93333% per annum. Thereafter, the Class A-8 Certificates will accrue
interest at a per annum rate equal to 17.06667% minus the product of
2.13333 and LIBOR, subject to a minimum and maximum Pass-Through Rate of
0% and 8.000% per annum, respectively. The Class A-8 Certificates will
accrue interest on the Class A-8 Notional Amount. For each Premium Rate
Mortgage Loan the foregoing rate reduces to interest on the principal
balance of such Mortgage Loan at a per annum rate equal to the product
of (a) the Stripped Interest Rate for such Mortgage Loan divided by 0.08
and (b) the excess, if any, of (i) 0.1706667 over (ii) 2.13333 times
LIBOR (expressed as a fraction), subject to a minimum rate of 0% and a
maximum rate equal to the Stripped Interest Rate for such Mortgage Loan.
The Class A-8 Certificates will not be entitled to receive distributions
of principal.
(6) The Class PO Certificates are Principal Only Certificates and will not
bear interest.
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, In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicers and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
Accrued Certificate Interest: With respect to each Distribution Date, as
to any Class of Certificates, one month's interest accrued at the related
Pass-Through Rate on the Certificate Principal Balance or Notional Amount, as
applicable, of the Certificates of such Class immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months. In each case, Accrued
Certificate Interest on any Class of Certificates will be reduced by the amount
of (i) Net Prepayment Interest Shortfalls (to the extent not offset by the
applicable Master Servicer with a payment of Compensating Interest as provided
in Section 4.01), (ii) the interest portion (adjusted to the Net Mortgage Rate)
of Realized Losses (including Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses and Extraordinary Losses) not allocated solely to one
or more specific Classes of Certificates pursuant to Section 4.05, (iii) the
interest portion of Advances previously made with respect to a Mortgage Loan or
REO Property which remained unreimbursed following the Cash Liquidation or REO
Disposition of such Mortgage Loan or REO Property that were made with respect to
delinquencies that were ultimately determined to be Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses
and (iv) any other interest shortfalls not covered by the subordination provided
by the Subordinate Certificates, including interest that is not collectible from
the Mortgagor pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, or similar legislation or regulations as in effect from time to
time, with all such reductions allocated among all of the Certificates in
proportion to their respective amounts of Accrued Certificate Interest payable
on such Distribution Date which would have resulted absent such reductions. In
addition to that portion of the reductions described in the preceding sentence
that are allocated to any Class of Subordinate Certificates, Accrued Certificate
Interest on such Class of Subordinate Certificates will be reduced by the
interest portion (adjusted to the Net Mortgage Rate) of Realized Losses that are
allocated solely to such Class of Subordinate Certificates pursuant to Section
4.05.
Advance: As to any Mortgage Loan, any advance made by the Master
Servicer of such Mortgage Loan, pursuant to Section 4.04.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly,
3
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whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Custodial Accounts at the close of business on
the preceding Determination Date on account of (i) Liquidation Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases made pursuant
to Sections 2.02 or 2.04 and Mortgage Loan substitutions made pursuant to
Sections 2.03 or 2.04 received or made in the month of such Distribution Date
(other than such Liquidation Proceeds, Insurance Proceeds and purchases of
Mortgage Loans that the Master Servicers have deemed to have been received in
the preceding month in accordance with Section 3.07(b)) and (ii) payments which
represent early receipt of scheduled payments of principal and interest due on a
date or dates subsequent to the related Due Date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced Mortgage Loan as to which it is the
appraised value determined in an appraisal at the time of refinancing.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
Available Distribution Amount: As to any Distribution Date, an amount
equal to (a) the sum of (i) the amount relating to the Mortgage Loans on deposit
in the Custodial Accounts as of the close of business on the immediately
preceding Determination Date and amounts deposited in the Custodial Accounts in
connection with the substitution of Qualified Substitute Mortgage Loans, (ii)
the amount of any Advance made on the immediately preceding Certificate Account
Deposit Date, (iii) any amount deposited in the Custodial Accounts pursuant to
Section 3.12(a), reduced by (b) the sum as of the close of business on the
immediately preceding Determination Date of (w) aggregate Foreclosure Profits,
(x) the Amount Held for Future Distribution, and (y) amounts permitted to be
withdrawn by each Master Servicer from the Custodial Accounts in respect of the
Mortgage Loans it services pursuant to clauses (i)-(xi), inclusive, of Section
3.10(a) and (z) the amount of the monthly payment required to be paid by the
Master Servicers to the Trustee pursuant to Section 8.05.
Bankruptcy Amount: As to any Determination Date, $100,000 less the sum
of any amounts allocated solely to the Subordinate Certificates in accordance
with Section 4.05 prior to such Determination Date.
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Bankruptcy Code: The United States Bankruptcy Code of 1978, as amended,
or any successor thereto.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that neither a Deficient
Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy Loss
hereunder so long as the Master Servicer of such Mortgage Loan has notified the
Trustee in writing that such Master Servicer is diligently pursuing any remedies
that may exist in connection with the representations and warranties made
regarding the related Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal and interest under the related Mortgage Loan are being advanced as
an Advance and any premiums on any applicable primary hazard insurance policy
and any related escrow payments in respect of such Mortgage Loan are being
advanced as a Servicing Advance on a current basis by the Master Servicer or a
Subservicer, in either case without giving effect to any Debt Service Reduction.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, which initially shall include the Class A, Class PO,
Class M, Class B-1 and Class B-2 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or State of New
York (and such other state or states in which either Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Buydown Funds: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan and held by the related Master Servicer, or the related
Subservicer, as applicable. Buydown Funds are not part of the Trust Fund prior
to deposit into the applicable Custodial or Certificate Account.
Buydown Mortgage Loan: Any Mortgage Loan as to which a specified amount
of interest is paid out of related Buydown Funds in accordance with a related
buydown agreement.
Cash Liquidation: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer of such Mortgage Loan that it has received all Insurance
Proceeds, Liquidation Proceeds and other payments or cash recoveries which such
Master Servicer reasonably and in good faith expects to be finally recoverable
with respect to such Mortgage Loan.
Certificate: Any of the Senior Certificates, the Class M Certificates or
the Class B Certificates.
Certificate Account: The separate account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bankers Trust
Company of California, N.A., as Trustee, in trust for the registered holders of
BA Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 1997-3"
and which must be an Eligible Account.
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<PAGE> 16
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Residual
Certificate for purposes hereof and, solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Residual Certificate, registered in the name of the Depositor, a Master Servicer
or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby shall
not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights necessary to effect any such consent or
direction has been obtained. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating members
thereof, except as otherwise specified herein; provided, however, that the
Trustee shall be required to recognize as a "Holder" or "Certificateholder" only
the Person in whose name a Certificate is registered in the Certificate
Register.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository Participant, if any,
and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to each Certificate of any
Class, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, reduced by (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance or amount thereof
pursuant to Section 4.02(a) and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.05.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates bearing the same
designation.
Class A Certificates: The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 and Class A-8 Certificates, collectively.
Class A-1 Certificates: The Certificates designated as "Class A-1" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-2 Certificates: The Certificates designated as "Class A-2" on
the face thereof in substantially the form attached hereto as Exhibit A.
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<PAGE> 17
Class A-3 Certificates: The Certificates designated as "Class A-3" on
the face thereof in substantially the form attached hereto as Exhibit A.
Class A-4 Certificates: The Certificates designated as "Class A-4" on
the face thereof in substantially the form attached hereto as Exhibit A.
Class A-5 Certificates: The Certificates designated as "Class A-5" on
the face thereof in substantially the form attached hereto as Exhibit A.
Class A-6 Certificates: The Certificates designated as "Class A-6" on
the face thereof in substantially the form attached hereto as Exhibit A.
Class A-7 Certificates: The Certificates designated as "Class A-7" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-8 Certificates: The Certificates designated as "Class A-8" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-6 Notional Amount: With respect to any Distribution Date, the
Class A-5 Certificate Principal Balance.
Class A-7 Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Premium Rate Mortgage Loans as of such Due Date
and the denominator of which is 8.000% per annum.
Class A-8 Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Premium Rate Mortgage Loans as of such Due Date
and the denominator of which is 8.000% per annum.
Class A-4 Liquidation Amount: The aggregate of, for each Mortgage Loan
which became a Liquidated Mortgage Loan during the Prior Period, the lesser of
(i) the Class A-4 Percentage of the principal balance of such Mortgage Loan
(exclusive of the Class PO Fraction thereof, if applicable) and (ii) the Class
A-4 Percentage on any Distribution Date occurring prior to the month of the
fifth anniversary of the first Distribution Date, and the Class A-4 Prepayment
Percentage on any Distribution Date thereafter, in each case, of the Liquidation
Principal with respect to such Mortgage Loan.
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Class A-4 Percentage: With respect to any Distribution Date occurring
prior to the month of the fifth anniversary of the first Distribution Date, 0%,
and with respect to any Distribution Date thereafter, the Class A-4 Certificate
Principal Balance divided by the aggregate Certificate Principal Balance of the
Certificates (other than the Class PO Certificates), in each case immediately
prior to the Distribution Date.
Class A-4 Prepayment Percentage: With respect to any Distribution Date,
the product of (a) the Class A-4 Percentage for such Distribution Date and (b)
the applicable Step Down Percentage.
Class A-4 Priority Amount: With respect to any Distribution Date, the
sum of (i) the Class A-4 Percentage of the Principal Payment Amount (exclusive
of the portion thereof attributable to the principal distributions to the Class
PO Certificates), (ii) the Class A-4 Prepayment Percentage of the Principal
Prepayment Amount (exclusive of the portion thereof attributable to the
principal distributions to the Class PO Certificates) and (iii) the Class A-4
Liquidation Amount.
Class B Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
and Class B-5 Certificates, collectively.
Class B-1 Certificates: The Certificates designated as "Class B-1" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-2 Certificates: The Certificates designated as "Class B-2" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-3 Certificates: The Certificates designated as "Class B-3" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-4 Certificates: The Certificates designated as "Class B-4" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-5 Certificates: The Certificates designated as "Class B-5" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class M Certificates: The Certificates designated as "Class M" on the
face thereof and in substantially the form attached hereto as Exhibit B.
Class PO Certificates: The Certificates designated as "Class PO" on the
face thereof and in substantially the form attached hereto as Exhibit A.
Class PO Fraction: For each Class PO Mortgage Loan, a fraction, the
numerator of which is 7.250% less the Net Mortgage Rate on such Class PO
Mortgage Loan and the denominator of which is 7.250%.
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<PAGE> 19
Class PO Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate of
less than 7.250% per annum.
Class R-I Certificates: The Certificates designated as "Class R-I" on
the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC I.
Class R-II Certificates: The Certificates designated as "Class R-II" on
the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
II.
Closing Date: December 19, 1997.
Code: The Internal Revenue Code of 1986.
Compensating Interest: With respect to any Distribution Date and either
Master Servicer, an amount equal to the aggregate of the Prepayment Interest
Shortfalls with respect to the Mortgage Loans serviced by such Master Servicer
during the calendar month preceding such Distribution Date, but not more than
the sum of one-twelfth of the annual Master Servicing Fee rate of the Stated
Principal Balance of the Mortgage Loans serviced by such Master Servicer
immediately preceding such Distribution Date; provided that for purposes of this
definition the amount of the Master Servicing Fee will not be reduced pursuant
to Section 7.02 except as may be required pursuant to the second to last
sentence of such Section.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at 3 Park Plaza, 16th Floor, Irvine, California 92614,
Attention: BA Mortgage Securities, Inc., Series 1997-3.
Corresponding Class: With respect to each REMIC I Regular Interest, the
corresponding Class or Classes of Certificates representing interests in REMIC
II set forth for such REMIC I Regular Interest below:
REMIC I Regular Interest T: Class R-II
REMIC I Regular Interest U: Class A-5 and Class A-6
REMIC I Regular Interest V: Class A-1, Class A-2, Class A-3
and Class A-4
REMIC I Regular Interest W: Class PO
REMIC I Regular Interest X: All Subordinate Classes
REMIC I Regular Interest Y: Class A-7
REMIC I Regular Interest Z: Class A-8
Credit Support Depletion Date: The first Distribution Date on which the
aggregate of the Certificate Principal Balances of the Subordinate Certificates
has been or will be reduced to zero.
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Curtailment: Any Principal Prepayment made by a Mortgagor which is not a
Principal Prepayment in Full.
Custodial Account: Each of the custodial accounts created and maintained
pursuant to Section 3.07 in the name of a depository institution, as custodian
for the holders of the Certificates, for the holders of certain other interests
in mortgage loans serviced or sold by a Master Servicer and for such Master
Servicer, into which the amounts set forth in Section 3.07 shall be deposited
directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among the
Depositor, the Master Servicers, the Trustee and a Custodian, in substantially
the form of Exhibit P hereto.
Custodian: A custodian appointed pursuant to a Custodial Agreement.
Cut-off Date: December 1, 1997.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto, whether or not received.
DCR: Duff & Phelps Credit Rating Co., or its successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan pursuant to Section 2.04 hereof.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined in
the Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
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Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th day
(or if such 15th day is not a Business Day, the Business Day immediately
preceding such 15th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a "disqualified
organization" under Section 860E(e)(5) of the Code, which includes any of the
following: (i) the United States, any State or political subdivision thereof,
any possession of the United States, or any agency or instrumentality of any of
the foregoing (other than an instrumentality which is a corporation if all of
its activities are subject to tax and, except for the FHLMC, a majority of its
board of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code and (v)
any other Person so designated by the Trustee based upon an Opinion of Counsel
that the holding of an Ownership Interest in a Residual Certificate by such
Person may cause the Trust Fund, or any Person having an Ownership Interest in
any Class of Certificates (other than such Person) to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Certificate to such Person. The terms
"United States", "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
Distribution Date: The 25th day of any month beginning in the month
following the month of the initial issuance of the Certificates or, if such 25th
day is not a Business Day, the Business Day immediately following such 25th day.
Due Date: With respect to any Distribution Date, the first day of the
month in which such Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period commencing
on the second day of the month preceding the month of such Distribution Date and
ending on the related Due Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited
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<PAGE> 22
to Permitted Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution with which such
account is maintained, or (iii) in the case of the Certificate Account, a trust
account or accounts maintained in the corporate trust division of Bankers Trust
Company of California, N.A., or if Bankers Trust Company is no longer the
Trustee, the trust department of a federal or state chartered depository
institution acceptable to each Rating Agency; (iv) an account or accounts of a
depository institution acceptable to each Rating Agency (as evidenced in writing
by each Rating Agency that use of any such account as a Custodial Account or the
Certificate Account will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date by such Rating
Agency).
Event of Default: As defined in Section 7.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, which
exceeds the then applicable Bankruptcy Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds the
then applicable Fraud Loss Amount.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion thereof,
that exceeds the then applicable Special Hazard Amount.
Extraordinary Events: Any of the following conditions with respect to a
Mortgaged Property or Mortgage Loan causing or resulting in a loss which causes
the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.12(b) but are in excess of the
coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in
part caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combatting or defending against an actual,
impending or expected attack:
1. by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
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(d) any weapon of war employing atomic fission or radioactive
force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering, combatting
or defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority; or risks of contraband or illegal
transportation or trade.
Extraordinary Losses: Any loss incurred on a Mortgage Loan caused by or
resulting from an Extraordinary Event.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FNMA: Federal National Mortgage Association, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01 which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Foreclosure Profits: As to any Mortgage Loan on any date of
determination, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to Section
3.10(a)(i)) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the immediately prior calendar month
over the sum of the unpaid principal balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 3.14) plus accrued and unpaid interest at the Mortgage Rate on such
unpaid principal balance from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
Fraud Loss Amount: As of any Determination Date after the Cut-off Date,
an amount equal to (X) prior to the first anniversary of the Cut-off Date an
amount equal to 2% of the aggregate outstanding principal balance of all of the
Mortgage Loans as of the Cut-off Date minus the aggregate amount of Fraud Losses
allocated solely to the Subordinate Certificates in accordance with Section 4.05
since the Cut-off Date up to such Determination Date, (Y) from the first through
the fifth anniversary of the Cut-off Date, an amount equal to (1) the lesser of
(a) the Fraud Loss Amount as of the most recent anniversary of the Cut-off Date
and (b) 1% of the aggregate principal balance of all of the Mortgage Loans as of
the most recent anniversary of the Cut-off Date minus (2) the aggregate amount
of Fraud Losses allocated solely to the Subordinate Certificates in accordance
with Section 4.05 since the most recent anniversary of
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<PAGE> 24
the Cut-off Date up to such Determination Date and (Z) on and after the fifth
anniversary of the Cut-off Date, the Fraud Loss Amount shall be zero.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in
the origination of such Mortgage Loan.
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicers
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicers or the Trustee or in an Affiliate thereof, and (iii) is not
connected with the Depositor, the Master Servicers or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Initial Certificate Principal Balance: With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates as
of the Cut-off Date as set forth in the Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Mortgage Insurance Policy or any other related insurance
policy, covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, any Subservicer, the Master Servicer of such
Mortgage Loan or the Trustee and are not applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that such Master Servicer would follow in servicing mortgage loans
held for its own account.
Insurer: Any named insurer under any Primary Mortgage Insurance Policy
or any successor thereto or the named insurer in any replacement policy.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIBOR: With respect to each Distribution Date, the London Interbank
Offered Rate for one-month United States dollar-denominated deposits determined
by the Trustee on the basis of quotations as of approximately 11:00 a.m. (London
time) on the applicable LIBOR Rate Adjustment Date appearing on the display
designated as page 3750 on the Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
offered rates of major banks). In the event that such rate does not appear on
such page (or such other page as may replace that page on that service, or if
such service is no longer offered, such other service for displaying LIBOR or
comparable rates as may be selected by the Trustee after consultation with the
Master Servicers), the rate will be the Reference Bank Rate. The "Reference Bank
Rate" will be determined on the basis of the rates at which deposits in U.S.
dollars are offered by the reference banks (which shall be three major banks
that are engaged in transactions in the London interbank market, selected by the
Trustee after consultation with the Master Servicers) as of 11:00 a.m., London
time, on the LIBOR Rate
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<PAGE> 25
Adjustment Date to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the LIBOR Certificates then outstanding. The Trustee will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations. If on such date fewer than two quotations are
provided as requested, the rate will be the arithmetic means of the rates quoted
by one or more major banks in New York City, selected by the Trustee after
consultation with the Master Servicers, as of 11:00 a.m., New York City time, on
such date for loans in U.S. dollars to leading European banks for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the LIBOR Certificates then outstanding. If no such quotations can be
obtained, the rate will be LIBOR for the prior Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
LIBOR Rate Adjustment Date: The LIBOR Business Day immediately prior to
the 25th day of the month preceding such Distribution Date.
Liquidated Mortgage Loan: A Mortgage Loan as to which the related Master
Servicer or any applicable Subservicer has determined in accordance with its
customary servicing practices that all amounts which it expects to recover from
or on account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise have been recovered. For purposes of this
definition, acquisition of a Mortgaged Property by the Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
Liquidation Principal: The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Mortgage
Loan (but not in excess of the principal balance thereof) during the Prior
Period, exclusive of the portion thereof attributable to the Class PO
Certificates.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by a Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
Master Servicing Fee: With respect to any Mortgage Loan, the fee payable
monthly to the Master Servicer of such Mortgage Loan in respect of master
servicing compensation that accrues at an annual rate designated on the Mortgage
Loan Schedule for such Mortgage Loan, as may be adjusted with respect to
successor Master Servicers as provided in Section 7.02. In addition, the Master
Servicing Fee shall include any increase in payments of interest on any
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Mortgage Loan following an increase in the Mortgage Rate on such Mortgage Loan
as a result of (i) the termination of the Mortgagor's employment by either of
the Sellers or any of their Affiliates or (ii) the Mortgagor's discontinuation
of electronic debiting for payments of the related Mortgage Loan.
Maturity Date: The latest possible maturity date, solely for purposes of
Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which the
Certificate Principal Balance of each Class of Certificates representing a
regular interest in REMIC II and the principal balance of each REMIC I Regular
Interest would be reduced to zero, which is January 25, 2028, the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after
adjustment, if any, for curtailments and for Deficient Valuations occurring
prior to such Due Date but before any adjustment to such amortization schedule
by reason of any bankruptcy, other than a Deficient Valuation, or similar
proceeding or any moratorium or similar waiver or grace period).
Moody's: Moody's Investors Service, Inc., or its successor in interest.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Purchase Agreement: A Mortgage Loan Purchase Agreement
between a Seller and the Depositor, dated December 19, 1997, substantially in
the form attached hereto as Exhibit G.
Mortgage Loan Schedule: The list of the Mortgage Loans attached hereto
as Exhibit E-1 and Exhibit E-2 (as amended from time to time to reflect the
removal of Deleted Mortgage Loans and the addition of Qualified Substitute
Mortgage Loans), which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property including state and
zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate;
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(vi) the Net Mortgage Rate;
(vii) the initial scheduled monthly payment of principal, if any, and
interest;
(viii) the principal balance of the Mortgage Loan at origination;
(ix) the Cut-off Date Principal Balance;
(x) the Loan-to-Value Ratio at origination;
(xi) the rate at which the Master Servicing Fee accrues;
(xii) a code indicating that the Mortgage Loan is secured by a second
or vacation residence;
(xiii) a code indicating that the Mortgage Loan is secured by a
non-owner occupied residence; and
(xiv) a code indicating whether or not a Primary Mortgage Policy exists
for the Mortgage Loan.
Such schedule may consist of multiple reports that collectively set forth all of
the information requested.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held or deemed to
be held as part of the Trust Fund, the Mortgage Loans originally so held being
identified in the initial Mortgage Loan Schedule, and Qualified Substitute
Mortgage Loans held or deemed held as part of the Trust Fund including, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining thereto.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate borne by the
related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate borne by the related Mortgage Note less the
sum of the per annum rate at which the related Master Servicing Fee accrues.
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Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
applicable Master Servicer as Compensating Interest.
Non-Primary Residence Loans: The Mortgage Loans designated as secured by
second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
Non-United States Person: Any Person other than a United States Person.
Nonrecoverable Advance: Any Advance or Servicing Advance previously made
or proposed to be made by a Master Servicer in respect of a Mortgage Loan (other
than a Deleted Mortgage Loan) which, in the good faith judgment of such Master
Servicer, will not, or, in the case of a proposed Advance or Servicing Advance,
would not, be ultimately recoverable by such Master Servicer from related Late
Collections, Insurance Proceeds, Liquidation Proceeds, REO Proceeds or amounts
reimbursable to such Master Servicer pursuant to Section 4.02(a) hereof.
Nonrecoverable Subservicer Advance: Any Subservicer Servicing Advance
previously made or proposed to be made by a Subservicer in respect of a Mortgage
Loan (other than a Deleted Mortgage Loan) which, in the good faith judgment of
Subservicer, will not, or, in the case of a proposed Subservicer Servicing
Advance, would not, be ultimately recoverable by such Subservicer from related
Late Collections, Insurance Proceeds, Liquidation Proceeds, or REO Proceeds.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Notional Amount: With respect to the Class A-6 Certificates, the Class
A-6 Notional Amount; with respect to the Class A-7 Certificates, the Class A-7
Notional Amount; and with respect to the Class A-8 Certificates, the Class A-8
Notional Amount.
Notional Amount Certificates: The Class A-6, Class A-7 and Class A-8
Certificates, collectively.
Officers' Certificate: A certificate signed by (i) the Chairman of the
Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of a Seller or the Depositor,
as the case may be, or (ii) a Servicing Officer of a Master Servicer, and
delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Master Servicers, who may be counsel for a Seller, the Depositor
or a Master Servicer, provided that any opinion of counsel (i) referred to in
the definition of "Permitted Transferee" or (ii) relating to the qualification
of either REMIC I or REMIC II as a REMIC or compliance with the REMIC Provisions
must, unless otherwise specified, be an opinion of Independent counsel.
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Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased,
deleted or substituted for prior to such Due Date pursuant to Section 2.02 or
2.04.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
Pass-Through Rate: With respect to any Class of Certificates and any
Distribution Date, the per annum rate set forth or described in the Preliminary
Statement hereto.
Paying Agent: Bankers Trust Company of California, N.A., or any
successor Paying Agent appointed by the Trustee.
Percentage Interest: With respect to any Certificate (other than a
Residual Certificate), the undivided percentage ownership interest in the
related Class evidenced by such Certificate, which percentage ownership interest
shall be equal to the Initial Certificate Principal Balance or Notional Amount
thereof divided by the aggregate Initial Certificate Principal Balance or
Notional Amount of all of the Certificates of the same Class. With respect to a
Residual Certificate, the interest in distributions to be made with respect to
such Class evidenced thereby, expressed as a percentage, as stated on the face
of each such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party
agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity
of more than 365 days or a remaining maturity of more than 30
days) denominated in United States dollars of any U.S. depository
institution or trust company incorporated under the laws of the
United States or any state thereof or of any domestic branch of a
foreign depository institution or trust company; provided that
the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by
each Rating Agency in its next to highest short-term rating
available;
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(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its highest
short-term rating available; provided that such commercial paper
shall have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by each
Rating Agency in its highest long-term rating available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not
reduce the rating assigned to any Class of Certificates by such
Rating Agency below the lower of the then-current rating or the
rating assigned to such Certificates as of the Closing Date by
such Rating Agency, as evidenced in writing;
provided, however, (A) such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury regulations and (B)
that no instrument shall be a Permitted Investment if it represents, either (1)
the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments
derived from obligations underlying such instrument and the principal and
interest payments with respect to such instrument provide a yield to maturity
greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the next to highest rating available on
unsecured long-term debt shall mean AA in the case of DCR and Aa3 in the case of
Moody's, and references herein to the highest rating available on unsecured
commercial paper and short-term debt obligations shall mean P-1 in the case of
Moody's and D-1 in the case of DCR.
Permitted Transferee: Any Transferee of a Residual Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pool Stated Principal Balance: As to any Determination Date, the
aggregate of the Stated Principal Balances of each Mortgage Loan that was an
Outstanding Mortgage Loan on the Due Date in the month preceding the month of
such date of determination.
Premium Rate Mortgage Loans: Those Mortgage Loans having Net Mortgage
Rates greater than or equal to 7.250% per annum.
Prepayment Assumption: A prepayment assumption of 250% of the standard
prepayment assumption, used for determining the accrual of original issue
discount and market discount and premium on the Certificates for federal income
tax purposes. The standard prepayment assumption assumes a constant rate of
prepayment of mortgage loans of 0.2% per annum of the then outstanding principal
balance of such mortgage loans in the first month of the life of the
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mortgage loans, increasing by an additional 0.2% per annum in each succeeding
month until the thirtieth month, and a constant 6% per annum rate of prepayment
thereafter for the life of the mortgage loans.
Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the calendar month
preceding such Distribution Date, an amount equal to the excess of one month's
interest at the Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan over the amount of interest (adjusted to the Net Mortgage Rate)
paid by the Mortgagor for the calendar month preceding such Distribution Date to
the date of such Principal Prepayment in Full or (b) a Curtailment during the
prior calendar month, an amount equal to the excess of one month's interest at
the Net Mortgage Rate on the amount of such Curtailment over the amount of
interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for the
calendar month preceding such Distribution Date to the date of such Curtailment.
Primary Mortgage Insurance Policy: A policy of mortgage guaranty
insurance, if any, or any replacement policy therefor, as evidenced by a policy
or certificate, providing coverage as required by clause (xi) of Exhibit 3 to
each Mortgage Loan Purchase Agreement.
Primary Servicing Fee: As to any Mortgage Loan, that portion of the
Master Servicing Fee that constitutes the fee payable monthly to the related
Subservicer in respect of servicing and other compensation that accrues at an
annual rate as set forth in the applicable Subservicing Agreement.
Principal Payment Amount: With respect to any Distribution Date, the sum
of (i) scheduled principal payments on the Mortgage Loans due on the related Due
Date, (ii) the principal portion of repurchase proceeds received with respect to
any Mortgage Loan which was repurchased as permitted or required herein during
the calendar month preceding the month of the Distribution Date and (iii) any
other unscheduled payments of principal which were received during the preceding
calendar month, other than full and partial Principal Prepayments or Liquidation
Principal.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment Amount: With respect to any Distribution Date, the
sum of all full and partial Principal Prepayments which were received during the
preceding calendar month.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Prior Period: The calendar month immediately preceding any Distribution
Date.
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Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be purchased on any date pursuant to Section 2.02 or 2.04, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof plus the
principal portion of any related unreimbursed Advances and Servicing Advances
and (ii) unpaid accrued interest at the Mortgage Rate on the Stated Principal
Balance thereof to the first day of the month following the month of purchase
from the Due Date to which interest was last paid by the Mortgagor.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in an Officers' Certificate delivered to the Trustee, (i) have an
outstanding principal balance, after deduction of the principal portion of the
monthly payment due in the month of substitution (or in the case of a
substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of
(and not substantially less than) the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be remitted by the applicable
Seller to the Master Servicer of such Deleted Mortgage Loan for deposit in the
applicable Custodial Account in the month of substitution); (ii) have a Mortgage
Rate and a Net Mortgage Rate no lower than and not more than 1% per annum higher
than the Mortgage Rate and Net Mortgage Rate, respectively, of the Deleted
Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value Ratio
at the time of substitution no higher than that of the Deleted Mortgage Loan at
the time of substitution; (iv) have a remaining term to stated maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan; (v) comply with each representation and warranty set forth in Exhibit 3 to
the applicable Mortgage Loan Purchase Agreement.
Rating Agency: Moody's and DCR. If either agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee and the Master Servicers.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan (or
REO Property) as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the last day of the month in which the Cash Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash
Liquidation (or REO Disposition) occurred, to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage Loan, net
of the portion thereof reimbursable to the Master Servicer of such Mortgage Loan
or any Subservicer with respect to related Advances, Servicing Advances,
Subservicer Servicing Advances or expenses as to which the Master Servicer of
such Mortgage Loan or any Subservicer is entitled to reimbursement thereunder
but which have not been previously reimbursed. With respect to each Mortgage
Loan for which the Master Servicer of such Mortgage Loan has forgiven the
payment of any principal, the amount of such forgiven principal. With respect to
each Mortgage Loan which has become the subject of a Deficient
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Valuation, the difference between the principal balance of the Mortgage Loan
outstanding immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect
to each Mortgage Loan which has become the object of a Debt Service Reduction,
the amount of such Debt Service Reduction.
Record Date: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in which
the related Distribution Date occurs.
Regular Certificate: Any of the Certificates other than a Residual
Certificate.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code, including REMIC I and REMIC II.
REMIC I: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of the Mortgage Loans.
REMIC I Regular Interest T: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class R-II
Certificates, and which bears interest at 7.000%.
REMIC I Regular Interest U: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-5
Certificates, and which bears interest at 9.000%.
REMIC I Regular Interest V: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the sum of the aggregate Certificate Principal Balance of the
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates
and the Class A-4 Certificates, and which bears interest at 7.000%.
REMIC I Regular Interest W: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class PO
Certificates, and which bears interest at 0.000%.
REMIC I Regular Interest X: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Subordinate
Certificates, and which bears interest at 7.250%.
REMIC I Regular Interest Y: An uncertificated partial undivided
beneficial ownership interest in REMIC I having no principal balance and
accruing interest on a notional amount with respect to any Distribution Date
equal to the sum of the principal balances of the Premium Rate Mortgage Loans as
of the second preceding Due Date, after giving effect to payments scheduled to
be received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, and which bears interest on
each portion of the notional amount corresponding to the principal balance of a
Premium Rate Mortgage Loan at a per annum rate equal to the product of (i) the
Stripped Interest Rate for such Mortgage Loan
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divided by 0.08 and (ii) the excess, if any, of (a) 2.13333 times LIBOR
(expressed as a fraction) over (b) 0.0906667, subject to a minimum rate of 0%
and a maximum rate equal to the Stripped Interest Rate for such Mortgage Loan.
REMIC I Regular Interest Z: An uncertificated partial undivided
beneficial ownership interest in REMIC I having no principal balance and
accruing interest on a notional amount with respect to any Distribution Date
equal to the sum of the principal balances of the Premium Rate Mortgage Loans as
of the second preceding Due Date, after giving effect to payments scheduled to
be received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, and which bears interest on
each portion of the notional amount corresponding to the principal balance of a
Premium Rate Mortgage Loan at a per annum rate equal to the product of (i) the
Stripped Interest Rate for such Mortgage Loan divided by 0.08 and (ii) the
excess, of any, of (a) 0.1706667 over (b) 2.13333 times LIBOR (expressed as a
fraction), subject to a minimum rate of 0% and a maximum rate equal to the
Stripped Interest Rate for such Mortgage Loan.
REMIC I Regular Interests: REMIC I Regular Interest T, REMIC I Regular
Interest U, REMIC I Regular Interest V, REMIC I Regular Interest W, REMIC I
Regular Interest X, REMIC I Regular Interest Y and REMIC I Regular Interest Z.
REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests conveyed in trust to the Trustee for the benefit of the
Certificateholders (other than the Class R-I Certificateholders) pursuant to
Section 2.01(a), with respect to which a separate REMIC election is to be made.
REMIC Administrator: Bankers Trust Company of California, N.A., or any
successor REMIC Administrator. If Bankers Trust Company of California, N.A. or
any successor REMIC Administrator is found by a court of competent jurisdiction
to no longer be able to fulfill its obligations as REMIC Administrator under
this Agreement, the Depositor shall appoint a successor REMIC Administrator,
subject to assumption of the REMIC Administrator obligations under this
Agreement.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
temporary and final regulations (or, to the extent not inconsistent with such
temporary or final regulations, proposed regulations) and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Acquisition: The acquisition by a Master Servicer on behalf of the
Trustee for the benefit of the Certificateholders of any REO Property pursuant
to Section 3.14.
REO Disposition: As to any REO Property, a determination by the related
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds, REO Proceeds and other payments and recoveries (including proceeds of
a final sale) which such Master Servicer expects to be finally recoverable from
the sale or other disposition of the REO Property.
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REO Imputed Interest: As to any REO Property, for any period, an amount
equivalent to interest (at the Net Mortgage Rate that would have been applicable
to the related Mortgage Loan had it been outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof for such
period.
REO Proceeds: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged Property) which proceeds are required to be deposited into the
applicable Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by a Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request for Release: A request for release, the form of which is
substantially in the form attached as Exhibit H hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement or any related Subservicing Agreement in respect of such Mortgage
Loan.
Residual Certificates: The Class R-I Certificates and the Class R-II
Certificates, collectively.
Responsible Officer: When used with respect to the Trustee, any officer
of the Corporate Trust Department of the Trustee, including any Senior Vice
President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers to whom, with respect to a particular matter,
such matter is referred.
Seller: An institution from which the Depositor purchased any Mortgage
Loans pursuant to a Mortgage Loan Purchase Agreement. Bank of America National
Trust and Savings Association is the Seller with respect to the Mortgage Loans
set forth on Exhibit E-1 and Bank of America, Federal Savings Bank is the Seller
with respect to the Mortgage Loans set forth on Exhibit E-2.
Senior Certificates: The Class A Certificates, the Class PO Certificates
and the Residual Certificates, collectively.
Senior Liquidation Amount: The aggregate of, for each Mortgage Loan
which became a Liquidated Mortgage Loan during the Prior Period, the lesser of:
(i) the Senior Percentage of the Stated Principal Balance of such Mortgage Loan
(exclusive of the Class PO Fraction thereof, if applicable) and (ii) the Senior
Prepayment Percentage of the Liquidation Principal with respect to such Mortgage
Loan.
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Senior Percentage: With respect to any Distribution Date, the sum of the
Certificate Principal Balances of the Senior Certificates (other than the Class
PO Certificates) divided by the aggregate Certificate Principal Balance of all
Classes of Certificates (other than the Class PO Certificates), in each case,
immediately prior to such Distribution Date.
Senior Prepayment Percentage: (i) On any Distribution Date occurring
before the Distribution Date in the month of the fifth anniversary of the first
Distribution Date, 100%; (ii) on any other Distribution Date on which the Senior
Percentage for such Distribution Date exceeds the initial Senior Percentage as
of the Cut-off Date, 100%; and (iii) on any other Distribution Date in each of
the months of the fifth anniversary of the first Distribution Date and
thereafter, 100%, unless:
(a) the mean aggregate Stated Principal Balance of Mortgage Loans
which are 60 or more days delinquent (including loans in
foreclosure and property held by the Trust Fund) for each of the
immediately preceding six calendar months is less than 50% of the
aggregate of the Certificate Principal Balances of the
Subordinate Certificates, and
(b) cumulative Realized Losses on the Mortgage Loans allocated to the
Subordinate Certificates are less than or equal to (1) for any
Distribution Date before the month of the sixth anniversary of
the month of the first Distribution Date, 30% of the sum of the
Certificate Principal Balances of the Subordinate Certificates as
of the Cut-off Date, (2) for any Distribution Date in or after
the month of the sixth anniversary of the month of the first
Distribution Date but before the seventh anniversary of the month
of the first Distribution Date, 35% of the sum of the Certificate
Principal Balances of the Subordinate Certificates as of the
Cut-off Date, (3) for any Distribution Date in or after the month
of the seventh anniversary of the month of the first Distribution
Date but before the eighth anniversary of the month of the first
Distribution Date, 40% of the sum of the Certificate Principal
Balances of the Subordinate Certificates as of the Cut-off Date,
(4) for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but
before the ninth anniversary of the month of the first
Distribution Date, 45% of the sum of the Certificate Principal
Balances of the Subordinate Certificates as of the Cut-off Date,
and (5) for any Distribution Date in or after the month of the
ninth anniversary of the month of the first Distribution Date,
50% of the sum of the Certificate Principal Balances of the
Subordinate Certificates as of the Cut-off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Senior Percentage for such Distribution Date plus 70% of the Subordinate
Percentage for such Distribution Date; (2) for any such Distribution Date in or
after the month of the sixth anniversary of the month of the first Distribution
Date but before the seventh anniversary of the month of the first Distribution
Date, the Senior Percentage for such Distribution Date plus 60% of the
Subordinate Percentage for such Distribution Date; (3) for any such Distribution
Date in or after the month of the seventh anniversary of the month of the first
Distribution Date but before the eighth anniversary of the month of the first
Distribution Date, the Senior Percentage for such Distribution Date plus 40% of
the Subordinate
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Percentage for such Distribution Date; (4) for any such Distribution Date in or
after the month of the eighth anniversary of the month of the first Distribution
Date but before the ninth anniversary of the month of the first Distribution
Date, the Senior Percentage for such Distribution Date plus 20% of the
Subordinate Percentage for such Distribution Date; and (5) for any such
Distribution Date thereafter, the Senior Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Senior Certificates
(other than the Class PO Certificates) of Principal Prepayments in the
percentage required would reduce the sum of the Certificate Principal Balances
of the Senior Certificates (other than the Class PO Certificates) below zero,
the Senior Prepayment Percentage for such Distribution Date shall be limited to
the percentage necessary to reduce such sum to zero.
Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of (i) the Senior Percentage of the Principal Payment Amount
(exclusive of the portion thereof attributable to the principal distributions to
the Class PO Certificates), (ii) the Senior Prepayment Percentage of the
Principal Prepayment Amount (exclusive of the portion thereof attributable to
the principal distributions to the Class PO Certificates) and (iii) the Senior
Liquidation Amount.
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary and reasonable "out of pocket" costs
and expenses incurred in connection with a default, delinquency or other
unanticipated event by a Master Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.08, 3.12(a) and 3.14; and any amount that is stated herein to
be a "Servicing Advance."
Servicing Officer: Any officer of a Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by such Master Servicer, as such list may from time to time be
amended.
Special Hazard Amount: As of any Distribution Date, an amount equal to
$4,008,051 minus the sum of (i) the aggregate amount of Special Hazard Losses
allocated solely to the Subordinate Certificates in accordance with Section 4.05
and (ii) the Adjustment Amount (as defined below) as most recently calculated.
For each anniversary of the Cut-off Date, the Adjustment Amount shall be equal
to the amount, if any, by which the amount calculated in accordance with the
preceding sentence (without giving effect to the deduction of the Adjustment
Amount for such anniversary) exceeds the greater of (A) 1% (or, if greater than
1%, the highest percentage of Mortgage Loans, by principal balance, in any
California zip code area) times the aggregate principal balance of all of the
Mortgage Loans in the Mortgage Pool on such anniversary and (ii) twice the
principal balance of the single Mortgage Loan in the Mortgage Pool having the
largest principal balance.
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Special Hazard Loss: Any Realized Loss not in excess of the cost of the
lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any loss
of a type covered by a hazard policy or a flood insurance policy required to be
maintained in respect of such Mortgaged Property pursuant to Section 3.12(a),
except to the extent of the portion of such loss not covered as a result of any
coinsurance provision and (ii) any Extraordinary Loss.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the Cut-off Date Principal Balance of the
Mortgage Loan, minus (ii) the sum of (a) the principal portion of the Monthly
Payments due with respect to such Mortgage Loan or REO Property during each Due
Period ending prior to the last succeeding Distribution Date which were received
or with respect to which an Advance was made, and (b) all Principal Prepayments
with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and REO Proceeds, to the extent applied by the Master
Servicer of such Mortgage Loan as recoveries of principal in accordance with
Section 3.14 with respect to such Mortgage Loan or REO Property, in each case
which were distributed pursuant to Section 4.02 on any previous Distribution
Date, and (c) any Realized Loss allocated to Certificateholders with respect
thereto for any previous Distribution Date.
Step Down Percentage: With respect to any Distribution Date occurring
from January 1998 through December 2002, 0%; with respect to any Distribution
Date occurring from January 2003 through December 2003, 30%; with respect to any
Distribution Date occurring from January 2004 through December 2004, 40%; with
respect to any Distribution Date occurring from January 2005 through December
2005, 60%; with respect to any Distribution Date occurring from January 2006
through December 2006, 80%; with respect to any Distribution Date occurring from
and after January 2007, 100%.
Stripped Interest Rate: For each Mortgage Loan, the excess, if any, of
the Net Mortgage Rate for such Mortgage Loan over 7.250%.
Subordinate Certificates: The Class M and the Class B Certificates,
collectively.
Subordinate Liquidation Amount: The excess, if any, of the aggregate
Liquidation Principal for all Mortgage Loans which became Liquidated Mortgage
Loans during the Prior Period, over the Senior Liquidation Amount for such
Distribution Date.
Subordinate Percentage: For any Distribution Date, the excess of 100%
over the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: For any Distribution Date, the excess
of 100% over the Senior Prepayment Percentage for such Distribution Date;
provided, however, that if the Certificate Principal Balance of the Senior
Certificates (other than the Class PO Certificates) has been reduced to zero,
then the Subordinate Prepayment Percentage will equal 100%.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date, the sum of (i) the Subordinate Percentage of the Principal
Payment Amount (exclusive of the portion
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thereof attributable to the principal distributions to the Class PO
Certificates), (ii) the Subordinate Prepayment Percentage of the Principal
Prepayment Amount (exclusive of the portion thereof attributable to the
principal distributions to the Class PO Certificates) and (iii) the Subordinate
Liquidation Amount.
Subordination Level: On any specified date, with respect to any Class of
Subordinate Certificates, the percentage obtained by dividing the sum of (i) the
aggregate Certificate Principal Balance of all Classes of Certificates which are
subordinate in right of payment to such Class by (ii) the sum of the aggregate
Certificate Principal Balances of all of the Certificates as of such date prior
to giving effect to distributions of principal or interest or allocations of
Realized Losses on the Mortgage Loans on such date. For purposes of this
definition, the relative seniority, from highest to lowest, of the Classes of
Subordinate Certificates shall be as follows: Class M, Class B-1, Class B-2,
Class B-3, Class B-4 and Class B-5.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom a Master Servicer has entered into a
Subservicing Agreement.
Subservicer Servicing Advances: All customary and reasonable "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event by a Subservicer in the performance of its servicing
obligations as required by the related Subservicing Agreement, including, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, and (iii) the management and liquidation of any REO Property; and
any amount that is stated herein to be a "Subservicer Servicing Advance."
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between a Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the REMICs due to their classifications as REMICs under the REMIC
Provisions, together with any and all other information, reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provisions of federal, state or local tax laws.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
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Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust created by this Agreement consisting
of all of the assets of the REMICs, including:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Mortgage Loans
due after the Cut-off Date,
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by foreclosure
or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance Policies, if
any, and certain proceeds thereof.
Underwriter: Morgan Stanley & Co. Incorporated, or its successor in
interest.
Uninsured Cause: Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
Unpaid Accrued Certificate Interest: With respect to each Distribution
Date and any Class of interest-bearing Certificates, any portion of the related
Accrued Certificate Interest remaining unpaid from any prior Distribution Date.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 99.0% of all of the Voting
Rights shall be allocated among Holders of Certificates, respectively, other
than the Residual Certificates, in proportion to the outstanding Certificate
Principal Balances of their respective Certificates; 1% of all Voting Rights
shall be allocated to the Holders of the Residual Certificates, allocated among
the Certificates of such Class in accordance with their respective Percentage
Interests.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby assign to the Trustee without recourse, all the right, title and
interest of the Depositor in and to the Mortgage Loans, including all interest
and principal received on or with respect to the Mortgage Loans after the
Cut-off Date (other than payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date) and its rights as purchaser under the
Mortgage Loan Purchase Agreements with each Seller. The Depositor, concurrently
with the execution and delivery hereof, does hereby assign to the Trustee
without recourse, all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Certificateholders (other
than the Class R-I Certificateholders).
(b) In connection with such assignment, except as set forth in Section
2.01(c) below, the Depositor does hereby deliver to, and deposit with, the
Trustee, or to and with one or more Custodians, as the duly appointed agent or
agents of the Trustee, the following documents or instruments (or copies thereof
as permitted by this Section):
(i) The original Mortgage Note, endorsed in blank and
showing an unbroken chain of endorsements from the originator thereof to
the Person endorsing it in blank, or, in the event of any Mortgage Note,
the original of which was permanently lost or destroyed and has not been
replaced, a copy of a duplicate original of the Mortgage Note, together
with an original lost note affidavit from the originator of the related
Mortgage Loan stating that the original Mortgage Note was lost,
misplaced or destroyed, together with a copy of the related Mortgage
Note;
(ii) The original Mortgage with evidence of recording
indicated thereon or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in blank;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof
to the Person assigning it in blank or a copy of such intervening
assignment or assignments of the Mortgage certified by the public
recording office in which such assignment or intervening assignments
have been recorded;
(v) The original of each modification or assumption
agreement, if any, relating to such Mortgage Loan or a copy of each
modification or assumption agreement certified by the public recording
office in which such document has been recorded; and
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(vi) The original mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract title.
(c) In the event that in connection with any Mortgage Loan the Depositor
cannot deliver the Mortgage, any assignment, modification or assumption
agreement (or copy thereof certified by the public recording office) with
evidence of recording thereon concurrently with the execution and delivery of
this Agreement solely because of a delay caused by the public recording office
where such Mortgage, assignment, modification or assumption agreement has been
delivered for recordation, the Depositor shall deliver or cause to be delivered
to the Trustee or any respective Custodian a true and correct photocopy of such
Mortgage, assignment, modification or assumption agreement.
The Trustee or the Custodian, as the case may be, shall promptly
complete the endorsement in blank of each Mortgage Note and stamp each
Assignment referred to in Section 2.01(b) as follows: Bankers Trust Company of
California, N.A., as Trustee for the benefit of the registered holders of BA
Mortgage Securities, Inc., Mortgage Pass-Through Certificates Series 1997-3 and
shall return such Assignments to the Depositor for recordation.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of the Depositor) acceptable
to the Rating Agencies, the Trustee and the Master Servicer of such Mortgage
Loan, such recording is not required to protect the Trustee's interests in the
Mortgage Loan against the claim of any subsequent transferee or any successor to
or creditor of the Depositor or the originator of such Mortgage Loan. If any
Assignment is lost or returned unrecorded to the Depositor because of any defect
therein, the Depositor shall prepare a substitute Assignment or cure such defect
and cause such Assignment to be recorded in accordance with this paragraph. The
Depositor shall promptly deliver or cause to be delivered to the Trustee or any
respective Custodian such Mortgage or assignment, as applicable (or copy thereof
certified by the public recording office) with evidence of recording indicated
thereon upon receipt thereof from the public recording office or from the
related Subservicer.
(d) It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Depositor to the Trustee as provided in this
Agreement be construed as a sale of the Mortgage Loans by the Depositor to the
Trustee. It is, further, not the intention of the parties that such conveyance
be deemed a pledge of the Mortgage Loans by the Depositor to the Trustee to
secure a debt or other obligation of the Depositor. However, in the event,
notwithstanding the intent of the parties, the Mortgage Loans are held to be
property of the Depositor, or if for any reason this Agreement is held or deemed
to create a security interest in the Mortgage Loans, then, (a) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the Uniform Commercial Code in effect in the applicable state; (b) the
conveyance provided for in this Agreement shall be deemed to be a grant by the
Depositor to the Trustee of a security interest in and to all of the Depositor's
right, title, and interest, whether now owned or hereafter acquired, in and to:
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(I) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and uncertificated securities consisting of, arising from
or relating to any of the property described in (w), (x), (y),
and (z) below: (w) the Mortgage Loans, including all Qualified
Substitute Mortgage Loans and including (i) the related Mortgage
Note, the Mortgage, any insurance policies and all other
documents in the related Mortgage File, (ii) all title, hazard
and primary mortgage insurance policies identified on the
Mortgage Loan Schedule as defined herein, and (iii) all
distributions with respect thereto payable on and after the
Cut-off Date; (x) the Certificate Account and the Custodial
Accounts, including all property therein and all income from the
investment of funds therein (including any accrued discount
realized on liquidation of any investment purchased at a
discount); (y) each Mortgage Loan Purchase Agreement; and (z) any
and all of any Seller's right, title, and interest, if any,
whether now owned or hereafter acquired, in and to the property
described in clauses (w) and (x) above granted by such Seller to
the Depositor pursuant to the related Mortgage Loan Purchase
Agreement;
(II) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, uncertificated securities, and other rights arising from
or by virtue of the disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the
collateral described in (I) above (including any accrued discount
realized on liquidation of any investment purchased at a
discount); and
(III) All cash and non-cash proceeds of the collateral
described in (I) and (II) above.
(e) It is further the express intent of the parties hereto that the
conveyance of REMIC I Regular Interests to the Trustee by the Depositor as
provided in this Agreement be, and be construed as, an absolute sale of REMIC I
Regular Interests. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of REMIC I Regular Interests by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor. However, in
the event that, notwithstanding the intent of the parties, REMIC I Regular
Interests are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in REMIC I
Regular Interests, then, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code in effect in the applicable state; and (b) the conveyance
provided for in this Agreement shall be deemed to be a grant by the Depositor to
the Trustee of a security interest in and to all of the Depositor's right,
title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods,
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letters of credit, advices of credit and uncertificated
securities consisting of, arising from or relating to any of the
property described below: the REMIC I Regular Interests,
including without limitation all rights represented thereby in
and to: (a) the Mortgage Loans, including all Qualified
Substitute Mortgage Loans and including (i) the related Mortgage
Note, the Mortgage, any insurance policies and all other
documents in the related Mortgage File, (ii) all title, hazard
and primary mortgage insurance policies identified on the
Mortgage Loan Schedule as defined herein, and (iii) all
distributions with respect thereto payable on and after the
Cut-off Date; (b) the Certificate Account and the Custodial
Accounts, including all property therein and all income from the
investment of funds therein (including any accrued discount
realized on liquidation of any investment purchased at a
discount); (c) each Mortgage Loan Purchase Agreement; (d) any and
all of any Seller's right, title, and interest, if any, whether
now owned or hereafter acquired, in and to the property described
in clauses (a) and (b) above granted by such Seller to the
Depositor pursuant to the related Mortgage Loan Purchase
Agreement; (e) all property or rights arising from or by virtue
of the disposition of, or collections with respect to, or
insurance proceeds payable with respect to, or claims against
other persons with respect to, all or any part of the collateral
described in (a) through (d) above (including any accrued
discount realized on liquidation of any investment purchased at a
discount), and (f) all cash and non-cash proceeds of the
collateral described in (a) through (e) above
(II) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, uncertificated securities, and other rights arising from
or by virtue of the disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the
collateral described in (I) above (including any accrued discount
realized on liquidation of any investment purchased at a
discount); and
(III) All cash and non-cash proceeds of the collateral
described in (I) and (II) above.
(f) The possession by the Trustee or its designee of the Mortgage Notes,
the Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall be
deemed to be "possession by the secured party," or possession by a purchaser or
a person designated by him or her, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code (including, without limitation,
Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee or its designee for the purpose of perfecting such security
interest under applicable law.
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In connection herewith, the Trustee shall have all of the rights and remedies of
a secured party and creditor under the Uniform Commercial Code as in force in
the relevant jurisdiction.
The Depositor and, at the Depositor's direction, the Sellers and the
Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, the REMIC I Regular
Interests, and the other property described above, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of this Agreement.
Without limiting the generality of the foregoing, the Depositor shall prepare
and deliver to the Trustee not less than 15 days prior to any filing date and,
the Trustee shall sign and return to the Depositor for filing, at the expense of
the Depositor, all filings necessary to maintain the effectiveness of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Trustee's security interest in or lien on the
Mortgage Loans, as evidenced by an Officer's Certificate of the Depositor,
including without limitation (x) continuation statements, and (y) such other
statements as may be occasioned by (1) any change of name of the Depositor or
the Trustee (such preparation and filing shall be at the expense of the Trustee,
if occasioned by a change in the Trustee's name), or (2) any change of location
of the place of business or the chief executive office of the Depositor.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon receipt or certification
executed by the Custodian and delivered to the Trustee, receipt by the
respective Custodian as the duly appointed agent of the Trustee) of the
documents referred to in Section 2.01(b)(i) through (vi) above and declares that
it, or a Custodian as its agent, holds and will hold such documents and the
other documents constituting a part of the Mortgage Files delivered to it, or a
Custodian as its agent, in trust for the use and benefit of all present and
future Certificateholders. Within 45 days following the Closing Date, the
Trustee or Custodian (such Custodian being so obligated under a Custodial
Agreement) agrees, for the benefit of the Certificateholders, to review each
Mortgage File delivered to it by the Depositor or Sellers to ascertain that (i)
the documents required to be delivered in the definition of Mortgage File 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 in
items (i)-(vi) of the definition of Mortgage Loan Schedule is correct. If the
Trustee or a Custodian, as the Trustee's agent, finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, the Trustee or the Custodian (such Custodian being so obliged
under a Custodial Agreement) shall promptly so notify the Depositor. Upon
completion of such review by the Trustee or the Custodian, as applicable, the
Trustee shall promptly deliver to the Depositor a certification in the form of
Exhibit Q (if applicable, based solely upon receipt of a certificate from the
Custodian) with respect to the Mortgage Loans on the related Mortgage Loan
Schedule, with any exceptions listed on an attachment thereto. The Trustee shall
be under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to verify (i) the validity, legality,
enforceability, sufficiency, due authorization, recordability or genuineness of
any
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document in any Mortgage File or of any of the Mortgage Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
If the Trustee or a Custodian, as the Trustee's agent, finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, the Trustee or the Custodian, as applicable,
shall promptly so notify the Master Servicer of such Mortgage Loan and the
Depositor. Such Master Servicer shall promptly notify the related Seller of such
omission or defect and request that such Seller correct or cure such omission or
defect within 60 days from the date such Master Servicer was notified of such
omission or defect and, if such Seller does not correct or cure such omission or
defect within such period, that such Seller purchase such Mortgage Loan from the
Trust Fund at its Purchase Price, in either case within 90 days from the date
such Master Servicer was notified of such omission or defect. The Purchase Price
for any such Mortgage Loan shall be deposited or caused to be deposited by such
Master Servicer in the Custodial Account maintained by it pursuant to Section
3.07 and, upon receipt by the Trustee of written notification of such deposit
signed by a Servicing Officer, the Trustee or any Custodian, as the case may be,
shall release to such Master Servicer the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment prepared by
such Master Servicer, in each case without recourse, as shall be necessary to
vest in the Seller or its designee any Mortgage Loan released pursuant hereto
and thereafter such Mortgage Loan shall not be part of the Trust Fund. It is
understood and agreed that the obligation of the Seller to so cure or purchase
any Mortgage Loan as to which a material defect in or omission of a constituent
document exists shall constitute the sole remedy respecting such defect or
omission available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicers.
Each Master Servicer hereby represents and warrants to the Trustee for
the benefit of Certificateholders, only with respect to itself, that:
(i) Such Master Servicer is a national banking association
or federal savings bank duly organized, validly existing and in good
standing under the laws governing its creation and existence and is or
will be in compliance with the laws of each state in which any Mortgaged
Property serviced by it is located to the extent necessary to ensure the
enforceability of each Mortgage Loan in accordance with the terms of
this Agreement;
(ii) The execution and delivery of this Agreement by such
Master Servicer and its performance and compliance with the terms of
this Agreement will not violate its Articles of Association 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 it is a
party or which may be applicable to it or any of its assets;
(iii) This Agreement, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of
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such Master Servicer, enforceable against it in accordance with the
terms hereof subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally or the rights of creditors of banking
institutions the accounts of which are insured by the Federal Deposit
Insurance Corporation or any other instrumentalities of the federal
government, and to general principles of equity, regardless of whether
such enforcement is considered in a proceeding in equity or at law;
(iv) Such Master Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of
any Federal, state, municipal or governmental agency, which default
might have consequences that would materially and adversely affect its
condition (financial or other), operations or properties or might have
consequences that would materially adversely affect its performance
hereunder;
(v) No litigation is pending or, to the best of such Master
Servicer's knowledge, threatened against such Master Servicer which
would prohibit its entering into this Agreement or which would adversely
affect the legality and validity of this Agreement or such Master
Servicer's performance of its obligations under this Agreement;
(vi) Subject to Section 4.04(c) hereof, such Master Servicer
will comply in all material respects in the performance of this
Agreement with all reasonable rules and requirements of each insurer
under each Required Insurance Policy; and
(vii) Such Master Servicer has examined each existing, and
will examine each new, Subservicing Agreement and is or will be familiar
with the terms thereof. The terms of each existing Subservicing
Agreement and each designated Subservicer are acceptable to the Master
Servicer and any new Subservicing Agreements will comply with the
provisions of Section 3.02.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee or any Custodian.
Section 2.04. Representations and Warranties of Sellers.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to each Mortgage Loan. Insofar as
such Seller's Mortgage Loan Purchase Agreement relates to the representations
and warranties made by the related Seller in respect of such Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer of such Mortgage Loan on behalf of the Trustee and the
Certificateholders or by the Trustee if a Master Servicer is the applicable
Seller. Upon the discovery by the Depositor, the related Master Servicer, the
Trustee or any Custodian of a breach of any of the representations and
warranties made in a Mortgage Loan Purchase Agreement (which, for purposes
hereof, will be deemed to include any other cause giving rise to a repurchase
obligation under the Mortgage Loan Purchase Agreement) in
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respect of any Mortgage Loan which materially and adversely affects the
interests of the Certificateholders in such Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties (any Custodian
being so obligated under a Custodial Agreement). The Master Servicer of such
Mortgage Loan shall promptly notify the related Seller of such breach and
request that such Seller either (i) cure such breach in all material respects
within 90 days from the date such Master Servicer was notified of such breach or
(ii) purchase such Mortgage Loan from the Trust Fund at the Purchase Price and
in the manner set forth in Section 2.02; provided that such Seller shall have
the option to substitute a Qualified Substitute Mortgage Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the Closing
Date, except that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such
substitution must occur within 90 days from the date such Master Servicer was
notified of the breach if such 90 day period expires before two years following
the Closing Date. In the event that the applicable Seller elects to substitute a
Qualified Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant
to this Section 2.04, such Seller shall deliver to the Trustee or the Custodian,
as the case may be, for the benefit of the Certificateholders with respect to
such Qualified Substitute Mortgage Loan or Loans, the original Mortgage Note,
the Mortgage, an Assignment of the Mortgage in recordable form, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed as required by Section 2.01. No substitution will be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall not be part of the Trust Fund and will be retained by the applicable
Master Servicer and remitted by such Master Servicer to the related Seller on
the next succeeding Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Monthly Payment due on a
Deleted Mortgage Loan for such month and thereafter the related Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The applicable Master Servicer shall amend or cause to be amended the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Qualified
Substitute Mortgage Loan or Loans and such Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement and any related Subservicing Agreement in all respects, the
related Seller shall be deemed to have made the representations and warranties
with respect to the Qualified Substitute Mortgage Loan contained in the related
Mortgage Loan Purchase Agreement as of the date of substitution.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer of
such Deleted Mortgage Loans will determine the amount (if any) by which the
aggregate principal balance of all such Qualified Substitute Mortgage Loans as
of the date of substitution is less than the aggregate Stated Principal Balance
of all such Deleted Mortgage Loans (in each case after application of the
principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to Certificateholders in the month of substitution) and
promptly shall collect such amounts from the applicable Seller. Such Master
Servicer shall deposit the amount of such shortfall into the applicable
Custodial Account on the day of substitution. Such Master Servicer shall give
notice in writing to the Trustee of such event, which notice shall be
accompanied by
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an Officers' Certificate as to the calculation of such shortfall and by an
Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on either REMIC, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start up date" under Section 860G(d)(1) of
the Code or (b) any portion of either REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding.
It is understood and agreed that the obligation of the applicable Seller
to cure such breach or purchase (or to substitute for) such Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to Certificateholders or the Trustee on
behalf of Certificateholders. If the Master Servicer of such Mortgage Loan is
the related Seller, then the Trustee shall also have the right to give the
notification and require the purchase or substitution provided for in the second
preceding paragraph in the event of such a breach of a representation or
warranty made by the related Seller in the applicable Mortgage Loan Purchase
Agreement. In connection with the purchase of or substitution for any such
Mortgage Loan by the related Seller, the Trustee shall assign to the related
Seller all of the right, title and interest in respect of the Mortgage Loan
Purchase Agreement applicable to such Mortgage Loan.
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust
Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted in the 45 day review (such exceptions based
solely upon receipt by the Trustee of a certificate from the Custodian, if
applicable), together with the assignment to it of all other assets included in
the Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
delivery and in exchange therefor, the Trustee, pursuant to the written request
of the Depositor, executed by an officer of the Depositor, has executed and
caused to be authenticated and delivered to or upon the order of the Depositor
the Certificates in authorized denominations which evidence ownership of the
Trust Fund. The rights of the Certificateholders to receive distributions from
the proceeds of the Trust Fund in respect of the Certificates, and all ownership
interests of the Certificateholders in such distributions, shall be as set forth
in this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers.
(a) Each Master Servicer shall service and administer only those
Mortgage Loans for which it is appointed Master Servicer, as indicated by their
inclusion on Exhibit F-1 or Exhibit F-2, as applicable. The Master Servicers
shall service and administer the Mortgage Loans in accordance with the terms of
this Agreement and the respective Mortgage Loans and shall have full power and
authority, acting alone or through Subservicers as provided in Section 3.02, to
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do any and all things which it may deem necessary or desirable in connection
with such servicing and administration. Without limiting the generality of the
foregoing, each Master Servicer in its own name or in the name of a Subservicer
is hereby authorized and empowered by the Trustee when such Master Servicer or
Subservicer, as the case may be, believes it appropriate in its best judgment,
to execute and deliver, on behalf of the Certificateholders and the Trustee or
any of them, and only with respect to the Mortgage Loans serviced by such Master
Servicer or Subservicer, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, or of consent to
assumption or modification in connection with a proposed conveyance, or of
assignment of any Mortgage and Mortgage Note in connection with the repurchase
of a Mortgage Loan and all other comparable instruments, or with respect to the
modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the completion of judicial or
non-judicial foreclosure, the conveyance of a Mortgaged Property to an Insurer,
the acquisition of any property acquired by foreclosure or deed in lieu of
foreclosure, or the management, marketing and conveyance of any property
acquired by foreclosure or deed in lieu of foreclosure with respect to the
Mortgage Loans and with respect to the Mortgaged Properties. Notwithstanding the
foregoing, subject to Section 3.07(a), no Master Servicer shall permit any
modification with respect to any Mortgage Loan it services that would both
constitute a sale or exchange of such Mortgage Loan within the meaning of
Section 1001 of the Code and any proposed, temporary or final regulations
promulgated thereunder (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is treated as a Principal Prepayment in
Full pursuant to Section 3.13(d) hereof) and cause either REMIC to fail to
qualify as a REMIC under the Code. The Trustee shall furnish a Master Servicer
with any powers of attorney and other documents necessary or appropriate to
enable such Master Servicer to service and administer the Mortgage Loans it
services within five Business Days of receipt of request therefor from such
Master Servicer. The Trustee shall not be liable for any action taken by such
Master Servicer or any Subservicer pursuant to such powers of attorney.
(b) All costs incurred by the Master Servicers or by Subservicers in
effecting the timely payment of taxes and assessments on the properties subject
to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be treated as Servicing Advances or Subservicer
Servicing Advances and shall be recoverable to the extent permitted by Section
3.10(a).
Section 3.02. Subservicing Agreements Between Master Servicers and
Subservicers; Enforcement of Subservicers' and Sellers'
Obligations.
(a) Each Master Servicer may continue in effect Subservicing Agreements
entered into by Sellers and Subservicers prior to the execution and delivery of
this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans it services. Each Subservicer of a Mortgage Loan shall be
entitled to receive and retain, as provided in the related Subservicing
Agreement and in Section 3.07, the related Primary Servicing Fee from payments
of interest received on such Mortgage
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Loan after payment of all amounts required to be remitted to the related Master
Servicer in respect of such Mortgage Loan. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by a
Master Servicer in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of such Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are not inconsistent with
this Agreement and as the applicable Master Servicer and the Subservicer have
agreed. With the approval of the applicable Master Servicer, a Subservicer may
delegate its servicing obligations to third-party servicers, but such
Subservicer will remain obligated under the related Subservicing Agreement.
(b) As part of its servicing activities hereunder, each Master Servicer,
for the benefit of the Trustee and the Certificateholders, shall use its best
reasonable efforts with respect to the Mortgage Loans it services to enforce the
obligations of each Subservicer under the related Subservicing Agreement and of
each Seller under the related Mortgage Loan Purchase Agreement, to the extent
that the non-performance of any such obligation would have a material and
adverse effect on a Mortgage Loan, including, without limitation, the obligation
to purchase a Mortgage Loan on account of defective documentation, as described
in Section 2.02, or on account of a breach of a representation or warranty, as
described in Section 2.04. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Subservicing Agreements or Mortgage
Loan Purchase Agreements, as appropriate, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the applicable Master Servicer would employ in its good faith business
judgment and which are normal and usual in its general mortgage servicing
activities. Each Master Servicer shall pay the costs of such enforcement at its
own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loan or (ii) from a
specific recovery of costs, expenses or attorneys fees against the party against
whom such enforcement is directed.
Section 3.03. Successor Subservicers.
Each Master Servicer shall be entitled to terminate any Subservicing
Agreement to which it is a party and that may exist in accordance with the terms
and conditions of such Subservicing Agreement and without any limitation by
virtue of this Agreement; provided, however, that in the event of termination of
any Subservicing Agreement by a Master Servicer or the Subservicer, such Master
Servicer shall either act as servicer of the related Mortgage Loan or enter into
a Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement. If such Master Servicer or any
Affiliate of such Master Servicer acts as servicer, it will not assume liability
for the representations and warranties of the Subservicer which it replaces. If
such Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, such Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, such Master
Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
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Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the applicable
Master Servicer shall, for any reason, no longer be a Master Servicer hereunder
(including termination due to an Event of Default).
Section 3.04. Liability of the Master Servicers.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between a Master Servicer
or a Subservicer or reference to actions taken through a Subservicer or
otherwise, each Master Servicer shall, for the Mortgage Loans it is servicing,
remain obligated and liable to the Trustee and Certificateholders for the
servicing and administering of such Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer or the Depositor and to the same extent and
under the same terms and conditions as if such Master Servicer alone were
servicing and administering the Mortgage Loans. Each Master Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
such Master Servicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Subservicer and
Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
such Subservicer and the related Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06.
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee.
(a) In the event a Master Servicer shall for any reason no longer be a
master servicer hereunder (including by reason of an Event of Default), the
Trustee, its designee or its successor shall thereupon assume, at its sole
discretion, all of the rights and obligations of such Master Servicer under each
Subservicing Agreement that may have been entered into. If the Trustee so
elects, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of such Master Servicer's interest therein
and to have replaced such Master Servicer as a party to the Subservicing
Agreement to the same extent as if the Subservicing Agreement had been assigned
to the assuming party except that such Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) An outgoing Master Servicer shall promptly, upon request of the
Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Mortgage Loans then being serviced by such Master Servicer and an accounting of
amounts collected and held by it and otherwise use its best
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efforts to effect the orderly and efficient transfer of each Subservicing
Agreement to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Accounts.
(a) Each Master Servicer shall, with respect to the Mortgage Loans it
services, make reasonable efforts to collect all payments called for under the
terms and provisions of such Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any related Primary Mortgage Insurance Policy, follow such collection
procedures as it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. Consistent with
the foregoing, each Master Servicer may in its discretion, with respect to the
Mortgage Loans it services, (i) waive payments of interest or principal, (ii)
accept a deed in lieu of foreclosure, (iii) waive any late payment charge or any
prepayment charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (iv) extend the Due Date for payments due on a Mortgage Loan;
provided, however, that such Master Servicer shall first determine that any such
waiver or extension will not impair the coverage of any related Primary Mortgage
Insurance Policy or materially adversely affect the lien of the related
Mortgage. Subject in all instances to the provisions of Section 4.04(c), the
related Master Servicer must continue to make Advances as set forth herein
without regard to any such waiver or indulgence, in accordance with the original
terms of the Mortgage Loan. Consistent with the terms of this Agreement, a
Master Servicer may also, with respect to the Mortgage Loans it services, waive,
modify or vary any term of a Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in such Master Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Certificateholders; provided, however, that such Master Servicer may not modify
materially or permit any Subservicer to modify a Mortgage Loan, including
without limitation any modification that would change the Mortgage Rate, forgive
the payment of any principal or interest (unless in connection with the
liquidation of the related Mortgage Loan or except in connection with
prepayments to the extent that such reamortization is not inconsistent with the
terms of such Mortgage Loan), or extend the final maturity date of such Mortgage
Loan, unless such Mortgage Loan is in default or, in the judgment of such Master
Servicer, such default is reasonably foreseeable.
(b) Each Master Servicer shall establish and maintain a Custodial
Account in which such Master Servicer shall deposit or cause to be deposited on
a daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Mortgage Loans it services subsequent to the Cut-off Date (other than in
respect of principal and interest on such Mortgage Loans due on or before the
Cut-off Date):
(i) All payments on account of principal, including
Principal Prepayments made by Mortgagors on such Mortgage Loans and the
principal component of any REO Proceeds received in connection with an
REO Property for which an REO Disposition has occurred;
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(ii) All payments on account of interest on such Mortgage
Loans, including Buydown Funds, if any, and the interest component of
any REO Proceeds received in connection with an REO Property for which
an REO Disposition has occurred, less any applicable Primary Servicing
Fee;
(iii) Insurance Proceeds and Liquidation Proceeds (net of
any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased
pursuant to Section 2.02 or 2.04 and all amounts required to be
deposited in connection with the substitution of a Qualified Substitute
Mortgage Loan pursuant to Section 2.04;
(v) Any amounts required to be deposited pursuant to
Section 3.07(c) or 3.20; and
(vi) All amounts transferred from the Certificate Account
to the applicable Custodial Account in accordance with Section 4.02(a).
The foregoing requirements for deposit in the Custodial Accounts shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund (consisting of payments in respect of principal and interest on the
Mortgage Loans due on or before the Cut-off Date) and payments or collections in
the nature of prepayment charges or late payment charges or assumption fees may
but need not be deposited by the Master Servicers in the Custodial Accounts. In
the event any amount not required to be deposited in a Custodial Account is so
deposited by a Master Servicer, such Master Servicer may at any time withdraw
such amount from the applicable Custodial Account, any provision herein to the
contrary notwithstanding. The Custodial Accounts may contain funds that belong
to one or more trust funds created for mortgage pass-through certificates of
other series and may contain other funds respecting payments on mortgage loans
belonging to the Master Servicers or serviced or master serviced by them on
behalf of others. Notwithstanding such commingling of funds, each Master
Servicer shall keep records that accurately reflect the funds on deposit in the
applicable Custodial Account that have been identified by it as being
attributable to the Mortgage Loans it services.
(c) Each Master Servicer may cause the institution maintaining the
related Custodial Account to invest the funds in the Custodial Account
attributable to the Mortgage Loans it services in Permitted Investments which
shall mature not later than the Certificate Account Deposit Date next following
the date of such investment (with the exception of the Amount Held for Future
Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of such Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of any
losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
applicable Custodial Account by such Master Servicer out of its own funds
immediately as realized, without right of reimbursement.
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(d) Each Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account established by
it.
Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the related Master Servicer shall cause
the Subservicer, pursuant to the Subservicing Agreement, to establish and
maintain one or more Subservicing Accounts which shall be an Eligible Account
or, if such account is not an Eligible Account, shall be otherwise acceptable to
such Master Servicer and each Rating Agency. The Subservicer will be required
thereby to deposit into the Subservicing Account on a daily basis all proceeds
of the Mortgage Loans received by the Subservicer, less its Primary Servicing
Fees and unreimbursed advances and expenses, to the extent permitted hereby and
by the Subservicing Agreement. The related Master Servicer shall be deemed to
have received such monies upon receipt thereof by the Subservicer. The
Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of prepayment charges or late charges or
assumption fees. On or before the date specified in the Subservicing Agreement,
but in no event later than the Determination Date, the related Master Servicer
shall cause the Subservicer, pursuant to the Subservicing Agreement, to remit to
such Master Servicer for deposit in the applicable Custodial Account all funds
held in the Subservicing Account with respect to each Mortgage Loan serviced by
such Subservicer that are required to be remitted to such Master Servicer.
(b) In addition to the Custodial Accounts, the Master Servicers shall
for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers for
Subserviced Mortgage Loans to, establish and maintain one or more Servicing
Accounts and deposit and retain therein all collections from the Mortgagors (or
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
or comparable items for the account of the Mortgagors. Each Servicing Account
shall satisfy the requirements for a Subservicing Account and, to the extent
acceptable to each Master Servicer, may also function as a Subservicing Account.
Withdrawals of amounts related to the Mortgage Loans from the Servicing Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
or comparable items, to reimburse the applicable Master Servicer or Subservicer
out of related collections for any payments made pursuant to Sections 3.11 (with
respect to the Primary Mortgage Insurance Policy) and 3.12(a) (with respect to
hazard insurance), to refund to any Mortgagors any sums as may be determined to
be overages, to pay interest, if required, to Mortgagors on balances in the
Servicing Account or to clear and terminate the Servicing Account at the
termination of this Agreement in accordance with Section 9.01. As part of its
servicing duties, the Master Servicers shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.
(c) Subject to the provisions of Section 4.04(c) hereof, each Master
Servicer shall advance as a Servicing Advance the payments for taxes, premiums
or other costs referred to in the preceding subsection for the Mortgage Loans it
services that are not timely paid by the Mortgagors or advanced by the
Subservicers as a Subservicer Servicing Advance to the same
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extent as such Master Servicer would advance such payments on loans similar to
the Mortgage Loans that such Master Servicer owns.
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any Class
of Certificates legal for investment by federally insured savings associations,
each Master Servicer shall provide, or cause the Subservicers to provide, to the
Trustee, each Office of Thrift Supervision or the FDIC and the supervisory
agents and examiners thereof access to the documentation regarding the Mortgage
Loans it services required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by such
Master Servicer. Each Master Servicer shall permit such representatives to
photocopy any such documentation and shall provide equipment for that purpose at
a charge reasonably approximating the cost of such photocopying to such Master
Servicer.
Section 3.10. Permitted Withdrawals.
(a) Each Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account established by it of amounts on deposit
therein pursuant to Section 3.07 that are attributable to the Mortgage Loans it
services for the following purposes:
(i) to reimburse itself or the related Subservicer for
previously unreimbursed advances or expenses made pursuant to Sections
3.01(b), 3.08(c), 3.11, 3.12(a), 3.14 and 4.04 or otherwise reimbursable
pursuant to the terms of this Agreement, such withdrawal right being
limited to amounts received on particular Mortgage Loans (including, for
this purpose, REO Proceeds, Insurance Proceeds, Liquidation Proceeds and
proceeds from the purchase of a Mortgage Loan pursuant to Section 2.02
or 2.04) which represent (A) Late Collections of Monthly Payments for
which any such advance was made in the case of Advances pursuant to
Section 4.04 and (B) late recoveries of the payments for which such
advances were made in the case of Servicing Advances;
(ii) to pay to itself the Master Servicing Fee and to the
related Subservicer (if not previously retained by such Subservicer) the
Primary Servicing Fee;
(iii) to remit funds to the Trustee for deposit into the
Certificate Account in the amounts and in the manner provided for in
Section 4.01;
(iv) to pay to itself as additional servicing compensation
any interest or investment income earned on funds deposited in the
Custodial Account that it is entitled to withdraw pursuant to Section
3.07(c);
(v) to pay to itself as additional servicing compensation
any Foreclosure Profits;
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(vi) to pay to itself, a Seller, the Depositor or any other
appropriate Person, as the case may be, with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased or
otherwise transferred pursuant to Section 2.02, 2.04 or 9.01, all
amounts received thereon and not required to be distributed to
Certificateholders as of the date on which the related Stated Principal
Balance or Purchase Price is determined;
(vii) to reimburse itself or any Subservicer for any
Nonrecoverable Advance or Nonrecoverable Subservicer Advances in the
manner and to the extent provided in subsection (c) below or any Advance
reimbursable to such Master Servicer pursuant to Section 4.02(a);
(viii) to reimburse itself, the Depositor or the REMIC
Administrator for expenses incurred by and reimbursable to it or the
Depositor pursuant to Sections 3.13, 3.14(c), 6.03 or 10.01;
(ix) to reimburse itself for amounts expended by it (a)
pursuant to Section 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b) in
connection with the liquidation of a Mortgage Loan or disposition of an
REO Property to the extent not otherwise reimbursed pursuant to clause
(i) or (viii) above;
(x) to withdraw any amount deposited in such Custodial
Account that was not required to be deposited therein pursuant to
Section 3.07; and
(xi) to clear and terminate the Custodial Account pursuant
to Section 9.01.
(b) Each Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the related Custodial Account pursuant to clauses (i), (ii), (v)
and (vi) above.
(c) Each Master Servicer shall be entitled to reimburse itself or the
related Subservicer for any Advance or Servicing Advance or Subservicer
Servicing Advance made in respect of a Mortgage Loan it services that such
Master Servicer determines in its sole discretion to be a Nonrecoverable Advance
or a Nonrecoverable Subservicer Advance by withdrawal from the related Custodial
Account, prior to any other withdrawals therefrom, of amounts on deposit therein
on any Certificate Account Deposit Date succeeding the date of such
determination.
Section 3.11. Maintenance of the Primary Insurance Policies; Collections
Thereunder.
(a) Subject to Section 4.04(c) hereof, no Master Servicer shall take, or
permit any Subservicer to take, any action which would result in non-coverage
under any applicable Primary Mortgage Insurance Policy of any loss which, but
for the actions of such Master Servicer or Subservicer, would have been covered
thereunder. To the extent coverage is available, each Master Servicer shall keep
or cause to be kept in full force and effect such Primary Mortgage
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Insurance Policy for each Mortgage Loan it services until the principal balance
of the related Mortgage Loan secured by a Mortgaged Property is reduced to 80%
or less of the Appraised Value in the case of such a Mortgage Loan having a
Loan-to-Value Ratio at origination in excess of 80%, provided that such Primary
Mortgage Insurance Policy was in place as of the Cut-off Date and the Depositor
had knowledge of such Primary Mortgage Insurance Policy. Except with respect to
the Mortgage Loans listed on Exhibit N, in the event that the Depositor gains
knowledge that as of the Closing Date, a Mortgage Loan had a Loan-to-Value Ratio
at origination in excess of 80% and is not the subject of a Primary Mortgage
Insurance Policy and that such Mortgage Loan has a current Loan-to-Value Ratio
in excess of 80%, then the Master Servicer of such Mortgage Loan shall or use
its reasonable efforts to obtain and maintain a Primary Mortgage Insurance
Policy to the extent that such a policy is obtainable at a reasonable price.
Each Master Servicer shall not cancel or refuse to renew any such Primary
Mortgage Insurance Policy applicable to a Nonsubserviced Mortgage Loan, or
consent to any Subservicer canceling or refusing to renew any such Primary
Mortgage Insurance Policy applicable to a Mortgage Loan subserviced by it, that
is in effect at the date of the initial issuance of the Certificates and is
required to be kept in force hereunder unless the replacement Primary Mortgage
Insurance Policy for such canceled or non-renewed policy is maintained with an
insurer whose claims-paying ability is acceptable to each Rating Agency for
mortgage pass-through certificates having a rating equal to or better than the
lower of the then-current rating or the rating assigned to the Certificates as
of the Closing Date by such Rating Agency. Any premium on a Primary Mortgage
Insurance Policy paid by a Master Servicer or a Subservicer from its own funds
shall constitute a Servicing Advance or a Subservicer Servicing Advance, as the
case may be, hereunder.
(b) In connection with its activities as administrator and servicer of
the Mortgage Loans it services, each Master Servicer agrees to present or to
cause the related Subservicer to present, on behalf of such Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the Insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken, subject to Section
4.04(c) hereof, such reasonable action as shall be necessary to permit recovery
under any Primary Insurance Policies respecting defaulted Mortgage Loans
serviced by such Master Servicer. Pursuant to Section 3.07, any Insurance
Proceeds collected by or remitted to a Master Servicer under any Primary
Insurance Policies shall be deposited in the related Custodial Account, subject
to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage.
(a) Each Master Servicer shall cause to be maintained for each Mortgage
Loan it services fire insurance with extended coverage in an amount which is
equal to the lesser of the principal balance owing on such Mortgage Loan or 100
percent of the insurable value of the improvements; provided, however, that such
coverage may not be less than the minimum amount required to fully compensate
for any loss or damage on a replacement cost basis. To the extent it may do so
without breaching the related Subservicing Agreement, the related Master
Servicer shall replace any Subservicer that does not cause such insurance, to
the extent it is available, to be maintained. Each Master Servicer shall also
cause to be maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Mortgage Loan it services, fire insurance
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with extended coverage in an amount which is at least equal to the amount
necessary to avoid the application of any co-insurance clause contained in the
related hazard insurance policy. Pursuant to Section 3.07, any amounts collected
by a Master Servicer under any such policies (other than amounts to be applied
to the restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the related
Master Servicer's normal servicing procedures) shall be deposited in the
applicable Custodial Account, subject to withdrawal pursuant to Section 3.10.
Any cost incurred by a Master Servicer or any Subservicer in maintaining any
insurance described in this Section 3.12(a) shall not, for the purpose of
calculating monthly distributions to Certificateholders, be added to the amount
owing under the Mortgage Loan, notwithstanding that the terms of the Mortgage
Loan so permit, but shall be treated as a Servicing Advance or Subservicer
Servicing Advance, as applicable. Such costs shall be recoverable by the Master
Servicer out of the Mortgage Loan or the Subservicer out of related late
payments by the Mortgagor or out of Insurance Proceeds and Liquidation Proceeds
to the extent permitted by Section 3.10 and otherwise as permitted by Section
3.10(a). It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage Loan other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. When the improvements securing a Mortgage Loan are located
at the time of origination of such Mortgage Loan in a federally designated
special flood hazard area, the Master Servicer of such Mortgage Loan shall cause
flood insurance (to the extent available) to be maintained in respect thereof.
Such flood insurance shall be in an amount equal to the lesser of (i) the amount
required to compensate for any loss or damage to the Mortgaged Property on a
replacement cost basis and (ii) the maximum amount of such insurance available
for the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program).
(b) Each Master Servicer shall obtain and maintain at its own expense
and keep in full force and effect throughout the term of this Agreement a
blanket fidelity bond and an errors and omissions insurance policy covering such
Master Servicer's officers and employees and other persons acting on behalf of
such Master Servicer in connection with its activities under this Agreement. The
amount of coverage shall be at least equal to the coverage that would be
required by FNMA or FHLMC, whichever is greater, with respect to such Master
Servicer if such Master Servicer were servicing and administering the Mortgage
Loans for FNMA or FHLMC. In the event that any such bond or policy ceases to be
in effect, such Master Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer acceptable to the Depositor. Coverage of a
Master Servicer under a policy or bond obtained by an Affiliate of a Master
Servicer and providing the coverage required by this Section 3.12(b) shall
satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
related Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under
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applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy.
Notwithstanding the foregoing:
(i) such Master Servicer shall not be deemed to be in
default under this Section 3.13(a) by reason of any transfer or
assumption which such Master Servicer is restricted by law from
preventing; and
(ii) if such Master Servicer determines that it is reasonably
likely that any Mortgagor will bring, or if any Mortgagor does bring,
legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, such
Master Servicer shall not be required to enforce the due-on-sale clause
or to contest such action.
(b) Subject to the Master Servicers' duty to enforce any due-on-sale
clause to the extent set forth in Section 3.13(a), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption or modification agreement or supplement to the
Mortgage Note or Mortgage which requires the signature of the Trustee, or if an
instrument of release signed by the Trustee is required releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer of such Mortgage Loan
is authorized, subject to the requirements of the sentence next following, to
execute and deliver, on behalf of the Trustee, the assumption agreement with the
Person to whom the Mortgaged Property is to be conveyed and such modification
agreement or supplement to the Mortgage Note or Mortgage or other instruments as
are reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person; provided, however,
none of such terms and requirements shall both constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or final, temporary or proposed Treasury Regulations promulgated
thereunder) and cause either REMIC to fail to qualify as a REMIC under the Code.
The Master Servicer of such Mortgage Loan shall execute and deliver such
documents only if it reasonably determines that (i) its execution and delivery
thereof will not conflict with or violate any terms of this Agreement or cause
the unpaid balance and interest on the Mortgage Loan to be uncollectible in
whole or in part, (ii) any required consents of insurers under any Required
Insurance Policies have been obtained and (iii) subsequent to the closing of the
transaction involving the assumption or transfer (A) the Mortgage Loan will
continue to be secured by a first mortgage lien pursuant to the terms of the
Mortgage, (B) such transaction will not adversely affect the coverage under any
Required Insurance Policies, (C) the Mortgage Loan will fully amortize over the
remaining term thereof, (D) no material term of the Mortgage Loan (including the
interest rate on the Mortgage Loan) will be altered nor will the term of the
Mortgage Loan be changed and (E) if the seller/transferor of the Mortgaged
Property is to be released from liability on the Mortgage Loan, such release
will not (based on the related Master Servicer's or Subservicer's good faith
determination) adversely affect the collectability of the Mortgage Loan. Upon
receipt of appropriate instructions from the Master Servicer of such Mortgage
Loan in accordance with the foregoing, the Trustee shall execute any necessary
instruments for such assumption or substitution of liability as directed by such
Master Servicer. Upon the closing of the transactions contemplated by such
documents, the Master Servicer of
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such Mortgage Loan shall cause the originals or true and correct copies of the
assumption agreement, the release (if any), or the modification or supplement to
the Mortgage Note or Mortgage to be delivered to the Trustee or the Custodian
and deposited with the Mortgage File for such Mortgage Loan. Any fee collected
by a Master Servicer or such related Subservicer for entering into an assumption
or substitution of liability agreement will be retained by the Master Servicer
or such Subservicer as additional servicing compensation.
(c) The Master Servicer, with respect to a Mortgage Loan it services, or
the related Subservicer, as the case may be, shall be entitled to approve a
request from a Mortgagor for a partial release of the related Mortgaged
Property, the granting of an easement thereon in favor of another Person, any
alteration or demolition of the related Mortgaged Property or other similar
matters if it has determined, exercising its good faith business judgment in the
same manner as it would if it were the owner of the related Mortgage Loan, that
the security for, and the timely and full collectability of, such Mortgage Loan
would not be adversely affected thereby and that neither REMIC I nor REMIC II
would fail to continue to qualify as a REMIC under the Code as a result thereof
and that no tax on "prohibited transactions" or "contributions" after the
start-up day would be imposed on either REMIC as a result thereof. Any fee
collected by a Master Servicer or the related Subservicer for processing such a
request will be retained by such Master Servicer or Subservicer as additional
servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and each Master Servicer with respect to the Mortgage
Loans it services, shall be entitled to approve an assignment in lieu of
satisfaction with respect to a Mortgage Loan, provided the obligee with respect
to such Mortgage Loan following such proposed assignment provides the Trustee
and such Master Servicer with a "Lender Certification for Assignment of Mortgage
Loan" in the form attached hereto as Exhibit M, in form and substance
satisfactory to the Trustee and such Master Servicer, providing the following:
(i) that such Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and that the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws; (iii) that
such Mortgage Loan following the proposed assignment will have a rate of
interest at least 0.25 percent below or above the rate of interest on such
Mortgage Loan prior to such proposed assignment; and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction with respect to any Mortgage Loan it
services, the Master Servicer of such Mortgage Loan shall receive cash in an
amount equal to the unpaid principal balance of and accrued interest on such
Mortgage Loan, and such Master Servicer shall treat such amount as a Principal
Prepayment in Full with respect to such Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) Each Master Servicer, with respect to the Mortgage Loans it
services, shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in
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default and as to which no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 3.07. In connection with such
foreclosure or other conversion, such Master Servicer shall, consistent with
Section 3.11, follow such practices and procedures as it shall deem necessary or
advisable, as shall be normal and usual in its general mortgage servicing
activities; provided that such Master Servicer shall not be liable in any
respect hereunder if such Master Servicer is acting in connection with any such
foreclosure or other conversion in a manner that is consistent with the
provisions of this Agreement. Such Master Servicer, however, shall not be
required to expend its own funds in connection with any foreclosure, or
attempted foreclosure which is not completed, or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan to Holders of
Certificates of one or more Classes after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds, Insurance Proceeds or REO Proceeds (respecting which it
shall have priority for purposes of withdrawals from the applicable Custodial
Account pursuant to Section 3.10, whether or not such expenses are actually
recoverable from related Liquidation Proceeds, Insurance Proceeds or REO
Proceeds); any such expenditure shall be treated as a Servicing Advance
hereunder. In the event of a determination by a Master Servicer pursuant to this
Section 3.14(a), such Master Servicer shall be entitled to reimbursement of its
funds so expended pursuant to Section 3.10. Concurrently with the foregoing,
such Master Servicer may pursue any remedies that may be available in connection
with a breach of a representation and warranty with respect to any such Mortgage
Loan in accordance with Section 2.04. Upon the occurrence of a Cash Liquidation
or REO Disposition, following the deposit in the applicable Custodial Account of
all Insurance Proceeds, Liquidation Proceeds and other payments and recoveries
referred to in the definition of "Cash Liquidation" or "REO Disposition," as
applicable, upon receipt by the Trustee of written notification of such deposit
signed by a Servicing Officer, the Trustee, or any Custodian, as the case may
be, shall release to the Master Servicer of the related Mortgage Loan the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment prepared by such Master Servicer, in each case without
recourse, as shall be necessary to vest in the designee of such Master Servicer
the related Mortgaged Property, and thereafter such Mortgaged Property shall not
be part of the Trust Fund. Notwithstanding the foregoing or any other provision
of this Agreement, in each Master Servicer's sole discretion with respect to any
defaulted Mortgage Loan it services or REO Property as to either of the
following provisions, (i) a Cash Liquidation or REO Disposition may be deemed to
have occurred if substantially all amounts expected by such Master Servicer to
be received in connection with the related defaulted Mortgage Loan or REO
Property have been received, and (ii) for purposes of determining the amount of
any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or any other
unscheduled collections or the amount of any Realized Loss, such Master Servicer
may take into account minimal amounts of additional receipts expected to be
received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired by the
Trust Fund as an REO Property by foreclosure or by deed in lieu of foreclosure,
the deed or certificate of sale shall be issued to the Trustee or to its nominee
on behalf of Certificateholders. Notwithstanding any such acquisition of title
and cancellation of the related Mortgage Loan, such REO Property shall (except
as otherwise expressly provided herein) be considered to be an
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Outstanding Mortgage Loan held in the Trust Fund until such time as the REO
Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be an
Outstanding Mortgage Loan it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been discharged,
such Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer of such Mortgage Loan shall dispose of such
REO Property within two years, or such other period permitted by the Code, after
its acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the
Code, or such other period permitted by the Code, unless (i) at the expense of
the Trust Fund, the Master Servicer requests and receives an extension of such
period in which case the Master Servicer shall sell such REO property within the
applicable extension period or (ii) such Master Servicer obtains for the Trustee
an Opinion of Counsel, addressed to the Trustee and such Master Servicer, to the
effect that the holding by the Trust Fund of such REO Property subsequent to
such two-year period will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code or cause either REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such REO Property (subject to any
conditions contained in such Opinion of Counsel). A Master Servicer shall be
entitled to be reimbursed from the applicable Custodial Account for any costs
incurred in obtaining such Opinion of Counsel, as provided in Section 3.10, and
such costs shall be treated as Servicing Advances hereunder. Notwithstanding any
other provision of this Agreement, no REO Property acquired by the Trust Fund
shall be rented (or allowed to continue to be rented) or otherwise used by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or (ii) subject the Trust Fund to
the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) and
860F(a)(2)(B) of the Code.
(d) The proceeds of any Cash Liquidation, REO Disposition or purchase or
repurchase of any Mortgage Loan pursuant to the terms of this Agreement, as well
as any recovery resulting from a collection of Liquidation Proceeds, Insurance
Proceeds or REO Proceeds, will be applied in the following order of priority:
first, to reimburse the Master Servicer of such Mortgage Loan or the related
Subservicer in accordance with Section 3.10(a)(i); second, to all Master
Servicing Fees and Primary Servicing Fees payable therefrom (and the Master
Servicer of such Mortgage Loan and the Subservicer shall have no claims for any
deficiencies with respect to such fees which result from the foregoing
allocation); third, to the Certificateholders to the extent of accrued and
unpaid interest on the Mortgage Loan, and any related REO Imputed Interest, at
the Net Mortgage Rate to the Due Date prior to the Distribution Date on which
such amounts are to be distributed; fourth, to the Certificateholders as a
recovery of principal on the Mortgage Loan (or REO Property); and fifth, to
Foreclosure Profits.
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Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of a Mortgage Loan, or
upon the receipt by a Master Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the applicable Master
Servicer will immediately notify the Trustee and the Custodian, if applicable,
by a certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
applicable Custodial Account pursuant to Section 3.07 have been or will be so
deposited), substantially in one of the forms attached hereto as Exhibit H
requesting delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to such Master Servicer. Such
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to a Custodial Account or the
Certificate Account.
(b) From time to time as is appropriate for the servicing or foreclosure
of a Mortgage Loan, the Master Servicer of such Mortgage Loan shall deliver to
the Trustee (if it holds the related Mortgage File) or the Custodian, with a
copy to the Trustee, a certificate of a Servicing Officer substantially in one
of the forms attached as Exhibit H hereto, requesting that possession of all, or
any document constituting part of, the Mortgage File be released to such Master
Servicer and certifying as to the reason for such release and that such release
will not invalidate any insurance coverage provided in respect of such Mortgage
Loan under any Required Insurance Policy. Upon receipt of the foregoing, the
Trustee shall deliver, or cause the Custodian to deliver, the Mortgage File or
any document therein to such Master Servicer. Such Master Servicer shall cause
each Mortgage File or any document therein so released to be returned to the
Trustee, or the Custodian as agent for the Trustee, when the need therefor by
such Master Servicer no longer exists, unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the applicable Custodial Account or (ii) the Mortgage File or such
document has been delivered directly or through a Subservicer to an attorney, or
to a public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property either judicially or non-judicially, and such Master
Servicer has delivered directly or through a Subservicer to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. In the event that the Mortgage File or any
document therein is retained for purposes of initiating or pursuing foreclosure
of the Mortgage Property, if such foreclosure proceedings are terminated or the
need for the Mortgage File or other document no longer exists and the Mortgage
Loan is still part of the Trust Fund, the Master Servicer shall cause the
Mortgage File or any document therein to be returned to the Trustee. In the
event of the liquidation of a Mortgage Loan, the Trustee shall deliver the
Request for Release with respect thereto to the Master Servicer of such Mortgage
Loan upon deposit of the related Liquidation Proceeds in the applicable
Custodial Account.
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(c) The Trustee, or the applicable Master Servicer on the Trustee's
behalf shall execute and deliver to such Master Servicer, if necessary, any
court pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings (if signed by the
Trustee), the applicable Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee and certifying as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate any insurance coverage under any Required Insurance
Policy or invalidate or otherwise affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale.
Section 3.16. Servicing and Other Compensation; Compensating Interest.
(a) Each Master Servicer, as compensation for its activities hereunder,
shall be entitled to retain from collections on the Mortgage Loans it services
the amounts provided for by clauses (ii), (iv), (v) and (vi) of Section 3.10(a),
subject to clause (e) below. The amount of servicing compensation provided for
in such clauses shall be accounted for on a Mortgage Loan-by-Mortgage Loan
basis.
(b) Additional servicing compensation in the form of prepayment charges,
assumption fees, late payment charges, investment income on amounts in the
applicable Custodial Account or otherwise shall be retained by the Master
Servicers or the Subservicer to the extent provided herein, subject to clause
(e) below.
(c) The Master Servicers shall be required to pay, or cause to be paid,
all expenses incurred by it in connection with their servicing activities
hereunder (including the fees and expenses of the Trustee any co-trustee, and
any Custodian) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.10 and 3.14.
(d) A Master Servicer's right to receive servicing compensation may not
be transferred in whole or in part except in connection with the transfer of all
of its responsibilities and obligations as a Master Servicer under this
Agreement.
(e) Notwithstanding any other provision herein, the amount of servicing
compensation that each Master Servicer shall be entitled to receive for their
activities hereunder for the period ending on each Distribution Date shall be
reduced (but not below zero) by an amount equal to Compensating Interest (if
any) to be paid by such Master Servicer for such Distribution Date. Such
reduction shall be applied during such period in reduction of the Master
Servicing Fee to which the Master Servicers are entitled pursuant to Section
3.10(a)(ii). Such reduction in the Master Servicing Fee shall be effectuated by
the remittance of Compensating Interest (if any) to the Trustee for deposit in
the Certificate Account pursuant to Section 4.01(a).
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Section 3.17. Annual Statement as to Compliance.
Each Master Servicer will deliver to the Depositor and the Trustee not
later than March 31 of each year beginning in 1999, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of such
Master Servicer during the preceding calendar year and of its performance under
the pooling and servicing agreements, including this Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, such Master Servicer has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has been
a default in the fulfillment in all material respects of any such obligation
relating to this Agreement, specifying each such default known to such officer
and the nature and status thereof and (iii) to the best of such officers'
knowledge, each related Subservicer has fulfilled its material obligations under
its Subservicing Agreement with such Master Servicer in all material respects,
or if there has been a material default in the fulfillment of such obligations
relating to this Agreement, specifying such default known to such officer and
the nature and status thereof.
Section 3.18. Annual Independent Public Accountants' Servicing Report.
Not later than March 31 of each year beginning in 1999, each Master
Servicer at its expense shall cause a firm of Independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Depositor and the Trustee to the effect that such
firm has examined certain documents and records relating to the servicing of the
mortgage loans under pooling and servicing agreements (including this Agreement)
substantially similar one to another (such statement to have attached thereto a
schedule setting forth the pooling and servicing agreements covered thereby,
including this Agreement) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, such
servicing has been conducted in compliance with such pooling and servicing
agreements except for such significant exceptions or errors in records that, in
the opinion of such firm, the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC requires it to
report. In rendering such statement, such firm may rely, as to matters relating
to direct servicing of mortgage loans by Subservicers, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC (rendered within one year of such statement) of
Independent public accountants with respect to the related Subservicer. For
purposes of such statement, such firm may conclusively assume that all pooling
and servicing agreements among the Depositor, the related Master Servicer and
the Trustee relating to Mortgage Pass-Through Certificates evidencing an
interest in first mortgage loans are substantially similar one to another except
for any such pooling and servicing agreement which, by its terms, specifically
states otherwise.
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Section 3.19. Rights of the Depositor in Respect of the Master
Servicers.
Each Master Servicer shall afford the Depositor, upon reasonable notice,
during normal business hours access to all records maintained by such Master
Servicer in respect of its rights and obligations hereunder and access to
officers of such Master Servicer responsible for such obligations. Upon request,
such Master Servicer shall furnish the Depositor with its most recent financial
statements and such other information as such Master Servicer possesses
regarding its business, affairs, property and condition, financial or otherwise.
Each Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or
Persons identified by the Depositor or such Master Servicer. The Depositor may,
but is not obligated to, enforce the obligations of the Master Servicers
hereunder. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicers and is not obligated to
supervise the performance of the Master Servicers under this Agreement or
otherwise.
Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master Servicer of
such Buydown Mortgage Loan or the related Subservicer has deposited Buydown
Funds in an account that satisfies the requirements for a Custodial Account (the
"Buydown Account"). Upon receipt from the Mortgagor of the amount due on a Due
Date for each Buydown Mortgage Loan, the Master Servicer of such Buydown
Mortgage Loan or the related Subservicer, as applicable, will withdraw from the
Buydown Account the predetermined amount that, when added to the amount due on
such date from the Mortgagor, equals the full Monthly Payment and deposit that
amount in the applicable Custodial Account in accordance with the terms hereof
or transmit that amount in accordance with the terms of the Subservicing
Agreement to such Master Servicer, in either case together with the related
payment made by the Mortgagor or advanced by the Subservicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan in its
entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Master Servicer of
such Buydown Mortgage Loan or the related Subservicer shall be required to
withdraw from the Buydown Account and remit any Buydown Funds remaining in the
Buydown Account in accordance with the related buydown agreement. The amount of
Buydown Funds which may be remitted in accordance with the related buydown
agreement may reduce the amount required to be paid by the Mortgagor to fully
prepay the related Mortgage Loan. If the Mortgagor on a Buydown Mortgage Loan
defaults on such Mortgage Loan during the Buydown Period and the property
securing such Buydown Mortgage Loan is sold in the liquidation thereof (either
by the Master Servicer of such Buydown Mortgage Loan or the insurer under any
related Primary Mortgage Insurance Policy), the Master Servicer of such Buydown
Mortgage Loan or the related Subservicer shall be required to withdraw from the
Buydown Account the Buydown Funds for such Buydown Mortgage Loan still held in
the Buydown Account and deposit that amount in the applicable Custodial Account
in accordance with the terms hereof or remit the same to the Master Servicer of
such Buydown Mortgage Loan in accordance with the terms of the Subservicing
Agreement for deposit in the applicable Custodial Account, as applicable, or pay
to the insurer under any related Primary
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Mortgage Insurance Policy if the Mortgaged Property is transferred to such
insurer and such insurer pays all of the loss incurred in respect of such
default. Any amount so remitted pursuant to the preceding sentence will be
deemed to reduce the amount owed on the Mortgage Loan.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Trustee shall establish and maintain a Certificate Account. On
or before 11:00 A.M. Los Angeles time on each Certificate Account Deposit Date
each Master Servicer shall remit to the Trustee for deposit into the Certificate
Account, by wire transfer of immediately available funds, an amount equal to the
sum of (i) any Advance for the immediately succeeding Distribution Date, (ii)
any amount required to be remitted to the Trustee for deposit in the Certificate
Account pursuant to Section 3.16(e), (iii) any amount required to be paid
pursuant to Section 9.01 and (iv) all other amounts constituting the portion the
Available Distribution Amount attributable to collections made or payments owed
by such Master Servicer for the immediately succeeding Distribution Date. The
Trustee shall promptly deposit such funds in the Certificate Account. Funds
remitted by the Master Servicer as set forth above shall include the amount
required to be remitted to the Trustee and any co-trustee pursuant to Section
8.05(a).
(b) The Trustee shall be entitled to all investment earnings on the
funds in the Certificate Account from the receipt of such funds from the Master
Servicers as set forth in Section 4.01(a) until the distribution of such funds
to the Certificateholders as set forth in Section 4.02.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee or the Paying Agent shall,
from funds received by the Trustee pursuant to Section 4.01(a) (i) distribute to
a Master Servicer or a Subservicer, by remitting for deposit to the applicable
Custodial Account, to the extent of and in reimbursement for any Advances
previously made by such Master Servicer or Subservicer with respect to any
Mortgage Loan it services or REO Property which remain unreimbursed in whole or
in part following the Cash Liquidation or REO Disposition of such Mortgage Loan
or REO Property as evidenced by an Officer's Certificate received by the Trustee
by the Determination Date; (ii) distribute to the Trustee and any co-trustee the
amounts required to be remitted to the Trustee and any co-trustee pursuant to
Section 8.05(a); and then (iii) distribute to each Certificateholder of record
on the next preceding Record Date (other than as provided in Section 9.01
respecting the final distribution) either in immediately available funds (by
wire transfer or otherwise) to the account of such Certificateholder holding
Certificates in the amount of at least $5,000,000 at a bank or other entity
having appropriate facilities therefor, if such Certificateholder has so
notified the Trustee or the Paying Agent at least five (5) Business Days prior
to the related Record Date, as the case may be, or, if such Certificateholder
has not so
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notified the Trustee or the Paying Agent at least five (5) Business Days prior
to the related Record Date, by check mailed to such Certificateholder at the
address of such Holder appearing in the Certificate Register such
Certificateholder's share (based on the aggregate of the Percentage Interests
represented by Certificates of the applicable Class held by such Holder) of the
following amounts, in the following order of priority (subject to the provisions
of Section 4.02(b)), to the extent of the Available Distribution Amount on
deposit in the Certificate Account on the Distribution Date:
(i) first, to the Class PO Certificates, the Class PO Fraction
of all principal received on or in respect of each Class PO Mortgage
Loan;
(ii) second, concurrently, to each Class of the Senior
Certificates entitled to interest, Accrued Certificate Interest and
Unpaid Accrued Certificate Interest, with any shortfall allocated pro
rata among such Classes based on the respective amounts of Accrued
Certificate Interest;
(iii) third, to the Senior Certificates entitled to principal,
other than the Class PO Certificates, the Senior Principal Distribution
Amount, in the following order:
(A) first, to each Class of the Residual Certificates, pro
rata, according to their respective Certificate Principal
Balances, until the Certificate Principal Balances of the
Residual Certificates have been reduced to zero; and
(B) second, concurrently:
(I) 12.5% to the Class A-5 Certificates until the
Class A-5 Certificate Principal Balance has been
reduced to zero; and
(II) 87.5% sequentially as follows:
(a) first, to the Class A-4 Certificates, an
amount, up to the amount of the Class A-4
Priority Amount, until the Class A-4
Certificate Principal Balance has been
reduced to zero;
(b) second, to the Class A-1 Certificates until
the Class A-1 Certificate Principal Balance
has been reduced to zero;
(c) third, to the Class A-2 Certificates until
the Class A-2 Certificate Principal Balance
has been reduced to zero;
(d) fourth, to the Class A-3 Certificates until
the Class A-3 Certificate Principal Balance
has been reduced to zero; and
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(e) fifth, to the Class A-4 Certificates, until
the Class A-4 Certificate Principal Balance
has been reduced to zero;
(iv) fourth, to the Class PO Certificates, to the extent of
amounts otherwise available to pay the Subordinate Principal
Distribution Amount on such Distribution Date, the sum of (a) principal
in an amount equal to the Class PO Fraction of any Realized Loss on a
Class PO Mortgage Loan, other than an Excess Special Hazard Loss, an
Excess Fraud Loss or an Excess Bankruptcy Loss on the Class PO Mortgage
Loans and (b) the sum of amounts, if any, by which the amount described
in clause (a) above on each prior Distribution Date exceeded the amount
actually distributed in respect thereof on such prior Distribution Dates
and not subsequently distributed; provided that (i) any amounts
distributed in respect of losses pursuant to this clause shall not cause
a further reduction in the Class PO Certificate Principal Balance and
(ii) distributions pursuant to this clause shall result in a reduction
of the amount of principal distributions on such Distribution Date to
the Subordinate Certificates in reverse order of their payment priority;
(v) fifth, to the Class M Certificates, Accrued Certificate
Interest and Unpaid Accrued Certificate Interest;
(vi) sixth, to the Class M Certificates, their pro rata share
of the Subordinate Principal Distribution Amount;
(vii) seventh, to the Class B-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) eighth, to the Class B-1 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(ix) ninth, to the Class B-2 Certificates, Accrued Certificate
Interest and Unpaid Accrued Certificate Interest;
(x) tenth, to the Class B-2 Certificates, their pro rata share
of the Subordinate Principal Distribution Amount;
(xi) eleventh, to the Class B-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xii) twelfth, to the Class B-3 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(xiii) thirteenth, to the Class B-4 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
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(xiv) fourteenth, to the Class B-4 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(xv) fifteenth, to the Class B-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xvi) sixteenth, to the Class B-5 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount; and
(xvii) seventeenth, to the Class R-I Certificates, the remaining
portion, if any, of the Available Distribution Amount for such
Distribution Date.
With respect to the Subordinate Certificates, notwithstanding the
foregoing, on any Distribution Date on which the Subordination Level for any
Class of Subordinate Certificates is less than such percentage as of the Cut-off
Date, the portion of the Subordinate Principal Distribution Amount otherwise
allocable to such Class or Classes junior to such Class will be allocated to the
most senior Class of Subordinate Certificates for which the Subordination Level
is less than such percentage as of the Cut-off Date and to the Class or Classes
of Subordinate Certificates senior thereto, pro rata, according to the
Certificate Principal Balances of such Classes. On any Distribution Date, any
reduction in funds available for distribution to the Classes of Subordinate
Certificates resulting from a distribution to the Class PO Certificates as
described in clause (iv) above will be allocated to the Class of Subordinate
Certificates with the lowest payment priority, in reduction of its share of the
Subordinate Principal Distribution Amount.
With respect to the Senior Certificates, notwithstanding the foregoing,
on each Distribution Date on or after the Credit Support Depletion Date,
distributions will be made in the order and priority as follows, subject, in
each case, to the extent of the Available Distribution Amount remaining
following prior distributions, if any, on such Distribution Date:
(i) first, to the Class PO Certificates, the Class PO Fraction of
all principal received on or in respect of each Class PO Mortgage Loan;
(ii) second, concurrently, to each Class of the Senior
Certificates entitled to interest, Accrued Certificate Interest and
Unpaid Accrued Certificate Interest, with any shortfall allocated pro
rata among such Classes based on the respective amounts of Accrued
Certificate Interest;
(iii) third, to the Senior Certificates entitled to principal
(other than the Class PO Certificates), the Senior Principal
Distribution Amount, pro rata, according to their respective Certificate
Principal Balances; and
(iv) fourth, to the Class R-I Certificates, the remaining
portion, if any, of the Available Distribution Amount for such
Distribution Date.
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(b) In addition to the foregoing distributions, with respect to any
Mortgage Loan that was previously the subject of a Cash Liquidation or an REO
Disposition that resulted in a Realized Loss, in the event that within two years
of the date on which such Realized Loss was determined to have occurred the
Master Servicer of such Mortgage Loan receives amounts, which such Master
Servicer reasonably believes to represent subsequent recoveries (net of any
related liquidation expenses), or determines that it holds surplus amounts
previously reserved to cover estimated expenses, specifically related to such
Mortgage Loan (including, but not limited to, recoveries in respect of the
representations and warranties made by the related Seller pursuant to the
applicable Mortgage Loan Purchase Agreement) such Master Servicer shall notify
the Trustee of the existence of such amounts by means of an Officer's
Certificate delivered on the related Determination Date and, the Trustee shall
distribute such amounts to the applicable Certificateholders of the Class or
Classes to which such Realized Loss was allocated (with the amounts to be
distributed allocated among such Classes in the same proportions as such
Realized Loss was allocated), subject to the following: No such distribution
shall be in an amount that would result in total distributions on the
Certificates of any such Class in excess of the total amounts of principal and
interest that would have been distributable thereon if such Cash Liquidation or
REO Disposition had occurred but had resulted in a Realized Loss equal to zero.
Any amount to be so distributed with respect to the Certificates of any Class
shall be remitted by the Master Servicer of such Mortgage Loan to the Trustee
for distribution to the Certificateholders of record as of the Record Date
immediately preceding the date of such distribution, on a pro rata basis based
on the Percentage Interest represented by each Certificate of such Class as of
such Record Date. Any amounts to be so distributed shall not be remitted to or
distributed from the Trust Fund, and shall constitute subsequent recoveries with
respect to Mortgage Loans that are no longer assets of the Trust Fund.
(c) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicers shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) If either Master Servicer or the Trustee anticipates that a final
distribution with respect to any Class of Certificates will be made on the next
Distribution Date, such Master Servicer, if applicable, shall, no later than the
Determination Date in the month of such final distribution, notify the Trustee
and the Trustee shall, no later than two (2) Business Days after such
Determination Date, mail on such date to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates that the
final distribution with respect to such Class of Certificates will be made on
such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein, and
(ii) no interest shall accrue on such Certificates from and after the end of the
prior calendar month. In the event that Certificateholders required to surrender
their Certificates pursuant to Section 9.01(c) do not surrender their
Certificates for final cancellation, the Trustee shall cause funds
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distributable with respect to such Certificates to be withdrawn from the
Certificate Account and credited to a separate escrow account for the benefit of
such Certificateholders as provided in Section 9.01(d).
Section 4.03. Statements to Certificateholders.
(a) No later than two Business Days after the Determination Date for the
immediately succeeding Distribution Date, the Master Servicers shall deliver to
the Trustee a report in computer-readable form as to each Mortgage Loan serviced
by them as of such date such information as the Trustee shall reasonably require
in order to make, or cause its agents to make, distributions on the Certificates
and prepare reports to Certificateholders. The Trustee may conclusively rely
upon the accuracy of and shall be under no duty to recalculate, verify or
recompute the information provided to it by a Master Servicer.
(b) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Trustee shall forward by
mail to each Holder and the Underwriter, each Master Servicer and the Depositor
a statement setting forth the following information as to each Class of
Certificates to the extent applicable and to the extent the Trustee has received
the Master Servicer tape in a timely manner:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included therein
representing Principal Prepayments;
(ii) the amount of such distribution to Holders of such
Class of Certificates allocable to interest;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the
amount of the shortfall;
(iv) the amount of any Advances by the Master Servicers
pursuant to Section 4.04;
(v) the number and Pool Stated Principal Balance of the
Mortgage Loans after giving effect to the distribution of principal on
such Distribution Date;
(vi) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the amounts distributed on
such Distribution Date, separately identifying any reduction thereof due
to Realized Losses other than pursuant to an actual distribution of
principal;
(vii) the related Subordinate Principal Distribution Amount;
(viii) on the basis of the most recent reports furnished to
it by Subservicers, if applicable, the number and aggregate principal
balances of Mortgage
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Loans (not including REO Properties) that are delinquent (A) one month,
(B) two months and (C) three months and the number and aggregate
principal balance of Mortgage Loans (not including REO Properties) that
are in foreclosure;
(ix) the number, aggregate principal balance and book
value of any REO Properties;
(x) the aggregate Accrued Certificate Interest remaining
unpaid, if any, for each Class of Certificates, after giving effect to
the distribution made on such Distribution Date;
(xi) the Special Hazard Amount, Fraud Loss Amount and
Bankruptcy Amount as of the close of business on such Distribution Date
and a description of any change in the calculation of such amounts;
(xii) the occurrence of the Credit Support Depletion Date;
(xiii) the Senior Percentage for such Distribution Date;
(xiv) the aggregate amount of Realized Losses for such
Distribution Date;
(xv) the aggregate amount of any recoveries on previously
foreclosed loans from Sellers due to a breach of representation or
warranty;
(xvi) the weighted average remaining term to maturity of
the Mortgage Loans after giving effect to the amounts distributed on
such Distribution Date;
(xvii) the weighted average Mortgage Rates of the Mortgage
Loans after giving effect to the amounts distributed on such
Distribution Date;
(xviii) the Senior Prepayment Percentage for such
Distribution Date;
(xix) Extraordinary Losses for the Prior Period; and
(xx) the cumulative Realized Losses.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare, or cause to be prepared, and shall forward to
each Person who at any time during the calendar year was the Holder of a
Certificate other than a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above aggregated
for such calendar year or applicable portion thereof during which such Person
was a Certificateholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the
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extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare, or cause to be prepared, and shall forward to
each Person who at any time during the calendar year was the Holder of a
Residual Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Residual Certificate. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code.
(e) Upon the written request of any Holder of a Class B-3, Class B-4 or
Class B-5 Certificate, the Master Servicer, as soon as reasonably practicable,
shall provide the requesting Certificateholder with such information as is
necessary and appropriate, in the Master Servicer's sole discretion, for
purposes of satisfying applicable reporting requirements under Rule 144A.
(f) Upon request to the Trustee by any Holder of a Certificate who is a
Holder thereof at the time of making such request (an "Eligible
Certificateholder"), the Trustee shall provide, in the form of a
computer-readable tape or disk, loan by loan data with respect to the payment
experience on the Mortgage Loans containing at least the fields of information
listed on Exhibit O hereto (based on information provided by the Master
Servicer). In addition, upon the written request of any Eligible
Certificateholder, the Trustee shall provide similar loan by loan data with
respect to any prior monthly remittance report to the Certificateholders
pursuant to this Agreement (as and when such information becomes available). The
expense of providing any tape or disk pursuant to this subsection shall be the
expense of the Eligible Certificateholder. The Trustee shall include in each
monthly remittance report pursuant to this Agreement a statement that the
monthly loan by loan information described in this subsection is available upon
the request and at the expense of any Eligible Certificateholder directed to the
Trustee.
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicers.
(a) Prior to the close of business on the Business Day next succeeding
each Determination Date, each Master Servicer shall furnish a written (or in
such electronic format as the Trustee and the Master Servicer shall mutually
agree) statement to the Trustee, any Paying Agent and the Depositor (the
information in such statement to be made available to Certificateholders by each
Master Servicer on request) setting forth (i) the portion of the Available
Distribution Amount to be remitted by such Master Servicer, (ii) the aggregate
amount of Special Hazard Losses, Fraud Losses and Bankruptcy Losses attributable
to the Mortgage Loans serviced by it for such Distribution Date and (iii) the
amounts required to be withdrawn from the applicable Custodial Account and
remitted to the Trustee for deposit into the Certificate Account on the
immediately succeeding Certificate Account Deposit Date pursuant to clause (iii)
of Section 4.01(a) and (iv) the aggregate book value of REO Properties serviced
by it. The determination by each Master Servicer of such amounts shall, in the
absence of obvious error,
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be presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 11:00 A.M. Los Angeles time on each Certificate Account
Deposit Date, each Master Servicer shall either (i) remit to the Trustee for
deposit in the Certificate Account from its own funds, or funds received
therefor from the Subservicers, an amount equal to the Advances to be made by
such Master Servicer in respect of the related Distribution Date, which shall be
in an aggregate amount equal to the aggregate amount of Monthly Payments (with
each interest portion thereof adjusted to the Net Mortgage Rate), less the
amount of any related Debt Service Reductions or reductions in the amount of
interest collectable from the Mortgagor pursuant to the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended, or similar legislation or regulations then
in effect, on the Outstanding Mortgage Loans serviced by such Master Servicer as
of the related Due Date, which Monthly Payments were delinquent as of the close
of business as of the related Determination Date; provided that no Advance shall
be made if it would be a Nonrecoverable Advance, (ii) withdraw from amounts on
deposit in the applicable Custodial Account and deposit in the Certificate
Account all or a portion of the Amount Held for Future Distribution in discharge
of any such Advance, or (iii) make advances in the form of any combination of
(i) and (ii) aggregating the amount of such Advance. Any portion of the Amount
Held for Future Distribution so used shall be replaced by such Master Servicer
by remittance to the Trustee for deposit in the Certificate Account on or before
11:00 A.M. Los Angeles time on any future Certificate Account Deposit Date to
the extent that funds attributable to the Mortgage Loans serviced by such Master
Servicer that are available in the applicable Custodial Account for remittance
to the Trustee on such Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made on the following Distribution
Date.
The determination by a Master Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer delivered to
the Depositor and the Trustee by 11:00 A.M. Los Angeles time on the related
Determination Date.
In the event that a Master Servicer determines as of the Business Day
preceding any Certificate Account Deposit Date that it will be unable to remit
to the Trustee an amount equal to the Advance required to be made by it for the
immediately succeeding Distribution Date, it shall give written notice to the
Trustee of its inability to advance (such notice may be given by telecopy), not
later than 12:00 P.M. Los Angeles time on such Business Day, specifying the
portion of such amount that it will be unable to remit. Not later than 12:00
P.M. Los Angeles time on the Certificate Account Deposit Date the Trustee shall
(a) terminate all of the rights and obligations of such Master Servicer under
this Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of such Master Servicer hereunder, including the obligation to
advance funds in an amount equal to the Advance required to be made by such
Master Servicer for the immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this Section
4.04 into the Certificate Account.
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(c) Notwithstanding any other provision of this Agreement or any
provision of any Subservicing Agreement, (i) a Master Servicer shall not make
any Advance or any Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Advance or Servicing Advance, if
made, would be a Nonrecoverable Advance, (B) a Cash Liquidation or REO
Disposition has occurred with respect to the related Mortgage Loan serviced by
such Master Servicer, or (C) the related Mortgage Loan serviced by such Master
Servicer is a Deleted Mortgage Loan, and (ii) any Subservicer shall not make any
Subservicer Servicing Advance if (A) it determines in its good faith judgment
after reasonable inquiry that such Subservicer Servicing Advance, if made, would
be a Nonrecoverable Subservicer Advance, (B) a Cash Liquidation or REO
Disposition has occurred with respect to the related Mortgage Loan, or (C) the
related Mortgage Loan is a Deleted Mortgage Loan.
Section 4.05. Allocation of Realized Losses.
Prior to each Determination Date, each Master Servicer shall determine
the total amount of Realized Losses with respect to the Mortgage Loans serviced
by it, if any, that resulted from any Cash Liquidation, Debt Service Reduction,
Deficient Valuation or REO Disposition that occurred during the calendar month
preceding such Distribution Date. The amount of each Realized Loss shall be
evidenced by an Officers' Certificate delivered to the Trustee no later than the
Determination Date. All Realized Losses other than Excess Special Hazard Losses,
Extraordinary Losses, Excess Bankruptcy Losses or Excess Fraud Losses, shall be
allocated by the Trustee as follows: first, to the Class B-5 Certificates until
the Class B-5 Certificate Principal Balance has been reduced to zero; second, to
the Class B-4 Certificates until the Class B-4 Certificate Principal Balance has
been reduced to zero; third, to the Class B-3 Certificates until the Class B-3
Certificate Principal Balance has been reduced to zero; fourth, to the Class B-2
Certificates until the Class B-2 Certificate Principal Balance has been reduced
to zero; fifth, to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance has been reduced to zero; sixth, to the Class M Certificates
until the Class M Certificate Principal Balance has been reduced to zero; and
seventh, to the Senior Certificates on a pro rata basis; provided, however, that
in each case if any such Realized Losses is on a Class PO Mortgage Loan, the
Class PO Fraction of such loss will first be allocated to the Class PO
Certificates and the remainder of such Realized Losses will be allocated as
described above in this paragraph. Any Excess Special Hazard Losses, Excess
Bankruptcy Losses, Excess Fraud Losses and Extraordinary Losses on the Mortgage
Loans (other than the Class PO Fraction of any such Realized Losses attributable
to the Class PO Mortgage Loans) will be allocated among the Certificates (other
than the Class PO Certificates) on a pro rata basis.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date (without
regard to any Compensating Interest for such Distribution Date) in the case of
an interest portion of a Realized Loss. Except as provided in the following
sentence, any allocation of Realized Losses (other than Debt Service Reductions)
to a Class of Certificates shall be made by reducing the Certificate
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Principal Balance thereof in the case of the principal portion of such Realized
Loss and the Accrued Certificate Interest thereon, in the case of the interest
portion of such Realized Loss by the amount so allocated, which allocation shall
be deemed to have occurred on such Distribution Date. Any allocation of the
principal portion of Realized Losses (other than Debt Service Reductions) to the
most junior Subordinate Certificates then outstanding shall be made by operation
of the definition of "Certificate Principal Balance" and by operation of the
provisions of Section 4.02(a). Allocations of the interest portions of Realized
Losses shall be made by operation of the definition of "Accrued Certificate
Interest" and by operation of the provisions of Section 4.02(a). Allocations of
the principal portion of Debt Service Reductions shall be made by operation of
the provisions of Section 4.02(a). All Realized Losses and all other losses
allocated to a Class of Certificates hereunder will be allocated among the
Certificates of such Class in proportion to the Percentage Interests evidenced
thereby.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
Each Master Servicer, with respect to the Mortgage Loans it services, or
the related Subservicers shall file information returns with respect to the
receipt of mortgage interests received in a trade or business, the reports of
foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050H, 6050J and 6050P, respectively, of
the Code, and deliver to the Trustee an Officers' Certificate on or before March
31 of each year stating that such reports have been filed. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
Sections 6050H, 6050J and 6050P of the Code.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Master
Servicers shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that the
Master Servicer reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for any such withholding. Without
limiting the foregoing, the Master Servicer agrees that it will not withhold
with respect to payments of interest or original issue discount in the case of a
Certificateholder that has furnished or caused to be furnished an effective Form
W-8 or an acceptable substitute form or a successor form and who is not a "10
percent shareholder" within the meaning of Code Section 871(h)(3)(B) or a
"controlled foreign corporation" described in Code Section 881(c)(3)(C) with
respect to the Trust Fund or the Depositor. In the event a Paying Agent
withholds any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Paying Agent shall indicate the amount withheld to such
Certificateholder.
Section 4.08. REMIC I Distributions. On each Distribution Date, the
Trustee shall be deemed to distribute to itself, as holder of the REMIC I
Regular Interests, the following amounts in the order set forth below:
(a) to the extent of the Available Distribution Amount, for each REMIC I
Regular Interest, in the same priority as the Corresponding Class or Classes of
Certificates relating
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thereto as provided in Section 4.02(a), an amount equal to the interest accrued
on the aggregate principal balance of such REMIC I Regular Interest at the
applicable interest rate for such REMIC I Regular Interest (as set forth in the
definition for such REMIC I Regular Interest) during the Prior Period (except
for REMIC I Regular Interest U, REMIC I Regular Interest Y and REMIC I Regular
Interest Z, which will accrue interest during the period from the Distribution
Date in the month prior to each Distribution Date to the day prior to such
Distribution Date), plus any unpaid portion of accrued interest for any prior
period with interest thereon at the applicable interest rate for such REMIC I
Regular Interest, reduced by the amount of any interest shortfalls (including
Prepayment Interest Shortfalls, to the extent not covered by Compensating
Interest) allocable to such REMIC I Regular Interest (in the same proportion as
the Corresponding Class or Classes of Certificates as provided in Section
4.02(a));
(b) to the extent of the Available Distribution Amount remaining after
the distributions deemed made under clause (a), an amount of principal equal to
the Principal Payment Amount on such Distribution Date in the same priority as
the Corresponding Class or Classes of Certificates as provided in Section
4.02(a);
(c) after the principal balance of each REMIC I Regular Interest is
reduced to zero, to the Class R-I Certificate, all other amounts remaining in
REMIC I;
provided, however, that notwithstanding the deemed distributions set forth in
clauses (a), (b) and (c) above, distributions from the Certificate Account shall
only be made to the holders of the Certificates; and provided, further, that
each Realized Loss and interest shortfall (including Prepayment Interest
Shortfalls, to the extent not covered by Compensating Interest), shall be deemed
allocated, and adjustments or distributions as a consequence thereof shall be
deemed made to the REMIC I Regular Interests corresponding to the Class or
Classes of Certificates to which such interest shortfall or Realized Loss is
allocated in a manner that accords with such correspondence.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A and Class PO Certificates shall be substantially in the
form set forth in Exhibit A. The Class M, Class B and Residual Certificates,
respectively, shall be substantially in the forms set forth in Exhibits B, C and
D. Each of the foregoing Certificates shall, on original issue, be executed and
delivered by the Trustee to the Certificate Registrar for authentication and
delivery to or upon the order of the Depositor upon receipt by the Trustee of
the documents specified in Section 2.01. The Certificates, other than the Class
A-2, Class A-3 and Residual Certificates, shall be issuable in minimum dollar
denominations of $100,000 initial Certificate Principal Balance (or initial
Notional Amount in the case of the Notional Amount Certificates) each and
integral multiples of $1 in excess thereof. The Class A-2 and Class A-3
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Certificates shall be issuable in minimum dollar denominations of $1,000 initial
Certificate Principal Balance each and integral multiples of $1 in excess
thereof.
The Residual Certificates shall be issuable in minimum denominations of
not less than a 99.99% Percentage Interest; provided, however, that one Class
R-I Certificate and one Class R-II Certificate will be issuable to Bank of
America, Federal Savings Bank as "tax matters person" pursuant to Section
10.01(c) and (e) in a minimum denomination representing a Percentage Interest of
not less than 0.01%.
The Certificates shall be executed by manual or facsimile signature on
behalf of an authorized officer of the Trustee. Certificates bearing the manual
or facsimile signatures of individuals who were at the time of issuance of such
Certificates the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
(b) The Class A, Class PO, Class M, Class B-1 and Class B-2 Certificates
shall initially be issued as one or more Certificates registered in the name of
the Depository or its nominee and, except as provided below, registration of
such Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold such Certificates for the respective Certificate
Owners with Ownership Interests therein. The Certificate Owners shall hold their
respective Ownership Interests in and to each of the Book-Entry Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to Definitive Certificates in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall transfer
the Ownership Interests only in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
The Trustee, the Master Servicers and the Depositor may for all purposes
(including the making of payments due on the respective Classes of Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the respective Classes of Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the respective
Classes of Book-Entry Certificates shall be limited to those established by law
and agreements between such Certificate Owners and the Depository Participants
and brokerage firms representing such Certificate Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of any Class of
Book-Entry Certificates with respect to any particular matter shall not be
deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of
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consents from or voting by Certificateholders and shall give notice to the
Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to the Book-Entry Certificates and
(B) the Trustee and the Depositor are unable to locate a qualified successor,
(ii) the Depositor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository or (iii) after an
Event of Default, holders of 51% of the Book-Entry Certificates notify the
Trustee that the book-entry system is not in their best interest, the Trustee
shall notify all Certificate Owners, through the Depository, of the occurrence
of any such event and of the availability of Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee shall
issue the Definitive Certificates. Neither the Depositor, the Master Servicers
nor the Trustee shall be liable for any actions taken by the Depository or its
nominee, including, without limitation, any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository in
connection with the issuance of the Definitive Certificates pursuant to this
Section 5.01 shall be deemed to be imposed upon and performed by the Trustee,
and the Trustee and the Master Servicers shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies
to be appointed by the Trustee in accordance with the provisions of Section 8.11
a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as herein provided. The Trustee
is initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
Upon the request of a Master Servicer, the Certificate Registrar or the Trustee
shall provide such Master Servicer with a certified list of Certificateholders.
(b) Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.11 and, in the case of any Class M, Class B or Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver within five (5)
Business Days, in the name of the designated transferee or transferees, one or
more new Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall authenticate and deliver within five (5) Business Days the Certificates of
such
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Class which the Certificateholder making the exchange is entitled to receive.
Every Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
such Holder's attorney duly authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class B-3, Class
B-4 or Class B-5 Certificate shall be made unless such transfer, sale, pledge or
other disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended, or is made in accordance with said Act. In the event
that a transfer of a Class B-3, Class B-4 or Class B-5 Certificate is to be
made, either (i)(A) the Trustee shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act or is being made
pursuant to said Act, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor or the Master Servicers or (B) the Trustee shall require
the transferee to execute a representation letter, substantially in the form of
Exhibit J hereto, and the Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit K hereto, certifying
to the Depositor and the Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Trustee, the Depositor or
the Master Servicers or (ii) the prospective transferee of such a Certificate
shall be required to provide the Trustee, the Depositor and the Master Servicers
with an investment letter substantially in the form of Exhibit L attached
hereto, or such other form as the Depositor in its sole discretion deems
acceptable, which investment letter shall not be an expense of the Trustee, the
Depositor or the Master Servicers, and which investment letter states that,
among other things, such transferee (A) is a "qualified institutional buyer" as
defined under Rule 144A, acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A, and (B) is aware
that the proposed transferor intends to rely on the exemption from registration
requirements under the Securities Act of 1933, as amended, provided by Rule
144A. The Holder of any such Certificate desiring to effect any such transfer,
sale, pledge or other disposition shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Master Servicers and the Certificate Registrar
against any liability that may result if the transfer, sale, pledge or other
disposition is not so exempt or is not made in accordance with the Securities
Act of 1933, as amended, or any similar state laws.
(e) In the case of any Class M, Class B or Residual Certificate
presented for registration in the name of any Person, either (i) the Trustee
shall require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicers to the
effect that the purchase or holding of such Class M, Class B or Residual
Certificate will not constitute or result in any non-exempt prohibited
transaction under Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), and will not subject the Trustee, the
Depositor or either Master Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Master Servicers or (ii) the
prospective transferee shall be required to provide the Trustee, the Depositor
and the Master Servicers with a certification to the effect
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set forth in paragraph six of Exhibit J (with respect to any Class M or Class B
Certificate), or paragraph five of Exhibit I-1 (with respect to any Residual
Certificate), which the Trustee may rely upon without further inquiry or
investigation, or such other certifications as the Trustee may deem desirable or
necessary in order to establish that such transferee or the Person in whose name
such registration is requested is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code, or any Person (including an investment manager, a named fiduciary or a
trustee of any such plan) who is using "plan assets" of any such plan to effect
such acquisition.
So long as the Class M, Class B-1, or Class B-2 Certificates are
Book-Entry Certificates, any purchaser of a Class M, Class B-1, or Class B-2
Certificate will be deemed to have represented by such purchases that either (a)
such purchaser is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code and is
not purchasing such certificates on behalf of or with "plan assets" of any Plan,
(b) the purchase of any such Certificate by or on behalf of or with "plan
assets" of any Plan is permissible under applicable law, will not result in any
non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and
will not subject either Master Servicer, the Depositor or the Trustee to any
obligation in addition to those undertaken in this Agreement, or (c) if the
transferee is an insurance company, that the transferee is an insurance company,
and the source of funds used to purchase such Certificate is an "insurance
company general account" (as such term is defined in PTCE 95-60) and the
conditions set forth in Sections I and III of PTCE 95-60 have been satisfied.
(f) (i) Each Person who has or who acquires any Ownership Interest in
a Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Residual Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Residual Certificate
until its receipt of, (I) an affidavit and agreement (a "Transfer
Affidavit and Agreement," in the form attached hereto as Exhibit I-1)
from the proposed Transferee, representing and warranting, among other
things, that it is a Permitted Transferee, that it is not acquiring its
Ownership Interest in the Residual Certificate that is the subject of
the proposed Transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor to remain
a Permitted Transferee, and that it has reviewed the provisions of this
Section 5.02(f) and agrees to be bound by
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them, and (II) a certificate, in the form attached hereto as Exhibit
I-2, from the Holder wishing to transfer the Residual Certificate,
representing and warranting, among other things, that no purpose of the
proposed Transfer is to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement has
actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Residual Certificate and (y) not to transfer
its Ownership Interest unless it provides a certificate to the Trustee
in the form attached hereto as Exhibit I-2.
(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it is, or is holding an
Ownership Interest in a Residual Certificate on behalf of, a
"pass-through interest holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and Agreement,
a certificate of the Holder requesting such transfer in the form attached hereto
as Exhibit I-2. Transfers of the Residual Certificates to Non-United States
Persons and Disqualified Organizations (as defined in Section 860E(e)(5) of the
Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become a holder
of a Residual Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Residual Certificate. If a Non-United States Person shall become a holder of a
Residual Certificate, then the last preceding United States Person shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Residual Certificate. If a transfer of a Residual Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.860G-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact not permitted
by this Section 5.02(f) or for making any payments due on such Certificate to
the holder thereof or for taking any other action with respect to such holder
under the provisions of this Agreement.
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(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section 5.02(f)
and to the extent that the retroactive restoration of the rights of the Holder
of such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then either Master Servicer shall have the
right, without notice to the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser selected by such
Master Servicer on such terms as such Master Servicer may choose. Such purported
Transferee shall promptly endorse and deliver each Residual Certificate in
accordance with the instructions of such Master Servicer. Such purchaser may be
a Master Servicer itself or any Affiliate of such Master Servicer. The proceeds
of such sale, net of the commissions (which may include commissions payable to
such Master Servicer or its Affiliates), expenses and taxes due, if any, will be
remitted by such Master Servicer to such purported Transferee. The terms and
conditions of any sale under this clause (iii)(B) shall be determined in the
sole discretion of the Master Servicers, and neither Master Servicer shall be
liable to any Person having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) Each Master Servicer, on behalf of the Trustee, shall make
available, upon written request from the Trustee, all information necessary to
compute any tax imposed (A) as a result of the Transfer of an Ownership Interest
in a Residual Certificate to any Person who is a Disqualified Organization,
including the information regarding "excess inclusions" of such Residual
Certificates required to be provided to the Internal Revenue Service and certain
Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
1.860E-2(a)(5), and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Residual Certificate having as among its record holders at any
time any Person who is a Disqualified Organization. Reasonable compensation for
providing such information may be required by the Master Servicers from such
Person.
(v) The provisions of this Section 5.02(f) set forth prior to this
clause (v) may be modified, added to or eliminated pursuant to Section 11.01,
provided that there shall have also been delivered to the Trustee the following:
(A) written notification from each Rating Agency to the effect
that the modification, addition to or elimination of such provisions
will not cause such Rating Agency to downgrade its then-current ratings,
if any, of any Class of the Class A, Class PO, Class M, Class B or
Residual Certificates below the lower of the then-current rating or the
rating assigned to such Certificates as of the Closing Date by such
Rating Agency; and
(B) a certificate of each Master Servicer stating that such
Master Servicer has received an Opinion of Counsel, in form and
substance satisfactory to such Master Servicer, to the effect that such
modification, addition to or absence of such provisions will not cause
REMIC I or REMIC II to cease to qualify as a REMIC and will not cause
(x) REMIC I or REMIC II to be subject to an entity-level tax caused by
the Transfer of any Residual Certificate to a Person that is a
Disqualified Organization or (y) a
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Certificateholder or another Person to be subject to a REMIC-related tax
caused by the Transfer of a Residual Certificate to a Person that is not
a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
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 and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Master Servicers, the Trustee, the Certificate Registrar and
any agent of the Depositor, the Master Servicers, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.02 and for all other purposes whatsoever, and neither the
Depositor, the Master Servicers, the Trustee, the Certificate Registrar nor any
agent of the Depositor, the Master Servicers, the Trustee or the Certificate
Registrar shall be affected by notice to the contrary except as provided in
Section 5.02(f).
Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date, the Trustee shall
deposit or cause to be deposited with the Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the
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manner provided for in Section 4.02, such sum to be held in trust for the
benefit of Certificateholders.
The Trustee shall cause each Paying Agent to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee
that such Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so
held by such Paying Agent shall be held only in Eligible Accounts to the extent
such sums are not distributed to the Certificateholders on the date of receipt
by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicers.
The Depositor and each Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and such Master
Servicer herein. By way of illustration and not limitation, the Depositor is not
liable for the servicing and administration of the Mortgage Loans, nor is it
obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicers or to appoint a designee to assume such obligations, nor is it
liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicers; Assignment of Rights and Delegation of Duties
by Master Servicers.
(a) The Depositor and each Master Servicer will each keep in full effect
its existence, rights and franchises as a corporation, national banking
association or federal savings bank, as applicable, under the laws governing its
incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or a Master Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or a Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or a Master Servicer,
shall be the successor of the Depositor or the related Master Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to a Master Servicer shall be qualified to service mortgage loans on
behalf of FNMA or FHLMC; and provided further that each Rating Agency's ratings,
if any, of the Class A, Class PO, Class M, Class B
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or Residual Certificates in effect immediately prior to such merger or
consolidation will not be qualified, reduced or withdrawn as a result thereof
(as evidenced by a letter to such effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section 6.04
to the contrary, a Master Servicer may assign its rights and delegate its duties
and obligations under this Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory to the
Trustee and the Depositor, has a minimum net worth of $50,000,000, is willing to
service the Mortgage Loans previously serviced by the Master Servicer assigning
its rights or delegating its duties and obligations under this Agreement and
executes and delivers to the Depositor and the Trustee an agreement, in form and
substance reasonably satisfactory to the Depositor and the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by such
Master Servicer under this Agreement; provided further that each Rating Agency's
rating of the Classes of Certificates that have been rated in effect immediately
prior to such assignment and delegation will not be qualified, reduced or
withdrawn as a result of such assignment and delegation (as evidenced by a
letter to such effect from each Rating Agency). In the case of any such
assignment and delegation, the applicable Master Servicer shall be released from
its obligations under this Agreement, except that such Master Servicer shall
remain liable for all liabilities and obligations incurred by it as a Master
Servicer hereunder prior to the satisfaction of the conditions to such
assignment and delegation set forth in the next preceding sentence.
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicers and Others.
Neither the Depositor, the Master Servicers nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicers shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicers or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicers and any director, officer, employee or agent of the Depositor or the
Master Servicers may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicers and any director, officer,
employee or agent of the Depositor or the Master Servicers shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
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Neither the Depositor nor the Master Servicers shall be under any
obligation to appear in, prosecute or defend any legal or administrative action,
proceeding, hearing or examination that is not incidental to its respective
duties under this Agreement and which in its opinion may involve it in any
expense or liability; provided, however, that the Depositor or a Master Servicer
may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicers shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the applicable
Custodial Account as provided by Section 3.10 and, on the Distribution Date(s)
following such reimbursement, the aggregate of such expenses and costs shall be
allocated in reduction of the Accrued Certificate Interest on each Class
entitled thereto in the same manner as if such expenses and costs constituted a
Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicers Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor a
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or a Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
by a Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed such Master Servicer's responsibilities and
obligations in accordance with Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein with respect to a Master
Servicer, means any one of the following events (whatever reason for such Event
of Default 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):
(i) such Master Servicer shall fail to remit to the Trustee
any remittance required to be made under the terms of this Agreement,
other than any Advances required by Section 4.01, and such failure shall
continue unremedied for a period of 5 days after the date upon which
written notice of such failure, requiring such failure to be remedied,
shall have been given to such Master Servicer by the Trustee or the
Depositor or to such Master Servicer, the Depositor and the Trustee by
the Holders
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of Certificates of any Class affected thereby evidencing Percentage
Interests aggregating not less than 25%; or
(ii) such Master Servicer shall fail to observe or perform in
any material respect any other of the covenants or agreements on the
part of such Master Servicer contained in this Agreement and such
failure shall continue unremedied for a period of 30 days (except that
such number of days shall be 15 in the case of a failure to pay the
premium for any Required Insurance Policy) after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to such Master Servicer by the Trustee or the Depositor,
or to such Master Servicer, the Depositor and the Trustee by the Holders
of Certificates of any Class evidencing, in the case of any such Class,
Percentage Interests aggregating not less than 25%; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or appointing 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 such Master Servicer and such
decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or
(iv) such Master Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities, or similar proceedings
of, or relating to, such Master Servicer or of, or relating to, all or
substantially all of the property of such Master Servicer; or
(v) such Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations; or
(vi) such Master Servicer shall notify the Trustee pursuant
to Section 4.04(b) that it is unable to remit to the Trustee an amount
equal to the Advance it must make or fails to make Advances, regardless
of notice.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee may,
and at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the applicable Master
Servicer (and to the Depositor if given by the Trustee or to the Trustee if
given by the Depositor), terminate all of the rights and obligations of such
Master Servicer under this Agreement, other than its rights as a
Certificateholder hereunder. If an Event of Default described in clause (vi)
hereof shall occur, the Trustee shall, by notice to the applicable Master
Servicer and the Depositor, immediately terminate all of the rights and
obligations of such Master Servicer under this Agreement, other than its rights
as a Certificateholder hereunder as
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provided in Section 4.04(b). On or after the receipt by such Master Servicer of
such written notice, all authority and power of such Master Servicer under this
Agreement, whether with respect to the Certificates (other than as a Holder
thereof) or the Mortgage Loans serviced by such Master Servicer or otherwise,
shall, subject to Section 7.02, pass to and be vested in the Trustee or the
Trustee's designee appointed pursuant to Section 7.02; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of such Master Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans serviced by such Master Servicer and related documents, or otherwise. Each
Master Servicer agrees to cooperate with the Trustee in effecting the
termination of such Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all cash amounts which shall at the time be credited to
the applicable Custodial Account or thereafter be received with respect to the
Mortgage Loans serviced by such Master Servicer all at such Master Servicer's
cost. No such termination shall release such Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time a Master Servicer receives a notice of termination
pursuant to Section 7.01 or resigns in accordance with Section 6.04, the Trustee
or, upon notice to the Depositor and with the Depositor's consent (which shall
not be unreasonably withheld), a designee (which meets the standards set forth
below) of the Trustee, shall be the successor in all respects to such Master
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on such Master
Servicer (except for the responsibilities, duties and liabilities contained in
Sections 2.02 and 2.03, excluding the duty to notify related Subservicers or
Sellers as set forth in such Sections, and its obligations to deposit amounts in
respect of losses incurred prior to such termination or resignation on the
investment of funds in the applicable Custodial Account or remit such amounts to
the Trustee pursuant to Sections 3.07(c) and 4.01(b), respectively, by the terms
and provisions hereof); provided, however, that any failure to perform such
duties or responsibilities caused by the preceding Master Servicer's failure to
provide information required by Section 4.04 shall not be considered a default
by the Trustee hereunder. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans serviced by the preceding
Master Servicer which such Master Servicer would have been entitled to charge to
the applicable Custodial Account or the Certificate Account if such Master
Servicer had continued to act hereunder and, in addition, shall be entitled to
the income from any Permitted Investments made with amounts attributable to the
Mortgage Loans serviced by the preceding Master Servicer held in the applicable
Custodial Account or the Certificate Account. If the Trustee has become the
successor to a Master Servicer in accordance with Section 6.04 or Section 7.01,
then notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, which is also a FNMA- or FHLMC-approved mortgage servicing
institution, having a net worth of not less than $10,000,000, as the successor
to such Master Servicer hereunder
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in the assumption of all or any part of the responsibilities, duties or
liabilities of such Master Servicer hereunder. Pending appointment of a
successor to a Master Servicer hereunder, the Trustee shall become successor to
such Master Servicer and shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans serviced by the preceding Master Servicer as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the applicable initial Master Servicer hereunder. The Depositor, the
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to a Master
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights affected by a
default or Event of Default hereunder, may waive such default or Event of
Default; provided, however, that (a) a default or Event of Default under clause
(i) of Section 7.01 may be waived only by all of the Holders of Certificates
affected by such default or Event of Default and (b) no waiver pursuant to this
Section 7.04 shall affect the Holders of Certificates in the manner set forth in
Section 11.01(b)(i), (ii) or (iii). Upon any such waiver of a default or Event
of Default by the Holders representing the requisite percentage of Voting Rights
affected by such default or Event of Default, such default or Event of Default
shall cease to exist and shall be deemed to have been remedied for every purpose
hereunder. No such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their
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exercise as a reasonably prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall forward or cause to be forwarded in a timely fashion
the notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 4.03, 7.03 and 10.01. The Trustee shall furnish in a timely
fashion to the Master Servicers such information as the Master Servicers may
reasonably request from time to time for the Master Servicers to fulfill their
duties as set forth in this Agreement. The Trustee covenants and agrees that it
shall perform its obligations hereunder in a manner so as to maintain the status
of both REMIC I and REMIC II as REMICs under the REMIC Provisions and to prevent
the imposition of any federal, state or local income, prohibited transaction,
contribution or other tax on either REMIC to the extent that maintaining such
status and avoiding such taxes are reasonably within the control of the Trustee
and are reasonably within the scope of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act or its own willful misfeasance; provided, however,
that:
(i) Prior to the occurrence of an Event of Default, and
after the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee by the Depositor or the Master Servicers and
which on their face, do not contradict the requirements of this
Agreement;
(ii) The Trustee (in its individual capacity) shall not be
personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was grossly negligent in ascertaining
the pertinent facts;
(iii) The Trustee (in its individual capacity) shall not be
personally liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the direction of
Certificateholders of any Class holding Certificates which evidence, as
to such Class, Percentage Interests aggregating not less than 25% as to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement;
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(iv) The Trustee shall not be charged with knowledge of any
default (other than a default in payment to the Trustee) specified in
clauses (i) and (ii) of Section 7.01 or an Event of Default under
clauses (iii), (iv) and (v) of Section 7.01 unless a Responsible Officer
of the Trustee assigned to and working in the Corporate Trust Office
obtains actual knowledge of such failure or event or the Trustee
receives written notice of such failure or event at its Corporate Trust
Office from a Master Servicer, the Depositor or any Certificateholder;
and
(v) Except to the extent provided in Section 7.02, no
provision in this Agreement shall require the Trustee to expend or risk
its own funds (including, without limitation, the making of any Advance
as successor Master Servicer) or otherwise incur any personal financial
liability in the performance of any of its duties as Trustee hereunder,
or in the exercise of any of its rights or powers, if the Trustee shall
have reasonable grounds for believing that repayment of funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of any
and all federal, state and local taxes imposed on the Trust Fund or its assets
or transactions including, without limitation, (A) "prohibited transaction"
penalty taxes as defined in Section 860F of the Code, if, when and as the same
shall be due and payable, (B) any tax on contributions to a REMIC after the
Closing Date imposed by Section 860G(d) of the Code and (C) any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code, but
only if such taxes arise out of a breach by the Trustee of its obligations
hereunder, which breach constitutes gross negligence or willful misfeasance of
the Trustee. If any tax on "net income from foreclosure property" as defined in
Section 860G(c) of the Code does not arise out of a breach by the Trustee as set
forth above, such tax will be paid as provided in Section 10.01(g).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such
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Certificateholders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent investor would exercise or
use under the circumstances in the conduct of such investor's own
affairs;
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by Holders
of Certificates of any Class evidencing, as to such Class, Percentage
Interests, aggregating not less than 50%; 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
expense or liability as a condition to so proceeding. The reasonable
expense of every such examination shall be paid by the Master Servicer
responsible for the Event of Default, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder
requesting the investigation;
(vi) 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
(vii) To the extent authorized under the Code and the
regulations promulgated thereunder, each Holder of a Residual
Certificate hereby irrevocably appoints and authorizes the Trustee to be
its attorney-in-fact for purposes of signing any Tax Returns required to
be filed on behalf of the Trust Fund. The Trustee shall sign on behalf
of the Trust Fund and deliver to REMIC Administrator in a timely manner
any Tax Returns prepared by or on behalf of REMIC Administrator that the
Trustee is required to sign as determined by REMIC Administrator
pursuant to applicable federal, state or local tax laws, provided that
REMIC Administrator shall indemnify the Trustee for signing any such Tax
Returns that contain errors or omissions.
(b) Following the issuance of the Certificates, the Trustee shall not
accept any contribution of assets to the Trust Fund unless it shall have
obtained or been furnished with an Opinion of Counsel to the effect that such
contribution will not (i) cause either REMIC I or REMIC II to fail to qualify as
a REMIC at any time that any Certificates are outstanding or (ii) cause Trust
Fund to be subject to any federal tax as a result of such contribution
(including
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the imposition of any federal tax on "prohibited transactions" imposed under
Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicers as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicers of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicers in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Accounts by the Depositor
or the Master Servicers.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Trustee.
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicers jointly and severally covenant and agree to pay
to the Trustee and any co-trustee on a monthly basis, and the Trustee and any
co-trustee shall be entitled to, reasonable compensation pursuant to a separate
letter agreement between Bank of America National Trust and Savings Association
and the Trustee (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
each of them in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Trustee and any
co-trustee, and the Master Servicers, jointly and severally, will pay or
reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the appointment of an office or
agency pursuant to Section 8.12) except any such expense, disbursement or
advance as may arise from its gross negligence or bad faith. The compensation
paid to the Trustee and any co-trustee by the Master Servicers as set forth
herein shall be made by means of additional funds remitted to the Trustee by the
Master Servicer pursuant to Section 4.01(a).
(b) The Master Servicers jointly and severally agree to indemnify the
Trustee and its officers, directors, agents and employees for, and to hold the
Trustee it and them harmless against, any loss, liability or expense incurred
without negligence or willful misconduct on its or their part, arising out of,
or in connection with, the acceptance and administration of the
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Trust Fund, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against any claim in connection with the
exercise or performance of any of its or their powers or duties under this
Agreement, provided that:
(i) with respect to any such claim, the Trustee shall have
given the Master Servicers written notice thereof promptly after the
Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the
Trustee shall cooperate and consult fully with the Master Servicers in
preparing such defense; and
(iii) notwithstanding anything in this Agreement to the
contrary, the Master Servicers shall not be liable for settlement of any
claim by the Trustee entered into without the prior consent of the
Master Servicers, which consent shall not be unreasonably withheld, and,
provided further, that in the event the Master Servicers withhold their
consent to any settlement of a claim proposed by the Trustee, except as
to liability for such settlement, the obligation to indemnify set forth
in this Section 8.05 shall continue in full force and effect.
No termination of this Agreement or the resignation or removal of the Trustee
hereunder shall affect the obligations created by this Section 8.05(b) of the
Master Servicers to indemnify the Trustee under the conditions and to the extent
set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicers in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any actions
taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
banking association having its principal office in a state and city acceptable
to the Depositor and organized and doing business under the laws of such state
or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or national banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.
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Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee. In addition, in the event that
the Depositor determines that the Trustee has failed (i) to distribute or cause
to be distributed to Certificateholders any amount required to be distributed
hereunder, if such amount is held by the Trustee or its Paying Agent for
distribution or (ii) to otherwise observe or perform in any material respect any
of its covenants, agreements or obligations hereunder, and such failure shall
continue unremedied for a period of 5 days (in respect of clause (i) above) or
30 days (in respect of clause (ii) above) after the date on which written notice
of such failure, requiring that the same be remedied, shall have been given to
the Trustee by the Depositor, then the Depositor may remove the Trustee and
appoint a successor trustee by written instrument delivered as provided in the
preceding sentence. In connection with the appointment of a successor trustee
pursuant to the preceding sentence, the Depositor shall, on or before the date
on which any such appointment becomes effective, obtain from each Rating Agency
written confirmation that the appointment of any such successor trustee will not
result in the reduction of the ratings on any class of Certificates below the
lesser of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.
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Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor, the Master Servicers and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee
may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Master Servicers and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest
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in such Person or Persons, in such capacity, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 8.10,
such powers, duties, obligations, rights and trusts as the Master Servicers and
the Trustee may consider necessary or desirable. If the Master Servicers shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Trustee alone shall have the power to make such
appointment, or in case an Event of Default shall have occurred and be
continuing, the Trustee and any non-defaulting Master Servicer shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, 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, 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 a Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
(c) 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 Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer and the
Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor, the Master Servicer or any Seller to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
Subject to Article VIII, the Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders. Each Custodian shall be a
depository institution subject
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to supervision by federal or state authority, shall have a combined capital and
surplus of at least $15,000,000 and shall be qualified to do business in the
jurisdiction in which it holds any Mortgage File. Each Custodial Agreement may
be amended only as provided in Section 11.01. The Trustee shall notify the
Certificateholders of the appointment of any Custodian (other than the Custodian
appointed as of the Closing Date) pursuant to this Section 8.11.
Section 8.12. Appointment of Office or Agency.
The Trustee will maintain an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices located at 4 Albany Street, New
York, New York 10004 for the purpose of keeping the Certificate Register. The
Trustee will maintain an office at the address stated in Section 11.05(d) hereof
where notices and demands to or upon the Trustee in respect of this Agreement
may be served.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or
Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicers and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:
(i) the later of the final payment or other liquidation (or
any Advance with respect thereto) of the last Mortgage Loan remaining in
the Trust Fund or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, or
(ii) the purchase by Bank of America National Trust and
Savings Association, as Master Servicer hereunder, or if Bank of America
National Trust and Savings Association is removed as Master Servicer
hereunder, then Bank of America, Federal Savings Bank, as Master
Servicer hereunder, of all Mortgage Loans and all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund at a price
equal to 100% of the Stated Principal Balance of each Mortgage Loan
(other than Mortgage Loans as to which a Cash Liquidation has occurred)
or the fair market value of the related underlying property of such
Mortgage Loan with respect to Mortgage Loans as to which an REO
Acquisition has occurred if such fair market value is less than such
unpaid principal balance (net of any unreimbursed Advances attributable
to principal), in each case less any Realized Losses that have not
previously been allocated
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to the Certificates on the day of repurchase plus accrued interest
thereon at the Net Mortgage Rate to, but not including, the first day of
the month in which such repurchase price is distributed, provided,
however, that in no event shall the trust created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof.
The right of the Master Servicers to purchase all the assets of the
Trust Fund pursuant to clause (ii) above is conditioned upon the Pool Stated
Principal Balance as of the Final Distribution Date being less than ten percent
of the Cut-off Date Principal Balance of the Mortgage Loans. If such right is
exercised by a Master Servicer, such Master Servicer shall be deemed to have
been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans it services. In addition, the
exercising Master Servicer shall provide to the Trustee the certification
required by Section 3.15 and the Trustee and any Custodian shall, promptly
following payment of the purchase price, release to the exercising Master
Servicer the Mortgage Files pertaining to the Mortgage Loans being purchased.
(b) Upon final distribution as a result of the exercise by a Master
Servicer of its right to purchase the assets of the Trust Fund, the exercising
Master Servicer shall give the Trustee not less than 60 days' prior notice of
the Distribution Date on which such Master Servicer anticipates that the final
distribution will be made to Certificateholders. Notice of any termination,
specifying the anticipated Final Distribution Date (which shall be a date that
would otherwise be a Distribution Date) upon which the Certificateholders may
surrender their Certificates to the Trustee (if so required by the terms hereof)
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 15th
day and not later than the 25th day of the month next preceding the month of
such final distribution specifying:
(i) the anticipated Final Distribution Date upon which final
payment of the Certificates is anticipated to be made upon presentation
and surrender of Certificates at the office or agency of the Trustee
therein designated,
(ii) the amount of any such final payment, if known, and
(iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable and that payment will be made only
upon presentation and surrender of the Certificates at the office or
agency of the Trustee therein specified.
If the Trustee is obligated to give notice as aforesaid, it shall give such
notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given, the exercising Master
Servicer shall remit to the Trustee for deposit in the Certificate Account
before the Final Distribution Date in immediately available funds an amount
equal to the purchase price for the assets of the Trust Fund computed as above
provided.
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(c) Upon presentation and surrender of the Certificates by the
Certificateholders thereof, the Trustee shall distribute to the
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with a Master Servicer's election to repurchase, or
(ii) if a Master Servicer elected to so repurchase, an amount determined as
follows: (A) with respect to each Certificate, the outstanding Certificate
Principal Balance thereof, plus one month's Accrued Certificate Interest and any
previously unpaid Accrued Certificate Interest, subject to the priority set
forth in Section 4.02(a), and (B) with respect to the Residual Certificates, any
excess of the amounts available for distribution (including the repurchase price
specified in clause (ii) of subsection (a) of this Section) over the total
amount distributed under the immediately preceding clause (A).
(d) In the event that any Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before the Final
Distribution Date (if so required by the terms hereof), the Trustee shall on
such date cause all funds in the Certificate Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the exercising Master
Servicer (if it exercised its right to purchase the assets of the Trust Fund),
or the Trustee (in any other case) shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within six months
after the second notice, any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by such
Master Servicer to contact the remaining Certificateholders concerning surrender
of their Certificates. The costs and expenses of maintaining the escrow account
and of contacting Certificateholders shall be paid out of the assets which
remain in the escrow account. No interest shall accrue or be payable to any
Certificateholder on any amount held in the escrow account as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01.
Section 9.02. Additional Termination Requirements.
(a) REMIC I and REMIC II as the case may be, shall be terminated in
accordance with the following additional requirements, unless the Trustee and
the Master Servicers have received an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee) to the effect that the failure
of REMIC I and REMIC II as the case may be, to comply with the requirements of
this Section 9.02 will not (i) result in the imposition on either REMIC of taxes
on "prohibited transactions," as described in Section 860F of the Code, or (ii)
cause either REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Certificate is outstanding:
(i) The REMIC Administrator shall establish a 90-day
liquidation period for REMIC I and REMIC II as the case may be, and
specify the first day of such period in a statement attached to such
REMIC's final Tax Return pursuant to Treasury regulations Section
1.860F-1. The REMIC Administrator also shall satisfy all of the
requirements of a qualified liquidation for REMIC I and REMIC II as the
case may be, under Section 860F of the Code and regulations thereunder;
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(ii) The REMIC Administrator shall notify the Trustee at the
commencement of such 90-day liquidation period and, at or prior to the
time of making of the final payment on the Certificates, the Trustee
shall sell or otherwise dispose of all of the remaining assets of the
Trust Fund in accordance with the terms hereof; and
(iii) If a Master Servicer is exercising its right to
purchase the assets of the Trust Fund, such Master Servicer shall, during the
90-day liquidation period prior to the Final Distribution Date, purchase all of
the assets of the Trust Fund for cash at the price set forth in Section 9.01
hereof; provided, however, that in the event that a calendar quarter ends after
the commencement of the 90-day liquidation period but prior to the Final
Distribution Date, such Master Servicer shall not purchase any of the assets of
the Trust Fund prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the REMIC Administrator as its attorney-in-fact to adopt a
plan of complete liquidation for the Trust Fund at the expense of the Trust Fund
in accordance with the terms and conditions of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to treat each
of REMIC I and REMIC II as a REMIC under the Code and, if necessary, under
applicable state law. Each such election will be made on Form 1066 or other
appropriate federal tax or information return (including Form 8811) or any
appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of the
REMIC I election in respect of the Trust Fund, the REMIC I Regular Interests
shall be designated as the "regular interests" and the Class R-I Certificates
shall be designated as the sole class of "residual interests" in REMIC I. For
the purposes of the REMIC II election in respect of the Trust Fund, the Regular
Certificates shall be designated as the "regular interests" and the Class R-II
Certificates shall be designated as the sole class of "residual interests" in
REMIC II. The REMIC Administrator and the Trustee shall not permit the creation
of any "interests" (within the meaning of Section 860G of the Code) in REMIC I
or REMIC II other than the REMIC I Regular Interests and the Class R-I
Certificates, and the Regular Certificates and the Class R-II Certificates,
respectively.
(b) The Closing Date is hereby designated as the "start-up day"
of the Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) Bank of America, Federal Savings Bank shall hold a Class R-I
Certificate representing a 0.01% Percentage Interest of the Class R-I
Certificates, a Class R-II Certificate representing a 0.01% Percentage Interest
of the Class R-II Certificates and shall be designated
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as "the tax matters person" with respect to REMIC I and REMIC II in the manner
provided under Treasury regulations section 1.860F-4(d) and temporary Treasury
regulations section 301.6231(a)(7)-1T. Bank of America, Federal Savings Bank
shall appoint the REMIC Administrator to serve as attorney-in-fact and agent for
the tax matters person, and as such the Remic Administrator shall (i) act on
behalf of REMIC I and REMIC II in relation to any tax matter or controversy
involving the Trust Fund and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The legal expenses, including without
limitation attorneys' or accountants' fees, and costs of any such proceeding and
any liability resulting therefrom shall be expenses of the Trust Fund and the
REMIC Administrator shall be entitled to reimbursement therefor out of amounts
attributable to the Mortgage Loans on deposit in the Custodial Accounts as
provided by Section 3.10 unless such legal expenses and costs are incurred by
reason of the REMIC Administrator's willful misfeasance, bad faith or gross
negligence.
(d) The REMIC Administrator shall prepare or cause to be prepared
all of the Tax Returns that it determines are required with respect to either
REMIC I or REMIC II created hereunder and deliver such Tax Returns in a timely
manner to the Trustee and the Trustee shall sign and file such Tax Returns in a
timely manner. The expenses of preparing such returns shall be borne by the
REMIC Administrator without any right of reimbursement therefor. The Trustee and
the Master Servicers shall promptly provide the REMIC Administrator with such
information as the REMIC Administrator may from time to time request for the
purpose of enabling the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor
of a Residual Certificate such information as is necessary for the application
of any tax relating to the transfer of a Class R-I or Class R-II Certificate to
any Person who is not a Permitted Transferee, (ii) to the Trustee and the
Trustee shall forward to the Certificateholders such information or reports as
are required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption) and (iii) to the Internal Revenue Service the name,
title, address and telephone number of the person who will serve as the
representative of each of REMIC and REMIC II.
(f) The Master Servicers and the REMIC Administrator shall take
such actions and shall cause each of REMIC I and REMIC II created hereunder to
take such actions as are reasonably within the Master Servicers' or the REMIC
Administrator's control and the scope of their duties more specifically set
forth herein as shall be necessary or desirable to maintain the status thereof
as REMICs under the REMIC Provisions (and the Trustee shall assist the Master
Servicers and the REMIC Administrator, to the extent reasonably requested by the
Master Servicers and the REMIC Administrator to do so). The Master Servicers and
the REMIC Administrator shall not knowingly or intentionally take any action,
cause REMIC I or REMIC II to take any action or fail to take (or fail to cause
to be taken) any action reasonably within its control and the scope of duties
more specifically set forth herein, that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of REMIC I or
REMIC II as a REMIC or (ii) result in the imposition of a tax upon REMIC I or
REMIC II (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d)
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of the Code) (either such event, an "Adverse REMIC Event") unless the Master
Servicers or the REMIC Administrator, as applicable, have received an Opinion of
Counsel (at the expense of the party seeking to take such action or, if such
party fails to pay such expense, and the Master Servicers or the REMIC
Administrator, as applicable, determine that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the
Trust Fund, but in no event at the expense of the Master Servicers, the REMIC
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to each of REMIC I or REMIC II created hereunder, endanger
such status. The Trustee shall not take or fail to take any action (whether or
not authorized hereunder) as to which the Master Servicers or the REMIC
Administrator, as applicable, have advised it in writing that they have received
an Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action. In addition, prior to taking any action with respect to
REMIC I or REMIC II or their assets, or causing REMIC I or REMIC II to take any
action, which is not expressly permitted under the terms of this Agreement, the
Trustee will consult with the Master Servicers or the REMIC Administrator, as
applicable, or their designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to REMIC I or REMIC II
and the Trustee shall not take any such action or cause REMIC I or REMIC II to
take any such action as to which the Master Servicers or the REMIC
Administrator, as applicable, have advised it in writing that an Adverse REMIC
Event could occur. The Master Servicers or the REMIC Administrator, as
applicable, may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not expressly
permitted by this Agreement, but in no event at the expense of the Master
Servicers or the REMIC Administrator. At all times as may be required by the
Code, the Master Servicers will to the extent within their control and the scope
of their duties more specifically set forth herein, maintain substantially all
of the assets of REMIC I or REMIC II as "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I or REMIC II created hereunder as defined in Section
860F(a)(2) of the Code, on "net income from foreclosure property" of REMIC I or
REMIC II as defined in Section 860G(c) of the Code, on any contributions to
REMIC I or REMIC II after the Start-up Day therefor pursuant to Section 860G(d)
of the Code, or any other tax is imposed by the Code or any applicable
provisions of state or local tax laws, such tax shall be charged (i) to a Master
Servicer, if such tax arises out of or results from a breach by such Master
Servicer of any of its obligations under this Agreement, (ii) to the Trustee, if
such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X or (iii) to the REMIC Administrator if such tax
results from a breach by the REMIC Administrator of its obligations under this
Article X, or (iv) otherwise against amounts on deposit in the Custodial
Accounts as provided by Section 3.10 and on the Distribution Date(s) following
such reimbursement the aggregate of such taxes shall be allocated in reduction
of the Accrued Certificate Interest on each Class entitled thereto in the same
manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicers shall, for federal
income tax purposes, maintain books and records with respect to REMIC I and
REMIC II on a calendar year and on an accrual basis or as otherwise may be
required by the REMIC Provisions.
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(i) Following the Start-up Day, neither the Master Servicers nor
the Trustee shall accept any contributions of assets to REMIC I or REMIC II
unless the Master Servicers and the Trustee shall have received an Opinion of
Counsel (at the expense of the party seeking to make such contribution) to the
effect that the inclusion of such assets in REMIC I or REMIC II will not cause
either REMIC I or REMIC II to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject REMIC I or REMIC II to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Master Servicers nor the Trustee shall enter into
any arrangement by which REMIC I or REMIC II will receive a fee or other
compensation for services nor permit any such REMIC to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.
(k) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, the "latest possible maturity date" by which Certificate
Principal Balance of each Regular Certificate and the principal balance of each
REMIC I Regular Interest Regular Interest would be reduced to zero is January
25, 2028, which is the Distribution Date immediately following the latest
scheduled maturity of any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC
Administrator shall prepare and file with the Internal Revenue Service Form
8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt Obligations" for REMIC I and REMIC II.
(m) Neither the Trustee nor the Master Servicers shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the default, imminent default or foreclosure of a Mortgage Loan,
including but not limited to, the acquisition or sale of a Mortgaged Property
acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC I or REMIC
II, (iii) the termination of REMIC I or REMIC II pursuant to Article IX of this
Agreement or (iv) a purchase of Mortgage Loans pursuant to Article II or III of
this Agreement) nor acquire any assets for REMIC I or REMIC II, nor sell or
dispose of any investments in the Custodial Accounts or the Certificate Account
for gain nor accept any contributions to REMIC I or REMIC II after the Closing
Date unless it has received an Opinion of Counsel that such sale, disposition,
substitution or acquisition will not (a) affect adversely the status of REMIC I
or REMIC II as REMICs or (b) cause REMIC I or REMIC II to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
Section 10.02. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Master Servicers for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor or the Master Servicers, as a result
of a breach of the Trustee's covenants set forth in Article VIII or this Article
X.
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(b) The REMIC Administrator agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the REMIC
Administrator's covenants set forth in this Article X with respect to compliance
with the REMIC Provisions, including without limitation, any penalties arising
from the Trustee's execution of Tax Returns prepared by the REMIC Administrator
that contain errors or omissions; provided, however, that such liability will
not be imposed to the extent such breach is a result of an error or omission in
information provided to the REMIC Administrator by the Master Servicers in which
case Section 10.02(c) will apply.
(c) Each Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Trustee for any taxes and costs
(including, without limitation, any reasonable attorneys' fees) imposed on or
incurred by the Trust Fund, the Depositor or the Trustee, as a result of a
breach of such Master Servicer's covenants set forth in this Article X or in
Article III with respect to compliance with the REMIC Provisions, including,
without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by such Master Servicer that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the Depositor,
the Master Servicers and the Trustee, without the consent of any of the
Certificateholders:
(i) to cure any ambiguity, provided that (A) such change
shall not, as evidenced by an Opinion of Counsel (at the expense of the
Depositor), adversely affect in any material respect the interest of any
Certificateholder, or (B) such change shall not result in a withdrawal
of the rating assigned to any Class of Certificates or a reduction of
such rating below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by a
letter from each Rating Agency to such effect;
(ii) to correct or supplement any provisions herein or
therein, which may be inconsistent with any other provisions herein or
therein or to correct any error, provided that (A) such change shall
not, as evidenced by an Opinion of Counsel (at the expense of the
Depositor), adversely affect in any material respect the interest of any
Certificateholder, or (B) such change shall not result in a withdrawal
of the rating assigned to any Class of Certificates or a reduction of
such rating below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by a
letter from each Rating Agency to such effect;
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<PAGE> 109
(iii) to modify, eliminate or add to any of its provisions
to such extent as shall be necessary or desirable to maintain the
qualification of the Trust Fund as a REMIC at all times that any
Certificate is outstanding or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund pursuant to the Code that would
be a claim against the Trust Fund, provided that the Trustee has
received an Opinion of Counsel to the effect that (A) such action is
necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax and (B) such action
will not adversely affect in any material respect the interests of any
Certificateholder;
(iv) to change the timing and/or nature of deposits into the
Custodial Accounts or the Certificate Account or to change the name in
which the Custodial Accounts are maintained, provided that (A) the
Certificate Account Deposit Date shall in no event be later than the
related Distribution Date, (B) such change shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder and (C) such change shall not result
in a reduction of the rating assigned to any Class of Certificates below
the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each
Rating Agency to such effect;
(v) to modify, eliminate or add to the provisions of Section
5.02(f) or any other provision hereof restricting transfer of the
Residual Certificates by virtue of their being the "residual interests"
in the Trust Fund, provided that (A) such change shall not result in
reduction of the rating assigned to any such Class of Certificates below
the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each
Rating Agency to such effect, and (B) such change shall not, as
evidenced by an Opinion of Counsel (at the expense of the party seeking
so to modify, eliminate or add such provisions), cause either the Trust
Fund or any of the Certificateholders (other than the transferor) to be
subject to a federal tax caused by a transfer to a Person that is not a
Permitted Transferee; or
(vi) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any or of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such amendment
shall:
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<PAGE> 110
(i) reduce in any manner the amount of, or delay the timing
of, payments which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate;
(ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such
amendment, in any such case without the consent of the Holders of all
Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment, except if the Trustee requests such amendment, in which case it
shall be at the expense of the Trust Fund) to the effect that such amendment or
the exercise of any power granted to the Master Servicers, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of a
federal tax on the Trust Fund or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificate is outstanding. The placement of an
"original issue discount" legend on, or any change required to correct any such
legend previously placed on, a Certificate shall not be deemed an amendment of
the Agreement.
(d) Promptly after the execution of any such amendments, the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Depositor and at its expense on direction by the Trustee (pursuant to the
request of Holders of Certificates entitled to at least 25% of the Voting
Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.
(b) For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
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<PAGE> 111
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates of any Class evidencing in the aggregate not less than 25% of
the related Percentage Interests of such Class, shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of California and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
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<PAGE> 112
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor, 345 Montgomery Street, Lower Level #2, Unit #8152, San Francisco,
California 94104, Attention: David Grout, or such other address as may hereafter
be furnished to the Master Servicers and the Trustee in writing by the
Depositor, (b) in the case of the Master Servicer, Bank of America National
Trust and Savings Association, 6200 Gateway, Cypress, California 90630,
Attention: Deborah Howard, or at such other address as may hereafter be
furnished to the Depositor, the other Master Servicer and the Trustee by it in
writing, (c) in the case of the other Master Servicer, Bank of America, Federal
Savings Bank, 2810 North Parham Road, Richmond, Virginia 23294, Attention: Sean
Clevenger or such other address as may be hereafter furnished to the Depositor,
the other Master Servicer and the Trustee by the it in writing, (d) in the case
of the Trustee, 3 Park Plaza, 16th Floor, Irvine, California 92614, Attention:
BA Mortgage Securities, Inc., Series 1997-3 or such other address as may
hereafter be furnished to the Depositor and the Master Servicers in writing by
the Trustee, (e) in the case of Moody's, Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Monitoring, or such other address as may hereafter be furnished to the
Depositor, the Trustee and the Master Servicers in writing by Moody's, (f) in
the case of DCR, Duff & Phelps Credit Rating Co., 55 East Monroe Street, 35th
Floor, Chicago, IL 60603, Attn: MBS Monitoring, or such other address as may be
hereafter furnished to the Depositor, Trustee, and Master Servicers by DCR and
(g) in the case of the Underwriter, Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, Attention: Legal Department, or such other
address as may hereafter be furnished to the Depositor, the Trustee, and the
Master Servicers by the Underwriter. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.06. Notices to Rating Agency.
The Depositor, the Master Servicers or the Trustee, as applicable, shall
notify each Rating Agency and any Subservicers at such time as it is otherwise
required pursuant to this Agreement to give notice of the occurrence of, any of
the events described in clause (a), (b), (c), (d), (g), (h), (i) or (j) below or
provide a copy to each Rating Agency at such time as otherwise required to be
delivered pursuant to this Agreement of any of the statements described in
clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master
Servicer or Trustee or a change in the majority ownership of the
Trustee,
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<PAGE> 113
(d) the filing of any claim under either Master Servicer's
blanket fidelity bond and the errors and omissions insurance policy
required by Section 3.12 or the cancellation or modification of coverage
under any such instrument,
(e) the statement required to be delivered to the Holders of each
Class of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Section
3.18,
(g) a change in the location of a Custodial Account or the
Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to the
Holders of any Class of Certificates resulting from the failure by a
Master Servicer to make an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage Loan,
provided, however, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the applicable Master Servicer shall
provide prompt written notice to each Rating Agency and any Subservicers of any
such event known to such Master Servicer.
Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
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<PAGE> 114
IN WITNESS WHEREOF, the Depositor, the Master Servicers and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
BA MORTGAGE SECURITIES, INC.
By:
-------------------------------------
Name:
Title:
BANK OF AMERICA, FEDERAL SAVINGS BANK,
as Master Servicer
By:
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, as Master Servicer
By:
-------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------------
Name:
Title:
<PAGE> 115
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary public in
and for said State, personally appeared _____________, known to me to be a
______________ of BA Mortgage Securities, Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[Notarial Seal]
<PAGE> 116
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
__________ of Bank of America, Federal Savings Bank, the federal savings bank
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------------
Notary Public
[Notarial Seal]
<PAGE> 117
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
__________ of Bank of America National Trust and Savings Association, the
national banking association that executed the within instrument, and also known
to me to be the person who executed it on behalf of said association, and
acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 118
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of __________, 19__ before me, a notary public in
and for said State personally appeared ________________, known to me to be a
______________ of Bankers Trust Company of California, N.A., the national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said association, and acknowledged to
me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 119
EXHIBIT A
FORM OF CLASS A AND CLASS PO CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ____________, 19__. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT 250% OF THE STANDARD PREPAYMENT ASSUMPTION (AS
DESCRIBED IN THE PROSPECTUS SUPPLEMENT), [AND ASSUMING A CONSTANT PASS-THROUGH
RATE EQUAL TO THE INITIAL PASS-THROUGH RATE,] THIS CERTIFICATE HAS BEEN ISSUED
WITH NO MORE THAN $_____ OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
BALANCE, THE YIELD TO MATURITY IS ___% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE
INITIAL ACCRUAL PERIOD IS NO MORE THAN $_______ PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE APPROXIMATE METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE OR AS TO THE CONSTANCY
OF THE PASS-THROUGH RATE.]
<PAGE> 120
<TABLE>
<S> <C>
Certificate No. ____ [___%] Pass-Through Rate
Class [ ] Senior [Variable Pass-Through Rate]
[based on a Notional Amount]
Date of Pooling and Servicing
Agreement and Cut-off Date:
December 1, 1997 Aggregate [Initial Certificate Principal Balance]
[Notional Amount] of the Class [ ]
Certificates:
First Distribution Date:
January 26, 1998
Master Servicers: Initial Certificate Principal
Bank of America National Trust and Balance of this
Savings Association Certificate: $_____________]
Bank of America, Federal Savings Bank
Assumed Final
Distribution Date:
January 25, 2028 CUSIP ____________
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1997-3
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting primarily
of a pool of conventional one- to four-family fixed interest rate first
mortgage loans formed and sold by BA MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in BA Mortgage Securities, Inc.,
the Master Servicers, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by BA Mortgage
Securities, Inc., the Master Servicers, the Trustee or any of their affiliates.
None of the Depositor, the Master Servicers or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that _____________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of an interest
in a pool of conventional one- to four-family fixed interest rate first mortgage
loans (the "Mortgage Loans"), formed and sold by BA Mortgage
A-2
<PAGE> 121
Securities, Inc. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicers and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing as described in
the Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month of such distribution (the "Record Date"), from the Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount [(of interest and principal, if
any)] required to be distributed to Holders of Class [ ] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Trustee or by
a Paying Agent appointed by the Trustee in immediately available funds (by wire
transfer or otherwise) to any Person holding an aggregate Certificate Principal
Balance of at least five million dollars for the account of the Person entitled
thereto if such Person shall have so notified the Trustee or such Paying Agent
at least five Business Days prior to the related Record Date, or by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Mortgage Pass-Through Certificates of the
Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer or any Subservicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the applicable Master Servicer or the Subservicer, to the extent
provided in the Agreement, from related recoveries on such Mortgage Loan or from
other cash that would have been distributable to Certificateholders.
A-3
<PAGE> 122
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicers, the Trustee nor any such agent shall be affected by notice to
the contrary.
A-4
<PAGE> 123
This Certificate shall be governed by and construed in accordance with the
laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer from
the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-5
<PAGE> 124
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [ ] Certificates referred to in the
within-mentioned Agreement.
------------------------------,
as Certificate Registrar
By:
Authorized Signatory
A-6
<PAGE> 125
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
Dated:
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________________________ for the
account of _____________ _______________________________ account number
________________, or, if mailed by check, to ____________
_________________________________________________ Applicable statements should
be mailed to ____________ _________________________________________________.
This information is provided by _______________, the assignee named above,
or , ____________________ as its agent.
A-7
<PAGE> 126
EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE AGREEMENT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE DEPOSITOR AND
THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT SUBJECT THE MASTER
SERVICERS, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT 250% OF THE STANDARD PREPAYMENT ASSUMPTION (AS
DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS BEEN ISSUED WITH
NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.]
<PAGE> 127
Certificate No. __ 7.250% Pass-Through Rate
Class M Aggregate Certificate
Principal Balance
of the Class M
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
December 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
January 26, 1998
Master Servicers: CUSIP ______________
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
January 25, 2028
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-3
evidencing a percentage interest in any distributions allocable to the
Class M Certificates with respect to the Trust Fund consisting primarily
of a pool of conventional one- to four-family fixed interest rate first
mortgage loans formed and sold by BA MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in BA Mortgage Securities, Inc.,
the Master Servicers, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by BA Mortgage
Securities, Inc., the Master Servicers, the Trustee or any of their affiliates.
None of the Depositor, the Master Servicers or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that ______________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the Certificate Principal Balance of this Certificate by the aggregate
Certificate Principal Balance of all Class M
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<PAGE> 128
Certificates, both as specified above) in certain distributions with respect to
a Trust Fund consisting primarily of a pool of conventional one- to four-family
fixed interest rate first mortgage loans (the "Mortgage Loans"), formed and sold
by BA Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, the Master Servicers and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
next preceding the month of such distribution (the "Record Date"), from the
Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class M
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicers acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) to any
Person holding an aggregate Certificate Principal Balance of at least five
million dollars for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicers or such Paying Agent at least five
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of the
distributions allocable to principal and any Realized Losses allocable hereto.
No transfer of this Class M Certificate will be made unless the Trustee
has received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicers
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or
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<PAGE> 129
Section 4975 of the Code (a "Plan"), or any other person (including an
investment manager, a named fiduciary or a trustee of any Plan) acting, directly
or indirectly, on behalf of or purchasing any Certificate with "plan assets" of
any Plan, or stating that the transferee is an insurance company, the source of
funds to be used by it to purchase the Certificate is an "insurance company
general account" (within the meaning of Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under Sections I
and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Mortgage Pass-Through Certificates of the
Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer or any Subservicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly
B-4
<PAGE> 130
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicers, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer from
the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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<PAGE> 131
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class M Certificates referred to in the
within-mentioned Agreement.
------------------------------,
as Certificate Registrar
By:
Authorized Signatory
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<PAGE> 132
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________________________(Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________________________ for the
account of _____________ _______________________________ account number
________________, or, if mailed by check, to ____________
_________________________________________________ Applicable statements should
be mailed to ____________ _________________________________________________.
This information is provided by _______________, the assignee named above,
or , ____________________ as its agent.
B-7
<PAGE> 133
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES AND CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).
[FOR CLASS B-3, CLASS B-4 AND CLASS B-5: THIS CERTIFICATE HAS NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT.]
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE AGREEMENT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE DEPOSITOR AND
THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT SUBJECT THE MASTER
SERVICERS, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT 250% OF THE STANDARD PREPAYMENT ASSUMPTION (AS
DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS BEEN ISSUED WITH
NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL
<PAGE> 134
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]
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<PAGE> 135
Certificate No. __ 7.250% Pass-Through Rate
Class B-__ Subordinate Aggregate Certificate
Principal Balance
of the Class B-__
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
December 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
January 26, 1998
Master Servicers: CUSIP _____________
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
January 25, 2028
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-3
evidencing a percentage interest in any distributions allocable to the
Class B-__ Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in BA Mortgage Securities, Inc.,
the Master Servicers, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by BA Mortgage
Securities, Inc., the Master Servicers, the Trustee or any of their affiliates.
None of the Depositor, the Master Servicers or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
C-3
<PAGE> 136
This certifies that ______________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the Certificate Principal Balance of this Certificate by the aggregate
Certificate Principal Balance of all Class B-__ Certificates, both as specified
above) in certain distributions with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest rate
first mortgage loans (the "Mortgage Loans"), formed and sold by BA Mortgage
Securities, Inc. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicers and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
next preceding the month of such distribution (the "Record Date"), from the
Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class B-__
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or by
a Paying Agent appointed by the Trustee in immediately available funds (by wire
transfer or otherwise) to any Person holding an aggregate Certificate Principal
Balance of at least five million dollars for the account of the Person entitled
thereto if such Person shall have so notified the Trustee or such Paying Agent
at least five Business Days prior to the related Record Date, or by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of the
distributions allocable to principal and any Realized Losses allocable hereto.
[For Class B-3, Class B-4 and Class B-5: No transfer of this Class B-__
Certificate will be made unless such transfer is exempt from the registration
requirements of the Securities Act of 1933, as amended, or is made in accordance
with said Act. In the event that such a transfer is to be made, (A)(i) the
Trustee shall require an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee and the Depositor that such transfer is
exempt (describing the applicable exemption and the basis therefor) from or is
being made pursuant to
C-4
<PAGE> 137
the registration requirements of the Securities Act of 1933, as amended, or (ii)
the transferee and the transferor shall execute investment letters in the forms
described by the Agreement, or (B) the prospective transferee of the Certificate
shall provide to the Trustee, the Depositor and the Master Servicers with an
investment letter in the form described by the Agreement, as required under
Section 5.02(d) of the Agreement. The Holder hereof desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Master Servicers and the Certificate Registrar acting on behalf of the
Trustee against any liability that may result if the transfer is not so exempt
or is not made in accordance with the Securities Act of 1933, as amended, or any
similar state laws.]
No transfer of this Class B-__ Certificate will be made unless the Trustee
has received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicers
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an insurance company, the
source of funds to be used by it to purchase the Certificate is an "insurance
company general account" (within the meaning of Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under Sections I
and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Mortgage Pass-Through Certificates of the
Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer or any Subservicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
C-5
<PAGE> 138
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicers, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or
C-6
<PAGE> 139
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer from
the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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<PAGE> 140
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__ Certificates referred to in the
within-mentioned Agreement.
------------------------------,
as Certificate Registrar
By:
Authorized Signatory
C-8
<PAGE> 141
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________________________ for the
account of _____________ _______________________________ account number
________________, or, if mailed by check, to ____________
_________________________________________________ Applicable statements should
be mailed to ____________ _________________________________________________.
This information is provided by _______________, the assignee named above,
or , ____________________ as its agent.
C-9
<PAGE> 142
EXHIBIT D
FORM OF RESIDUAL CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE AGREEMENT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE DEPOSITOR AND
THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT SUBJECT THE MASTER SERVICERS, THE DEPOSITOR OR THE TRUSTEE
TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICERS
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE
OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2)
NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND
(3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS
<PAGE> 143
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF
THIS PARAGRAPH.
D-2
<PAGE> 144
Certificate No. ___ 7.250% Pass-Through Rate
Class [R-I] [R-II] Senior Aggregate Initial Certificate
Principal Balance of the
Class [R-I] [R-II] Certificates
as of the Cut-off Date:
$----------------
Date of Pooling and Servicing Certificates: $50.00
Agreement and Cut-off Date:
December 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
January 26, 1998
Master Servicers:
Bank of America National Trust Percentage Interest:
and Savings Association _______%
Bank of America, Federal Savings Bank
CUSIP ____________
Assumed Final Distribution Date:
January 25, 2028
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-3
evidencing a percentage interest in any distributions allocable to the
Class [R-I][R-II] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in BA Mortgage Securities, Inc.,
the Master Servicers, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by BA Mortgage
Securities, Inc., the Master Servicers, the Trustee or any of their affiliates.
None of the Depositor, the Master Servicers or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that _________________________ is the registered owner of
the Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Certificate Principal Balance of this Certificate by the aggregate
Initial Certificate Principal Balance of all Class [R-I][R-II] Certificates,
both as specified above) in certain distributions with respect to the Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first
D-3
<PAGE> 145
mortgage loans (the "Mortgage Loans"), formed and sold by BA Mortgage
Securities, Inc. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicers and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing as described in
the Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month of such distribution (the "Record Date"), from the Available
Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to Holders of Class [R-I][R-II] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Trustee or by
a Paying Agent appointed by the Trustee in immediately available funds (by wire
transfer or otherwise) to any Person holding an aggregate Certificate Principal
Balance of at least five million dollars for the account of the Person entitled
thereto if such Person shall have so notified the Trustee or such Paying Agent
at least five Business Days prior to the related Record Date, or by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will
be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
Notwithstanding the reduction of the Certificate Principal Balance hereof to
zero, this Certificate will remain outstanding under the Agreement and the
Holder hereof may have additional obligations with respect to this Certificate,
including tax liabilities, and may be entitled to certain additional
distributions hereon, in accordance with the terms and provisions of the
Agreement.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and
D-4
<PAGE> 146
will vest no rights in the purported transferee, and (iv) if any person other
than a United States Person and a Permitted Transferee acquires any Ownership
Interest in this Certificate in violation of such restrictions, then the Master
Servicers will have the right, in their sole discretion and without notice to
the Holder of this Certificate, to sell this Certificate to a purchaser selected
by the Master Servicers, which purchaser may be a Master Servicer, or any
affiliate of the Master Servicers, on such terms and conditions as the Master
Servicers may choose.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Mortgage Pass-Through Certificates of the
Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer or any Subservicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
D-5
<PAGE> 147
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Master Servicers, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer from
the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, one of the Master
Servicers to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purpose have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-6
<PAGE> 148
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I][R-II] Certificates referred to in the
within-mentioned Agreement.
------------------------------,
as Certificate Registrar
By:
Authorized Signatory
D-7
<PAGE> 149
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________(Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
Dated:
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________________________ for the
account of _____________________________________________ account number
________________, or, if mailed by check, to ___________________________________
_________________________________________________ Applicable statements should
be mailed to ______________________________________________________________.
This information is provided by _______________, the assignee named above,
or , ____________________ as its agent.
D-8
<PAGE> 150
EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
<PAGE> 151
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FEDERAL SAVINGS BANK
<PAGE> 152
EXHIBIT F-1
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION
<PAGE> 153
EXHIBIT F-2
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, FEDERAL SAVINGS BANK
<PAGE> 154
EXHIBIT G
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
<PAGE> 155
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL SAVINGS BANK]
MORTGAGE LOAN PURCHASE AGREEMENT
DATED DECEMBER ___, 1997
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-3
<PAGE> 156
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated December ___, 1997,
between BA Mortgage Securities, Inc., a Delaware corporation (the "Depositor"),
and [Bank of America National Trust and Savings Association] [Bank of America,
Federal Savings Bank] a [national banking association] [federal savings bank]
(the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell certain Mortgage Loans (as defined below) to
the Depositor as provided herein. The Depositor intends to deposit such mortgage
loans, together with certain other mortgage loans, into a trust fund (the "Trust
Fund") evidenced by mortgage pass-through certificates (the "Certificates"). The
Certificates will be issued pursuant to a Pooling and Servicing Agreement (the
"Pooling Agreement") among the Depositor, Bank of America, Federal Savings Bank
and Bank of America National Trust and Savings Association, as master servicers
(together, the "Master Servicers"), and Bankers Trust Company of California,
N.A., as Trustee (the "Trustee") dated as of December 1, 1997 (the "Cut-off
Date"). The Certificates are described more fully in the related Prospectus
Supplement (the "Prospectus Supplement") dated December ___, 1997. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned in
the Pooling Agreement.
In consideration of the mutual agreements herein contained, the Depositor
and the Seller hereby agree as follows:
SECTION 1. Agreement to Purchase. The Seller agrees to sell, and the
Depositor agrees to purchase, the mortgage loans (the "Mortgage Loans"),
identified on the schedule annexed hereto as Exhibit 1 (the "Mortgage Loan
Schedule"). The Mortgage Loans will be conventional fixed rate one- to
four-family residential mortgage loans with original terms to maturity of not
more than 30 years from the date of origination. The Mortgage Loans will have an
aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after giving effect to any payments due on or before such date
whether or not received, of approximately $______________ (plus or minus 2.5%),
or such other amount acceptable to the Depositor as evidenced by the actual
aggregate outstanding principal balance of the Mortgage Loans accepted by the
Depositor for deposit into the Trust Fund. The sale of the Mortgage Loans shall
take place on or prior to December ___, 1997 or such other date as shall be
mutually acceptable to the parties hereto (the "Closing Date"), subject to the
deposit of the Mortgage Loans into the Trust Fund, the issuance of the
Certificates and the sale of the Certificates by the Depositor pursuant to the
Underwriting Agreement (the "Underwriting Agreement") and Purchase Agreement
(the "Purchase Agreement"), each to be entered into between the Depositor and
Morgan Stanley & Co. Incorporated (the "Underwriter"). The purchase price for
the Mortgage Loans (the "Purchase Price") shall be equal to _____% of the
aggregate outstanding principal balances thereof as of the close of business on
the Cut-off Date, together with interest accrued on such principal balance at a
per annum rate equal to ______% from the Cut-off Date to but not including the
Closing Date. The Purchase Price shall be paid to the Seller by wire transfer in
immediately available funds on the Closing Date by the Depositor, or as
otherwise agreed by the Depositor and the Seller.
<PAGE> 157
Pursuant to the terms of the Pooling Agreement, the Depositor shall assign
to the Trustee all of its right, title and interest in and to the Mortgage
Loans, and other rights and obligations under this Agreement (except with
respect to its rights to either indemnification or notice) and the Trustee shall
succeed to such right, title and interest and rights and obligations hereunder
of the Depositor.
SECTION 2. Conveyance of Mortgage Loans. The Seller hereby agrees to
transfer, assign, set over and otherwise convey to the Depositor, without
recourse but subject to the terms of this Agreement, on the Closing Date and as
of the Cut-off Date, all the right, title and interest of the Seller in and to
the Mortgage Loans identified on the Mortgage Loan Schedule as of the Closing
Date. The Mortgage Loan Schedule shall conform to the requirements of the
Depositor as set forth in this Agreement and the Pooling Agreement. The Mortgage
Loan Schedule, as amended on the Closing Date if necessary to reflect the actual
Mortgage Loans accepted by the Depositor on the Closing Date in accordance with
Section 3 hereof, shall be used as part of the Mortgage Loan Schedule under the
Pooling Agreement. In connection with such transfer and assignment, the Seller
shall deliver, or cause to be delivered, to the Custodian, the documents or
instruments specified in Section 2.01 of the Pooling Agreement with respect to
each Mortgage Loan (each such set of documents, a "Mortgage File"). At least two
days prior to the Closing Date, each Mortgage File shall have been delivered by
the Seller to the Custodian. All Mortgage Files so delivered will be held by the
Custodian, as bailee of the Seller, in escrow at all times prior to the Closing
Date.
In the event that any assignment is lost or returned unrecorded because of
a defect therein, the Seller shall prepare a substitute assignment or cure such
defect and record and deliver such assignment in accordance with this Section 2.
The Seller will also pay the fees of the Custodian incurred in connection with
the removal and replacement of each assignment of Mortgage delivered for
recording, as well as the fees of the Custodian incurred in connection with the
addition of any title insurance policy or recorded Mortgage to the related
Mortgage File.
Upon sale of the Mortgage Loans by the Seller to the Depositor hereunder,
the ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Depositor and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
that come into the possession of the Seller shall immediately vest in the
Depositor. The Seller's records shall accurately reflect the sale of each
Mortgage Loan to the Depositor. In the event that any original document held by
the Seller is required pursuant to the terms of this Section to be a part of a
Mortgage File, such document shall be delivered promptly to the Depositor or its
designee.
SECTION 3. Examination of Mortgage Files and Due Diligence Review. On or
before the Closing Date, the Seller shall either, as specified by the Depositor,
deliver to the Depositor, or its designee, in escrow, or make available, or
cause to be made available, for examination during normal business hours, all
credit files, underwriting documentation and Mortgage Files relating to the
Mortgage Loans. The fact that the Depositor has conducted or has failed to
conduct any partial or complete examination of the credit files, underwriting
documentation or Mortgage Files relating to the Mortgage Loans shall not affect
the Depositor's, the Trustee's or any holder of the Certificates' right to
demand repurchase of or substitution for the Mortgage
G-2
<PAGE> 158
Loans or other relief as provided under this Agreement or to be provided under
the Pooling Agreement.
In addition to the foregoing examination of the Mortgage Files and related
documents, the Seller agrees to allow the Depositor, or its designee, any
representative of a statistical Rating Agency, or the Underwriter, to examine
and audit all books, records and files pertaining to the Mortgage Loans, the
Seller's underwriting procedures and the Seller's ability to perform or observe
all of the terms, covenants and conditions of this Agreement. Such examinations
and audits shall take place at one or more offices of the Seller during normal
business hours and in the course of such examinations and audits, the Seller
will make available to the Depositor, or its designee, adequate facilities, as
well as the assistance of a sufficient number of knowledgeable and responsible
individuals who are familiar with the Mortgage Loans and the terms of this
Agreement and the Seller shall cooperate fully with any such review in all
respects. The Seller agrees to provide the Depositor, its designee and any
representative of a Rating Agency or the Underwriter with all material
information regarding the Seller (including its financial condition), and to
provide access to knowledgeable financial or accounting officers for the purpose
of answering questions with respect to the Seller's financial condition,
financial statements or other developments affecting the Seller. The Depositor
shall, upon reasonable prior notice, also have the right to perform such
examinations and audits or to obtain such material information regarding the
Seller's financial condition and access to the officers described above
following the Closing Date.
The Seller understands and agrees that any information, including but not
limited to financial information, the Seller's mortgage loan underwriting
standards, information regarding the status of the Seller with respect to any
regulatory body or entity and information as to the loss, foreclosure and
delinquency experience of loans originated or acquired by the Seller, obtained
in the examination and review described in the foregoing paragraph may be
disclosed in the Prospectus Supplement. In addition, the Seller will provide at
its own expense a letter from an independent nationally recognized accounting
firm verifying any financial information referred to in the previous sentence as
is reasonably required to be disclosed in such Prospectus Supplement. The
Depositor assumes no responsibility with respect to information referred to in
this paragraph.
SECTION 4. Representations, Warranties and Covenants of the Seller. In
order to induce the Depositor to enter into this Agreement, the Seller hereby
represents, warrants and covenants to the Depositor, and any assignee of the
Depositor, that as of the date hereof and as of the Closing Date (or such other
date specifically provided herein):
(i) The Seller is duly incorporated and validly existing as a
[national banking association] [federal savings bank] in good standing under the
laws of the United States with full power and authority to carry on its business
as presently conducted by it. The Seller had the full power and authority and
legal right to originate or acquire the Mortgage Loans. The Seller has the full
power and authority and legal right to own the Mortgage Loans and to transfer
and convey the Mortgage Loans to the Depositor and has the full power and
authority and legal right to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, this
Agreement.
G-3
<PAGE> 159
(ii) This Agreement has been duly and validly authorized, executed
and delivered by the Seller, all requisite corporate action has been or will
have been taken, and (assuming the due authorization, execution and delivery
hereof by the Depositor) constitutes or will constitute the valid, legal and
binding agreements of the Seller, enforceable in accordance with its terms,
except as such enforcement may be limited by (i) laws relating to bankruptcy,
insolvency, reorganization, receivership or moratorium, (ii) other laws relating
to or affecting the rights of creditors generally and by general principles of
equity or the rights of creditors of banking institutions the accounts of which
are insured by the Federal Deposit Insurance Corporation or any other
instrumentality of the federal government (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (iii) public
policy considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from liabilities under
applicable securities laws.
(iii) Either (a) no consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state laws, for the execution, delivery and
performance of or compliance by the Seller with this Agreement or the
consummation by the Seller of any other transaction contemplated hereby or (b)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) Neither the transfer of the Mortgage Loans to the Depositor,
nor the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with, or results or will result in a breach of, or
constitutes or will constitute a default under (a) any term or provision of the
documents governing the Seller's organization, or (b) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or is bound, or (c) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Seller, or results or will result in the creation or imposition of any
lien, charge or encumbrance which, in any of the foregoing cases, would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.
(v) There are no actions or proceedings against, or investigations
of, the Seller pending or, to the Seller's knowledge, threatened against the
Seller before any court, administrative agency or other tribunal, which would
reasonably be expected to adversely affect the transfer of the Mortgage Loans,
the issuance of the Certificates, the execution, delivery or enforceability of
this Agreement or have a material adverse effect on the financial condition of
the Seller.
(vi) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan was true and correct as of the Cut-off Date.
(vii) The Seller represents and warrants that each of the
representations and warranties contained in Exhibit 2 hereto is true and correct
and will be true and correct as of the Closing Date.
G-4
<PAGE> 160
(viii) The Seller covenants to (a) provide in a timely manner all of
the information regarding itself and the Mortgage Loans as the Depositor may
reasonably request in connection with the preparation of the Prospectus
Supplement, (b) fully cooperate with, and supply all information requested by
the Rating Agencies to the extent practicable, and (c) dedicate adequate
personnel and resources as may be required to comply with all of the terms and
conditions of this Agreement.
(ix) As of the date of the Prospectus Supplement and as of the
Closing Date, the information contained in the Prospectus Supplement with
respect to the Seller's Information (as defined in Section 9(a)) will be true
and accurate and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
(x) Other than in connection with solicitations or promotions
directed at the general public, the Seller agrees that it will not solicit the
mortgagor with respect to any Mortgage Loan for the purpose of refinancing such
Mortgage Loan; nor will the Seller treat the Mortgage Loans and the mortgage
loans held by the Seller in its own portfolio as separate classes of mortgage
loans for purposes of advertising the availability of refinancing terms.
SECTION 5. Cure, Repurchase and Indemnity Obligations of the Seller. Each
of the representations, warranties and covenants contained in or required to be
made pursuant to Section 4 of this Agreement shall survive the sale of the
Mortgage Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the mortgage notes and notwithstanding
subsequent termination of this Agreement or the Pooling Agreement. The
representations, warranties and covenants contained in or required to be made
pursuant to Section 4 of this Agreement shall not be impaired by any review or
examination of the Mortgage Files or other documents evidencing or relating to
the Mortgage Loans or any failure on the part of the Depositor to review or
examine such documents and shall inure to the benefit of any transferee of the
Mortgage Loans from the Depositor including, without limitation, the Trustee for
the benefit of the Certificateholders.
If the Depositor or its assignee finds any document or documents
constituting a part of a Mortgage File not to have been executed or otherwise
defective as set forth in Section 2.02 of the Pooling Agreement or received, or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule,
the Depositor or its assignee shall promptly so notify the Seller. The Seller
hereby covenants and agrees that, if any such defect cannot be corrected or
cured, the Seller shall either (i) repurchase the related Mortgage Loan from the
Depositor or its assignee at the Purchase Price, or (ii) substitute for any
Mortgage Loan to which such defect relates a Qualified Substitute Mortgage Loan,
in either case in accordance with Section 2.04 of the Pooling Agreement.
It is understood and agreed that the representations and warranties set
forth in Exhibit 2 hereto shall survive delivery of the respective Mortgage
Files to the Depositor or its assignee and shall continue throughout the term of
this Agreement. The Seller hereby covenants and agrees that if there is a breach
of any such representation or warranty which materially and
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adversely affects the interests of the Depositor or its assigns in the related
Mortgage Loans, the Seller shall either (i) repurchase the related Mortgage Loan
from the Depositor or its assignee at the Purchase Price, or (ii) substitute for
any Mortgage Loan to which such defect relates a Qualified Substitute Mortgage
Loan, in either case in accordance with Section 2.04 of the Pooling Agreement.
If the aggregate of the principal balances of the Qualified Substitute Mortgage
Loans substituted for a Mortgage Loan is less than the Stated Principal Balance
of such Mortgage Loan, the Seller shall pay the difference in cash to the
Depositor or its assignee, and such payment by the Seller shall be treated in
the same manner as proceeds of the repurchase by the Seller of a Mortgage Loan.
Furthermore, such Qualified Substitute Mortgage Loan shall otherwise have such
characteristics so that the representations and warranties of the Depositor set
forth in Exhibit 2 hereto would not have been incorrect had such Qualified
Substitute Mortgage Loan originally been a Mortgage Loan. A Qualified Substitute
Mortgage Loan may be substituted for a defective Mortgage Loan whether or not
such defective Mortgage Loan is itself a Qualified Substitute Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be payable to
the Depositor or its assignee by wire transfer of immediately available funds to
the account specified by the Depositor or its assignee, as applicable, and, upon
receipt by the Depositor or its assignee of written notification of such deposit
signed by an authorized officer, the Depositor or its assignee shall release to
the Seller the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Seller or its designee or assignee title to any
Mortgage Loan released pursuant hereto. The obligation of the Seller to
repurchase or substitute any Mortgage Loan as to which such a defect in a
constituent document exists or a breach of the Seller's representations with
respect to the Mortgage Loans which materially and adversely affects the
interests of the Depositor or the Certificateholders in any Mortgage Loan shall
constitute the sole remedy respecting such defects available to the Depositor or
its assignee on behalf of the Certificateholders; provided that this limitation
shall not in any way limit the Depositor's rights or remedies upon breach of any
representation or warranty herein.
With respect to any Mortgage Loan as to which the Seller delivers to the
Depositor or the Trustee an affidavit certifying that the original Mortgage Note
has been lost or destroyed, if such Mortgage Loan is subsequently in default and
the enforcement thereof or of the related Mortgage is materially adversely
affected by the absence of the original Mortgage Note, the Seller will be
obligated to repurchase or substitute for such Mortgage Loan in the manner set
forth above.
SECTION 6. Representations and Warranties of the Depositor. In order to
induce the Seller to enter into this Agreement, the Depositor hereby represents
and warrants to the Seller that as of the date hereof:
(i) The Depositor is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to carry on its business as presently conducted by it. The
Depositor has the full power and authority and legal right to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement.
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(ii) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all requisite corporate action has been or will
have been taken, and (assuming the due authorization, execution and delivery
hereof by the Seller) constitutes or will constitute the valid, legal and
binding agreement of the Depositor, enforceable in accordance with its terms,
except as such enforcement may be limited by (i) laws relating to bankruptcy,
insolvency, reorganization, receivership or moratorium, (ii) other laws relating
to or affecting the rights of creditors generally and by general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law) or (iii) public policy considerations underlying the
securities laws, to the extent that such public policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from liabilities under applicable securities laws.
(iii) Either (a) no consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state laws, for the execution, delivery and
performance of or compliance by the Depositor with this Agreement, or the
consummation by the Depositor of any other transaction contemplated hereby or
(b) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) The execution, delivery or performance of this Agreement by
the Depositor does not conflict or will not conflict with, or result or will
result in a breach of, or constitute or will constitute a default under (a) any
term or provision of the documents governing the Depositor's organization, or
(b) any term or provision of any material agreement, contract, instrument or
indenture, to which the Depositor is a party or is bound, or (c) any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor.
(v) There are no actions or proceedings against, or investigations
of, the Depositor pending or, to the Depositor's knowledge, threatened against
the Depositor before any court, administrative agency or other tribunal, which
would reasonably be expected to adversely affect the transfer of the Mortgage
Loans, the execution, delivery or enforceability of this Agreement or have a
material adverse effect on the financial condition of the Depositor.
SECTION 7. Closing. The closing of the sale of the Mortgage Loans shall be
held at the office of Orrick, Herrington & Sutcliffe LLP at 7:00 a.m., San
Francisco time, on the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller and
the Depositor shall be true and correct in all material respects as of the
Closing Date;
(b) All Closing Documents specified in Section 8 of this
Agreement, in such forms as are agreed upon and acceptable to the
Depositor and the Seller, shall be duly executed and delivered by all
signatories as required pursuant to the respective terms thereof;
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(c) The Seller shall have delivered and released to the Depositor
or its designee, all documents required to be delivered to the Depositor
pursuant to Section 2 of this Agreement;
(d) The result of the examination and audit performed by the
Depositor pursuant to Section 3 hereof shall be satisfactory to the
Depositor in its sole determination and the parties shall have agreed to
the form and content of the Seller's information (as defined in Section 9
hereof) to be disclosed in the Prospectus Supplement;
(e) All other terms and conditions of this Agreement required to
be complied with on or before the Closing Date shall have been complied
with and the Seller and the Depositor shall have the ability to comply
with all terms and conditions and perform all duties and obligations
required to be complied with or performed after the Closing Date; and
(f) All of the terms and conditions of the Underwriting Agreement
and the Purchase Agreement required to be complied with on or before the
Closing Date shall have been complied with.
SECTION 8. Closing Documents. The Closing Documents shall consist of the
following:
(a) The Underwriting Agreement duly executed by the Depositor and
the Underwriter, and all exhibits thereto duly executed by all applicable
signatories;
(b) The Purchase Agreement duly executed by the Depositor and the
Underwriter, and all exhibits thereto duly executed by all applicable
signatories;
(c) This Agreement duly executed by the Depositor and the Seller;
(d) A cross-receipt dated the Closing Date duly executed by the
Seller and the Depositor; and
(e) A duly executed Bill of Sale in the form attached hereto as
Exhibit 3.
SECTION 9. Costs. The Seller shall pay directly all of its own expenses,
including out-of-pocket expenses, the expenses of the preparation and recording
of assignments of Mortgage pursuant to Section 2 hereof and the delivery of
documents required pursuant to Section 2 hereof to the Trustee and its attorney
fees.
SECTION 10. Servicing. The Mortgage Loans are to be delivered free and
clear of any servicing agreements with third party servicers.
SECTION 11. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or mailed by
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registered mail, postage prepaid, return receipt requested, to the following
addresses: if to the Depositor, addressed to the Depositor at 345 Montgomery
Street, Lower Level #2, Unit #8152, San Francisco, California 94104, Attention:
David James or to such other address as the Depositor may designate in writing
to the Seller; or if to the Seller, addressed to the Seller at 555 California
Street, San Francisco, California 94104, Attention: David Grout, or to such
other addresses as the Seller may designate in writing to the Depositor.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 13. Further Assurances. The Seller and the Depositor each agree to
execute and deliver such instruments and take such actions as the other may,
from time to time, reasonably request in order to effectuate the purpose and to
carry out the terms of this Agreement.
SECTION 14. Survival. The Seller and the Depositor agree that the
representations, warranties and agreements made herein and in any certificate or
other instrument delivered pursuant hereto shall be deemed to be relied upon by
the other party, notwithstanding any investigation heretofore or hereafter made
by such party or on such party's behalf, and that the representations,
warranties and agreements made by the Seller and the Depositor herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans.
SECTION 15. Miscellaneous. This Agreement is to be governed by, and
construed in accordance with, the laws of the State of California. The rights
and obligations of the Seller under this Agreement shall not be assigned by the
Seller without the prior written consent of the Depositor. The Depositor has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee as may be required to effect the purposes of the Pooling Agreement, by
written notice to the Seller, without the consent of Seller, and the Trustee
shall thereupon succeed to the rights and obligations hereunder of the
Depositor. Notwithstanding any such assignment of the Depositor's interest under
this Agreement, the Depositor shall be entitled to indemnification from the
Seller in the circumstances and to the extent described in Section 9. Notice is
hereby given to the Seller by the Depositor that the representations and
warranties made by the Seller and contained in Exhibit 2 of this Agreement are
or will be assigned by the Depositor to the Trustee for the benefit of the
Certificateholders, together with such additional representations and warranties
as the Depositor shall specify. The Seller, without any further action on its
part, hereby consents to such assignment. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective
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successors and assigns. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Seller to the Depositor as provided in this Agreement be,
and be construed as, a sale of the Mortgage Loans by Seller to the Depositor. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by Seller to the Depositor to secure a debt or
other obligation of Seller. However, in the event, notwithstanding the intent of
the parties, the Mortgage Loans are held to be property of Seller, or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans, then, (a) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code
in effect in the applicable state; (b) the conveyance provided for in this
Agreement shall be deemed to be a grant by Seller to the Depositor of a security
interest in and to all of the Seller's right, title, and interest, whether now
owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and uncertificated
securities consisting of, arising from or relating to the Mortgage Loans,
including all Qualified Substitute Mortgage Loans and including (i) the
Mortgage, the Mortgage Note, any insurance policies and all other
documents in the related Mortgage File, (ii) all title, hazard and primary
mortgage insurance policies identified on the Mortgage Loan Schedule as
defined herein, and (iii) all distributions with respect thereto payable
on and after the Cut-off Date;
(II) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, uncertificated
securities, and other rights arising from or by virtue of the disposition
of, or collections with respect to, or insurance proceeds payable with
respect to, or claims against other persons with respect to, all or any
part of the collateral described in (I) above (including any accrued
discount realized on liquidation of any investment purchased at a
discount); and
(III) All cash and non-cash proceeds of the collateral described in
(I) and (II) above;
The possession by the Depositor or its assignee of the Mortgage Notes, the
Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall be
deemed to be "possession by the secured party," or possession by a purchaser or
a person designated by him or her, for purposes of perfecting the security
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interest pursuant to the Uniform Commercial Code (including, without limitation,
Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor or its assignee for the purpose of perfecting such security
interest under applicable law. In connection herewith, the Depositor (or its
assignee) shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
Any assignment of the interest of the Depositor pursuant to Section 1
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Depositor shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in or lien on the Mortgage
Loans, such security interest or lien would be deemed to be a perfected security
interest or lien of first priority under applicable law and will be maintained
as such throughout the term of the Agreement.
SECTION 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one legal instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
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IN WITNESS WHEREOF, the Seller and the Depositor have caused their names
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
[BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION] [BANK OF AMERICA,
FEDERAL SAVINGS BANK],
the Seller
By:______________________________________
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:______________________________________
Name:
Title:
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EXHIBIT 1
MORTGAGE LOAN SCHEDULE
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EXHIBIT 2
SELLER REPRESENTATIONS AND WARRANTIES
Seller's Representations to be Assigned by Depositor to Trustee
The Seller hereby represents and warrants to the Depositor, as to each
Mortgage Loan, that as of the Closing Date or as of such other date specifically
provided herein:
(i) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan is true and correct as of the Closing Date;
(ii) As of the Closing Date, each Mortgage is a valid first lien on
an unencumbered estate in fee simple or leasehold estate in the related
Mortgaged Property subject only to (a) liens for current real property taxes and
special assessments; (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally or specifically reflected in the appraisal
obtained in connection with the origination of the Mortgage Loan; (c) exceptions
set forth in the title insurance policy relating to such Mortgage, such
exceptions being acceptable to mortgage lending institutions generally; and (d)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage;
(iii) As of the Closing Date, the Seller had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any encumbrance or lien,
and immediately upon the transfer and assignment herein contemplated, the
Depositor shall have good title to, and will be the sole legal owner of, each
Mortgage Loan, free and clear of any encumbrance or lien (other than any lien
under this Agreement);
(iv) As of the day prior to the Cut-off Date, all payments due on
each Mortgage Loan had been made and no Mortgage Loan had been delinquent (i.e.,
was more than 30 days past due) more than once in the preceding 12 months and
any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the Mortgagor to
pay the unpaid principal or interest on such Mortgage Note except as may be
provided under the Soldiers and Sailors Civil Relief Act of 1940, as amended,
and except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, the Mortgaged Property securing each
Mortgage is undamaged by water, fire, earthquake, earth movement other than
earthquake, windstorm, flood, tornado or similar casualty (excluding casualty
from the presence of hazardous wastes or
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hazardous substances, as to which the Seller makes no representations), so as to
affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
(viii) Each Mortgage Loan at the time it was made complied with all
applicable state and federal laws, including, without limitation, usury, equal
credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings association,
savings bank, credit union, insurance company, or similar institution which is
supervised and examined by a federal or state authority or by a mortgagee
approved by the FHA;
(x) As of the Closing Date, except for Mortgage Loans for which
the related Mortgaged Properties are located in areas where such policies are
generally not available, each Mortgage Loan is covered by an ALTA form or CLTA
form of mortgagee title insurance policy or other form of policy of insurance
which, as of the Closing Date, is acceptable to FNMA or FHLMC, and has been
issued by, and is the valid and binding obligation of, a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the state in which
the related Mortgaged Property is located. Such policy insures the originator of
the Mortgage Loan, its successors and assigns as to the first priority lien of
the Mortgage in the original principal amount of the Mortgage Loan subject to
the exceptions set forth in such policy. With respect to each Mortgage Loan for
which the related Mortgage Property is located in an area where such policies
are generally not available, an attorney's certificate of title was obtained at
origination. Such policy (or certificate of title) is in full force and effect
and will be in full force and effect and inure to the benefit of the
Certificateholders upon the consummation of the transactions contemplated by
this Agreement and no claims have been made under such policy (or certificate of
title), and no prior holder of the related Mortgage, including the Seller, has
done, by act or omission, anything which would impair the coverage of such
policy (or certificate of title);
(xi) As of the Closing Date, except as specified on the mortgage
Loan Schedule, each Mortgage Loan which had a Loan-to-Value Ratio at the time of
the origination of the Mortgage Loan in excess of 80% was covered by a Primary
Mortgage Insurance Policy or an FHA insurance policy or a VA guaranty, and such
policy or guaranty is valid and remains in full force and effect, except for any
Mortgage Loan for which the outstanding Stated Principal Balance thereof at any
time subsequent to origination was 80% or less of the value of the related
Mortgaged Property (as determined by the original appraisal or an appraisal
obtained subsequent to origination);
(xii) As of the Closing Date, each insurer issuing a Primary
Mortgage Insurance Policy will hold a rating acceptable to the Rating Agency;
(xiii) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other instruments
approved by the Seller;
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(xiv) The Mortgaged Property securing each Mortgage is improved with
a one- to four-family dwelling unit, including units in a duplex, condominium
project, townhouse, a planned unit development or a de minimis planned unit
development;
(xv) Each Mortgage and Mortgage Note is genuine and the legal,
valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
laws relating to bankruptcy, insolvency, reorganization, receivership or
moratorium, or laws relating to or affecting the enforcement of creditors'
rights generally;
(xvi) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of such units
met FNMA requirements, are located in a condominium or planned unit development
projects which have received FNMA approval, or are approvable by FNMA;
(xvii) No more than __ of the Mortgage Loans are Buydown Loans;
(xviii) As of the Cut-off Date, all but approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, based solely on representations of the Mortgagors obtained
at the origination of the related Mortgage Loans and approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which were second or vacation homes of the
Mortgagors, based solely on such representations, and ____% (by Stated Principal
Balance) of the Mortgage Loans will be secured by Mortgaged Properties which
were investor properties of the related Mortgagors, based solely on such
representations;
(xix) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to FNMA and
FHLMC;
(xx) The Mortgage Loans have been underwritten substantially in
accordance with the underwriting standards of the originator of the Mortgage
Loan as in effect on the date of origination;
(xxi) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not be
exercised at the time of a transfer if prohibited by federal law;
(xxii) The Seller used no adverse selection procedures in selecting
the Mortgage Loans from among the outstanding fixed-rate conventional mortgage
loans originated or purchased by it which were available for inclusion in the
Mortgage Pool and as to which the representations and warranties in this Exhibit
could be made; and
(xxiii) No material misrepresentation or fraud with respect to a
Mortgage Loan has taken place on the part of any person involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan.
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(xxiv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior to,
or equal with, the lien of such Mortgage, except those which are insured against
by the title insurance policy referred to in item (x) above;
(xxv) To the Seller's knowledge, no improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning law or
regulation. To the Seller's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse effect on
the value of such Mortgaged Property, and the Mortgaged Property is lawfully
occupied under applicable law;
(xxvi) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making, or closing or recording the Mortgage Loans
were paid;
(xxvii) The related Mortgage contains customary and enforceable,
subject to paragraph (xv) above, provisions which render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure;
(xxviii) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Certificateholders to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(xxix) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxx) None of the Mortgage Loans provides for a prepayment penalty;
(xxxi) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements of
the current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis, or (C)
the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended;
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(xxxii) There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring;
(xxxiii) There is no material monetary default existing under any
Mortgage or the related Mortgage Note that is likely to result in a lien on the
Mortgaged Property with a higher priority than that of the Mortgage or an
impairment of the value of the Mortgaged property and, to the best of the
Seller's knowledge, there is no material event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxiv) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan;
(xxxv) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect (except
that a Mortgage Loan may have been modified by a written instrument which has
been recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and which has been delivered to the
Trustee); satisfied, cancelled or subordinated such Mortgage in whole or in
part; released the related Mortgaged property in whole or in part from the lien
of such mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto;
(xxxvi) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under the
mortgage or the related Mortgage Note.
(xxxvii) Other than any Buydown Fund with respect to a Buydown Loan,
there is no pledged account or other security other than real estate securing
the Mortgagor's obligations.
(xxxviii) Other than any such obligation relating to a Buydown Loan,
there is no obligation on the part of the Seller or any other party under the
terms of the Mortgage or related Mortgage Note to make payments in addition to
those made by the Mortgagor;
(xxxix) Except for (A) payments in the nature of escrow payments,
(B) interest accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage proceeds, whichever is later, to the day which precedes by one
month the Due Date of the first installment of principal and interest, including
without limitation taxes and insurance payments, and (C) any Buydown Fund with
respect to a Buydown Loan, the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required by the
Mortgage; and
(xxxx) The Mortgage Loans in the aggregate conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
G-18
<PAGE> 174
EXHIBIT 3
BILL OF SALE
1. PARTIES. The parties to this Bill of Sale are the following:
Seller: [Bank of America National Trust and Savings Association]
[Bank of America, Federal Savings Bank]
Depositor: BA Mortgage Securities, Inc.
2. SALE. For value received, the Seller hereby conveys to the Depositor,
without recourse, all right, title and interest in and to the Mortgage Loans
identified on Exhibit 1 (the "Mortgage Loan Schedule") to the Mortgage Loan
Purchase Agreement, dated as of December [___], 1997 (the "Mortgage Loan
Purchase Agreement"), between the Seller and the Depositor and all of the
following property:
(a) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and uncertificated
securities consisting of, arising from or relating to the Mortgage Loans,
including all Qualified Substantive Mortgage Loans and including (i) the
Mortgage, the Mortgage Note, any insurance policies and all other
documents in the related Mortgage File, (ii) all title, hazard and primary
mortgage insurance policies identified in the Mortgage Loan Schedule as
defined herein and (iii) all distributions with respect thereto payable on
and after the Cut-off Date;
(b) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, uncertificated
securities, and other rights arising from or by virtue of the disposition
of, or collections with respect to, or insurance proceeds payable with
respect to, or claims against other persons with respect to, all or any
part of the collateral described in clause (a) above (including any
accrued discount realized on liquidation of any investment purchased at a
discount); and
(c) All cash and non-cash proceeds of the collateral described in
clauses (a) and (b) above.
3. PURCHASE PRICE. $[________].
4. DEFINITIONS. Terms used but not defined herein shall have the meanings
assigned to them in the Mortgage Loan Purchase Agreement.
G-19
<PAGE> 175
IN WITNESS WHEREOF, each of the parties hereto has caused this Bill of
Sale to be duly executed and delivered on this [ ] day of December, 1997.
SELLER: [BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL
SAVINGS BANK]
By:_______________________________________
Name:
Title:
DEPOSITOR: BA MORTGAGE SECURITIES, INC.
By:_______________________________________
Name:
Title:
G-20
<PAGE> 176
EXHIBIT H
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
in custody for the referenced pool, the undersigned requests the release of the
mortgage documents described below for the reasons indicated. All documents to
be released to the undersigned shall be held in trust by the undersigned for the
benefit of the applicable securities holders solely for the purpose indicated
below. The issuer shall return the documents to the custodian when the issuer's
need thereof no longer exists, except where the mortgage is paid in full or
otherwise disposed of in accordance with the applicable pooling and servicing
agreement.
BA Mortgage Securities, Inc., Mortgage Pass-through Certificates, Series 1997-3
Pooling and Servicing Agreement Dated: December 1, 1997
Pool/Series#: 1997-3
Loan #
FHA/VA/FHMA#
Investor Loan#
Borrower Name(s):
Reason for Documents Request: (circle one)
1. Mortgage Paid in Full
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
- --------------------------------------------
[name of Master Servicer]
Authorized Signature
****************************************************************
TO TRUSTEE: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Mortgage Insurance Policy
[ ] Mortgage or Deed of Trust
<PAGE> 177
[ ] Assignment(s) of Mortgage or Deed
of Trust
Title Insurance Policy
[ ] Other:
______________________________
Name
______________________________
Title
______________________________
Date
H-2
<PAGE> 178
EXHIBIT I-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he/she is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Mortgage Pass-Through Certificates, Series 1997-3, Class
[R-I][R-II] (the "Owner")), a [savings institution] [corporation] duly organized
and existing under the laws of [the State of __________________] [the United
States], on behalf of which he/she makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class [R-I][R-II] Certificates, and (iii)
is acquiring the Class [R-I][R-II] Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement
in substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class [R-I][R-II] Certificates to disqualified organizations under
the Code, that applies to all transfers of Class [R-I][R-II] Certificates after
March 31, 1988; (ii) that such tax would be on the transferor, or, if such
transfer is through an agent (which person includes a broker, nominee or
middleman) for a disqualified organization, on the agent; (iii) that the person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is not a
disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class
[R-I][R- II] Certificates may be "noneconomic residual interests" within the
meaning of Treasury regulations promulgated pursuant to the Code and that the
transferor of a noneconomic residual interest will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer was to impede the assessment or collection of tax.
<PAGE> 179
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding Class [R-I][R-II] Certificates if at any time during the taxable
year of the pass-through entity a disqualified organization is the record holder
of an interest in such entity. (For this purpose, a "pass through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is not an employee benefit plan or other plan subject to
the prohibited transaction provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or an investment manager, named fiduciary or a
trustee of any such plan, or any other Person acting, directly or indirectly, on
behalf of or purchasing any Certificate with "plan assets" of any such plan.
6. That the Owner is aware that the Trustee will not register the
transfer of any Class [R-I][R-II] Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
7. That the Owner has reviewed the restrictions set forth on the face
of the Class [R-I][R-II] Certificates and the provisions of Section 5.02(f) of
the Pooling and Servicing Agreement under which the Class [R-I][R-II]
Certificates were issued (in particular, clause (iii)(A) and (iii)(B) of Section
5.02(f) which authorize the Trustee to deliver payments to a person other than
the Owner and negotiate a mandatory sale by the Trustee in the event the Owner
holds such Certificates in violation of Section 5.02(f)). The Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
8. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class [R-I][R-II] Certificates will
only be owned, directly or indirectly, by an Owner that is not a disqualified
organization.
9. The Owner's Taxpayer Identification Number is ______________.
10. This affidavit and agreement relates only to the Class [R-I][R-II]
Certificates held by the Owner and not to any other holder of the Class
[R-I][R-II] Certificates. The Owner understands that the liabilities described
herein relate only to the Class [R-I][R-II] Certificates.
11. That no purpose of the Owner relating to the transfer of any of the
Class [R-I][R-II] Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
12. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person
I-1-2
<PAGE> 180
from whom it acquired the Class [R-I][R-II] Certificate that the Owner intends
to pay taxes associated with holding such Class [R-I][R-II] Certificate as they
become due, fully understanding that it may incur tax liabilities in excess of
any cash flows generated by the Class [R-I][R-II] Certificate.
13. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as any of the
Class [R-I][R-II] Certificates remain outstanding.
14. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
I-1-3
<PAGE> 181
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Title
of Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:____________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Owner, and acknowledged to me that he/she
executed the same as his/her free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this ____ day of ________________, 199__.
_________________________________________
NOTARY PUBLIC
COUNTY OF________________________________
STATE OF_________________________________
My Commission expires the ____ day
of _______________, 19__.
I-1-4
<PAGE> 182
EXHIBIT I-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1997-3
Re: Mortgage Pass-Through Certificates,
Series 1997-3, Class [R-I][R-II]
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________________ (the "Seller") to _________________________ (the
"Purchaser") of $_____________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 1997-3 Class [R-I][R-II] (the "Certificates"),
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as December 1, 1997 among BA Mortgage
Securities, Inc., as depositor (the "Depositor"), Bank of America National Trust
and Savings Association and Bank of America, Federal Savings Bank, as master
servicers (together, the "Master Servicers"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Seller hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the Certificate
by the Seller to the Purchaser is or will be to impede the assessment or
collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Master Servicers a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit I-1. The Seller does
not know or believe that any representation contained therein is false.
<PAGE> 183
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Seller understands that the transfer of a Residual
Certificate may not be respected for United States income tax purposes (and the
Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Transferee is
not both a United States Person and a Permitted Transferee.
Very truly yours,
_________________________________________
(Seller)
By:______________________________________
Name:____________________________________
Title:___________________________________
I-2-2
<PAGE> 184
EXHIBIT J
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1997-3
RE: Mortgage Pass-Through Certificates,
Series 1997-3, Class B
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate
Principal Balance of Mortgage Pass-Through Certificates, Series 1997-3, Class __
(the "Certificates"), issued pursuant to the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of December 1, 1997 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America
National Trust and Savings Association and Bank of America, Federal Savings
Bank, as master servicers (together, the "Master Servicers"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not
been and will not be registered or qualified under the Securities Act of
1933, as amended (the "Act") or any state securities law, (b) the
Depositor is not required to so register or qualify the Certificates, (c)
the Certificates may be resold only if registered and qualified pursuant
to the provisions of the Act or any state securities law, or if an
exemption from such registration and qualification is available, (d) the
Pooling and Servicing Agreement contains restrictions regarding the
transfer of the Certificates and (e) the Certificates will bear a legend
to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any
<PAGE> 185
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters, and, in particular, in such matters related to
securities similar to the Certificates, such that it is capable of
evaluating the merits and risks of investment in the Certificates, (b)
able to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) a copy of the Private Placement Memorandum,
dated December [__], 1997, relating to the Certificates, (b) a copy of the
Pooling and Servicing Agreement and (c) such other information concerning
the Certificates, the Mortgage Loans and the Depositor as has been
requested by the Purchaser from the Depositor or the Seller and is
relevant to the Purchaser's decision to purchase the Certificates. The
Purchaser has had any questions arising from such review answered by the
Depositor or the Seller to the satisfaction of the Purchaser. If the
Purchaser did not purchase the Certificates from the Seller in connection
with the initial distribution of the Certificates and was provided with a
copy of the Private Placement Memorandum (the "Memorandum") relating to
the original sale (the "Original Sale") of the Certificates by the
Depositor, the Purchaser acknowledges that such Memorandum was provided to
it by the Seller, that the Memorandum was prepared by the Depositor solely
for use in connection with the Original Sale and the Depositor did not
participate in or facilitate in any way the purchase of the Certificates
by the Purchaser from the Seller, and the Purchaser agrees that it will
look solely to the Seller and not to the Depositor with respect to any
damage, liability, claim or expense arising out of, resulting from or in
connection with (a) error or omission, or alleged error or omission,
contained in the Memorandum, or (b) any information, development or event
arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Certificate, any interest in any Certificate or any
other similar security to any person in any manner, (b) solicit any offer
to buy or to accept a pledge, disposition of other transfer of any
Certificate, any interest in any Certificate or any other similar security
from any person in any manner, (c) otherwise approach or negotiate with
respect to any Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner or (e)
take any other action, that (as to any of (a) through (e) above) would
constitute a distribution of any Certificate under the Act, that would
render the disposition of any Certificate a violation of Section 5 of the
Act or any state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser
J-2
<PAGE> 186
will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
6. The Purchaser
(a) is not an employee benefit or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (a Plan"), or any
other person (including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan within the
meaning of the Department of Labor ("DOL") regulation at 29 C.F.R.
Section2510.3-101; or
(b) is an insurance company, the source of funds to be used
by it to purchase the Certificates is an "insurance company general
account" (within the meaning of DOL Prohibited Transaction Class Exemption
("PTCE") 95-60), and the purchase is being made in reliance upon the
availability of the exemptive relief afforded under Sections I and III of
PTCE 95-60.
7. The Purchaser is not a non-United States person.
` Very truly yours,
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
J-3
<PAGE> 187
EXHIBIT K
FORM OF TRANSFEROR REPRESENTATION LETTER
_______, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Bank of America National Trust and
Savings Association
555 California Street
San Francisco, California 94104
Bank of America, Federal Savings Bank
555 California Street
San Francisco, California 94104
Attention: BA Mortgage Securities, Inc., Series 1997-3
Re: Mortgage Pass-Through Certificates,
Series 1997-3, Class [ ]
Ladies and Gentlemen:
In connection with the sale by ________(the "Seller") to
_______________(the "Purchaser") of $______ Initial Certificate Principal
Balance of Mortgage Pass-Through Certificates, Series 1997-3, Class (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of December 1, 1997 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America
National Trust and Savings Association and Bank of America, Federal Savings
Bank, as master servicers (together, the "Master Servicers"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and the
Trustee that:
<PAGE> 188
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
_________________________________________
(Seller)
By:______________________________________
Name:____________________________________
Title:___________________________________
K-2
<PAGE> 189
EXHIBIT L
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
The undersigned seller, as registered holder (the "Seller"), intends
to transfer the Rule 144A Securities described above to the undersigned buyer
(the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Depositor, the Trustee and the Master Servicers pursuant to Section 5.02 of the
Pooling and Servicing Agreement, dated as of December 1, 1997 among BA Mortgage
Securities I, Inc., as Depositor, Bank of America National Trust and Savings
Association and Bank of America, Federal Savings Bank, as Master Servicers and
Bankers Trust Company of California, N.A., as Trustee, as follows:
a. The Buyer understands that the Rule 144A Securities have
not been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A Securities.
<PAGE> 190
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the Seller,
the Trustee or the Master Servicers.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security with,
any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action,
that would constitute a distribution of the Rule 144A Securities under the
1933 Act or that would render the disposition of the Rule 144A Securities
a violation of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize any
person to act, in such manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that
term is defined in Rule 144A under the 1933 Act and has completed either
of the forms of certification to that effect attached hereto as Annex 1 or
Annex 2. The Buyer is aware that the sale to it is being made in reliance
on Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own
account or the accounts of other qualified institutional buyers,
understands that such Rule 144A Securities may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with, the
Seller, the Trustee, Master Servicers and the Depositor that either (1) the
Buyer is (A) not an employee benefit plan (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or a
plan (within the meaning of Section 4975(e)(1) of the Internal Revenue Code of
1986 ("Code")), which (in either case) is subject to ERISA or Section 4975 of
the Code (both a "Plan"), and (B) is not directly or indirectly purchasing the
Rule 144A Securities on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with "plan assets" of a Plan, or (2) the Buyer understands
that registration of transfer of any Rule 144A Securities to any Plan, or to any
Person acting on behalf of or purchasing any such Certificate with "plan assets"
of any Plan, may not be made unless such Plan or Person, including the Buyer,
delivers an opinion of its counsel, addressed and satisfactory to the Trustee,
the Depositor and the Master Servicers, to the effect that the purchase and
holding of the Rule 144A Securities by, on behalf of or with "plan assets" of
such Plan is permissible under applicable law, will not constitute or result in
any non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code, and will not subject the Depositor, the Master Servicers or the
Trustee to any obligation or liability (including liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the Pooling and
Servicing Agreement.
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4. This document may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document
as of the date set forth below.
_________________________________ ____________________________________
Print Name of Seller Print Name of Buyer
By:______________________________ By:_________________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.______________________________ No._________________________________
Date:____________________________ Date:_______________________________
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ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings association or similar institution), limited liability
company, Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
___ Savings Association. The Buyer (a) is a savings association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined
by a State or Federal authority having supervision over any such
institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the
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<PAGE> 193
insurance commissioner or a similar official or agency of a State or territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained
by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees, or (b) employee
benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a trust fund that
includes as participants individual retirement accounts or H.R. 10
plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
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5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
_________________________________________
Print Name of Buyer
By: _____________________________________
Name:
Title:
Date:____________________________________
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<PAGE> 195
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.
____ The Buyer owned $___________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
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<PAGE> 196
5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will continue
to rely on the statements made herein because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase for
the Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
_________________________________________
Print Name of Buyer
By:______________________________________
Name:_________________________________
Title:________________________________
IF AN ADVISER:
_________________________________________
Print Name of Buyer
Date:____________________________________
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<PAGE> 197
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
- ------------------------------
- ------------------------------
- ------------------------------
Attention: BA Mortgage Securities, Inc., Series 1997-3
Re: Mortgage Pass-Through Certificates, Series 1997-3 Assignment of
Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
_________________ (the "Trustee") to _______________________ (the "Lender") of
_______________ (the "Mortgage Loan") pursuant to Section 3.13(d) of the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1997 among BA Mortgage Securities, Inc., as depositor, Bank of
America National Trust and Savings Association and Bank of America, Federal
Savings Bank, as master servicers (together, the "Master Servicers"), and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"). All terms
used herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Lender hereby certifies, represents and
warrants to, and covenants with, the Master Servicers and the Trustee that:
(i) the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
<PAGE> 198
(iii) the Mortgage Loan following the proposed assignment will be modified
to have a rate of interest at least 0.25 percent below or above the rate of
interest on such Mortgage Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the related
Mortgage Loan.
Very truly yours,
_________________________________________
(Lender)
By:______________________________________
Name:____________________________________
Title:___________________________________
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<PAGE> 199
EXHIBIT N
Schedule of Mortgage Loan Exceptions
<PAGE> 200
EXHIBIT O
Information Available for Reports to Certificateholders
Deal Name
Remit Date
Loan Number
City
State
Zip Code
Property Type (SFR, CONDO, etc.)
Occupancy Status (Owner, Investor, etc.)
Loan Purpose (Purchase, Refi, etc.)
Loan Type
Balloon Flag
Loan Status (Current, Foreclosure, REO, Bankrupt)
Original Term of Loan
Amortization Term
First Payment of Loan
Maturity Date
Appraisal Value
Original LTV
Original Principal Balance
Initial Principal Balance
Previous Month's Balance
Current Balance
Prepay Date
Prepay Status (Loan has prepaid, liquidated or repurchased by the servicer)
Original Scheduled P&I
Initial Scheduled P&I
Scheduled P&I
Scheduled Interest Amount
Scheduled Principal Amount
Curtailment
Original Note Rate
Initial Note Rate
Current Note Rate
Next Note Rate
Current Servicing Rate
Next Servicing Rate
Current Pass-Through Rate
Next Pass-Through Rate
Paid to Date
Current Payment Date
Next Payment Date
Index Type
<PAGE> 201
Gross Margin
Original Index
Current Index Rate
Next Index Rate
First Rate Adjust
Current Interest Adjust Date
Next Interest Adjust Date
Adjust Frequency Rate
Cap Rate
Maximum Interest Rate
Minimum Interest Rate
First Payment Adjust Date
Current Payment Adjust Date
Next Payment Adjust Date
Adjust Frequency Payment
Cap Payment
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<PAGE> 202
EXHIBIT P
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time,
the "Agreement"), dated [ ] with respect to the obligations of the Owner and
the Custodian, and as of the Closing Date under the Pooling Agreement (defined
below) with respect to the obligations of the other parties hereto, by and among
Bankers Trust Company of California, N.A., as Trustee (including its successors
under the Pooling Agreement defined below, the "Trustee"), BA MORTGAGE
SECURITIES, INC. (together with any successor in interest, the "Depositor"),
Bank of America National Trust and Savings Association [(together with any
successor in interest, the "Owner")] and Bank of America, Federal Savings Bank
[(together with any successor in interest, the "Owner")] (each, a "Master
Servicer," and together with any of their respective successors in interest or
successors under the Pooling Agreement referred to below, the "Master
Servicers"), and (together with any successor in interest or any successor
appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T :
WHEREAS, the Owner owns certain Mortgage Loans and the related Mortgage
Files (each as defined below);
WHEREAS, the Owner intends to sell the Mortgage Loans to the Depositor;
WHEREAS, the Depositor, the Master Servicers and the Trustee intend to
enter into a Pooling and Servicing Agreement dated as of December 1, 1997,
relating to the issuance of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1997-3 (as in effect on the Closing Date thereunder, the
"Original Pooling Agreement," and as amended and supplemented from time to time,
the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Owner, prior to
the Closing Date under the Pooling Agreement, and thereafter for the Trustee,
for the purposes of receiving and holding certain documents and other
instruments delivered by the Depositor and the Master Servicers under the
Pooling Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the Trustee, the Depositor, the Master
Servicers and the Custodian hereby agree as follows:
<PAGE> 203
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the following meanings
or, if not defined below, shall have the meanings assigned in the Original
Pooling Agreement, unless otherwise required by the context herein.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient when recorded under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage Loan, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county, if permitted by law.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of California or the State of
Minnesota are required or authorized by law or executive order to be closed.
Delivery Date: The date, prior to the Closing Date, upon which the Owner
delivers Mortgage Files to the Custodian pursuant to this Agreement.
Final Certification: A final certification in the form attached hereto as
Exhibit Two delivered by the Custodian to the Owner or the Trustee pursuant to
Section 2.2(b) or Section 2.02 of the Pooling Agreement, respectively, with a
Mortgage Loan Schedule Attached thereto.
Initial Certification: An initial certification in the form attached
hereto as Exhibit One delivered by the Custodian to the Owner pursuant to
Section 2.2(a) with a Mortgage Loan Schedule attached thereto.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents pertaining to a particular Mortgage
Loan held by the Custodian pursuant to this Agreement, which shall include:
(i) The original Mortgage Note, endorsed in blank and showing an
unbroken chain of endorsements from the originator thereof to the Person
endorsing it in blank, or, in the event of any Mortgage Note, the original
of which was permanently lost or destroyed and has not been replaced, a
copy of a duplicate original of the Mortgage Note, together with an
original lost note affidavit from the originator of the related Mortgage
Loan stating that the original Mortgage Note was lost, misplaced or
destroyed, together with a copy of the related Mortgage Note;
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(ii) The original Mortgage with evidence of recording indicated
thereon or a copy of the Mortgage certified by the public recording office
in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in blank;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Person assigning it in blank or a copy of such intervening assignment
or assignments of the Mortgage certified by the public recording office in
which such intervening assignment or assignments have been recorded;
(v) The original of each modification or assumption agreement, if
any, relating to such Mortgage Loan or a copy of each modification or
assumption agreement certified by the public recording office in which
such document has been recorded; and
(vi) the mortgage title insurance policy, title commitment, binder
or attorney's opinion of title and abstract of title, which in each case
may be a copy of the original thereof.
With respect to any endorsement described in item (i), the endorsement may
be contained on an allonge.
The Mortgage Files shall also contain originals or certified copies of
powers of attorney for any party executing any instrument or document set forth
in items (i) through (v) above pursuant to delegated authority.
Mortgage Loan Schedule: The list of the Mortgage Loans on computer
readable tape, containing the information set forth on Exhibit Three attached
hereto (as amended from time to time to reflect the removal or the addition of
Mortgage Loans pursuant to Section 2.3), which list shall set forth at a minimum
the following information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Owner's Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property including state
and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate; and
(vi) the principal balance of the Mortgage Loan at origination.
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Such schedule may consist of multiple reports that collectively set forth all of
the above information.
Mortgage Loans: The mortgage loans identified on the Mortgage Loan
Schedule (as amended from time to time to reflect the removal or the addition of
Mortgage Loans pursuant to Section 2.3).
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate at origination
borne by the related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Request for Release: A request for release of Mortgage Files and receipt
in the form attached hereto as Exhibit Four delivered prior to the Closing Date
by the Owner and on or after the Closing Date, by the applicable Master
Servicer, to the Custodian pursuant to Section 2.3.
Servicing Officer: Any officer of the Owner involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Custodian by the Owner, as such list may from time to time be amended.
Capitalized terms used in this Agreement shall have the following meanings
or, if not defined below, shall have the meanings assigned in the Original
Pooling Agreement, unless otherwise required by the context herein.
ARTICLE II
Delivery and Custody of Mortgage Files
Section 2.1. Delivery of Mortgage Files; Custodian to Act as Agent;
Acceptance of Mortgage Files. The Owner, from time to time, will cause to be
delivered to the Custodian on each Delivery Date the Mortgage Files relating to
the Mortgage Loans identified on the Mortgage Loan Schedule for such Delivery
Date. The Custodian, as the duly appointed agent of the Owner for these
purposes, declares that it will hold such Mortgage Files as agent for the Owner,
in trust, for the use and benefit of the Owner and its assigns. The Custodian
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<PAGE> 206
acknowledges that the Owner intends to sell the Mortgage Loans to the Depositor,
and the Depositor intends assign the Mortgage Loans to the Trustee, on the
Closing Date, and the Custodian agrees that it will hold the Mortgage Files as
agent for the Trustee, in trust for the use and benefit of all present and
future Certificateholders, upon receipt of written notice from a Servicing
Officer of such sale and assignment.
Section 2.2. Review of Mortgage Files.
(a) Within two (2) Business Days following each Delivery Date, the
Custodian shall deliver to the Owner an Initial Certification evidencing receipt
of a Mortgage File for each Mortgage Loan listed on the Schedule attached hereto
(the "Mortgage Loan Schedule").
(b) Within 10 days following each Delivery Date, (and within 45 days of
the Closing Date) the Custodian agrees, for the benefit of the Owner and its
assigns and the Trustee, to review each Mortgage File to ascertain that (i) the
documents required to be delivered in the definition of Mortgage File 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 in items
(i)-(vi) of the definition of Mortgage Loan Schedule is correct. If the
Custodian finds any document or documents constituting a part of a Mortgage File
to be missing or defective in any material respect, the Custodian shall promptly
so notify the Owner and its assigns, or the Trustee if after the Closing Date.
Upon completion of such review, the Custodian shall promptly deliver to the
Owner, or the Trustee if after the Closing Date, a Final Certification with
respect to the Mortgage Loans on the related Mortgage Loan Schedule, with any
exceptions listed on an attachment thereto. The Custodian shall be under no duty
or obligation to inspect, review or examine said documents, instruments,
certificates or other papers to verify (i) the validity, legality,
enforceability, sufficiency, due authorization, recordability or genuineness of
any document in any Mortgage File or of any of the Mortgage Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
(c) The Mortgage File review set forth in Section 2.2 (b) shall also
constitute the Mortgage File review under Section 2.02 of the Pooling Agreement.
The Trustee shall deliver a certification in the form of Exhibit R to the
Pooling Agreement in sole reliance upon receipt from the Custodian of the
Section 2.2(b) Final Certification. Trustee shall not be entitled to any
compensation in addition to that set forth in the Pooling Agreement in
connection with the delivery of any such certification pursuant to the Pooling
Agreement unless the Trustee is requested to perform an additional review of the
Mortgage Files.
Section 2.3. Custodian to Cooperate; Release of Mortgage Files; Completion
of Endorsements and Assignments.
(a) Upon receipt by the Custodian of a Request for Release, which
Request for Release shall have attached thereto a revised Mortgage Loan Schedule
reflecting the deletion of the Mortgage Files requested by such Request for
Release (if such Request for Release related to less than all of the Mortgage
Files), the Custodian shall deliver the Mortgage Files requested by the Owner to
the Owner or the Person designated by the Owner in such Request for Release
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within five Business Days of receipt of such Request for Release. Custodian
shall comply with any instructions regarding the completion of Assignments of
Mortgages and endorsement of Mortgage Notes set forth in any such Request for
Release prior to making such delivery.
(b) Upon the repurchase or substitution of any Mortgage Loan pursuant to
Article II of the Pooling Agreement or payment in full of any Mortgage Loan, or
the receipt by a Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the applicable Master Servicer
shall immediately notify the Custodian by a certification (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Custodial Account pursuant to Section 3.07 of the Pooling Agreement have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Mortgage File. The Custodian agrees, upon receipt of such
certification and request, promptly to release to the applicable Master Servicer
the related Mortgage File. The applicable Master Servicer shall deliver to the
Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Qualified
Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or foreclosures of
any Mortgage Loan, including, for this purpose, collection under any Primary
Mortgage Insurance Policy or any Mortgage Pool Insurance Policy, the related
Master Servicer shall deliver to the Custodian a certificate of a Servicing
Officer requesting that possession of the Mortgage File be released to such
Master Servicer and certifying as to the reason for such release and that such
release will not invalidate any insurance coverage provided in respect of the
Mortgage Loan under any of the Required Insurance Policies. With such
certificate, the applicable Master Servicer shall deliver to the Custodian a
trust receipt signed by a Servicing Officer on behalf of such Master Servicer,
and upon receipt of the foregoing, the Custodian shall deliver the Mortgage File
to such Master Servicer. The applicable Master Servicer shall cause each
Mortgage File so released to be returned to the Custodian when the need therefor
by such Master Servicer no longer exists, unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or (ii) the Mortgage File has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and such Master Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File was delivered and the purpose or purposes of
such delivery. In the event of the liquidation of a Mortgage Loan, the Custodian
shall deliver the Trust Receipt with respect thereto to the applicable Master
Servicer upon deposit of the related Liquidation Proceeds in the Custodial
Account as provided in the Pooling Agreement.
Section 2.5. Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or warranty
made by a Master Servicer as set forth in the Pooling Agreement or by a Seller
in a Mortgage Loan Purchase Agreement with respect to a Mortgage Loan relating
to a Mortgage File, the Custodian shall give prompt written notice to the
Depositor, the applicable Master Servicer and the Trustee.
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Section 2.6. Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect to
any Mortgage Loan subject to this Agreement in accordance with the terms and
provisions of the Pooling Agreement, the applicable Master Servicer shall notify
the Custodian that such assumption or substitution agreement has been completed
by forwarding to the Custodian the original of such assumption or substitution
agreement, which shall be added to the related Mortgage File and, for all
purposes, shall be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Owner and its Assigns.
With respect to each Mortgage Note, Mortgage and other documents constituting
each Mortgage File which are delivered to the Custodian, the Custodian is
exclusively the bailee and agent of Owner, until the Custodian has received the
notice described in Section 2.1 hereof, and thereafter as the exclusive bailee
and agent of the Trustee as the Owner's assign, and has no instructions to hold
any Mortgage Note or Mortgage for the benefit of any person other than the Owner
and its assigns, holds such documents for the benefit of the Owner and its
assigns and undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.3 of this Agreement, after receipt of the notice
described in Section 2.1 on the Closing Date no Mortgage Note, Mortgage or other
document constituting a part of a Mortgage File shall be delivered by the
Custodian to the Depositor or either Master Servicer or otherwise released from
the possession of the Custodian.
Section 3.2. Indemnification. The Depositor hereby agrees to indemnify and
hold the Custodian harmless from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Custodian may incur or with
which the Custodian may be threatened by reason of its acting as custodian under
this Agreement, including indemnification of the Custodian against any and all
expenses, including reasonable attorney's fees if counsel for the Custodian has
been approved by the Depositor, and the cost of defending any action, suit or
proceedings or resisting any claim. Notwithstanding the foregoing, it is
specifically understood and agreed that in the event any such claim, liability,
loss, action, suit or proceeding or other expense, fee or charge shall have been
caused by reason of any negligent act, negligent failure to act or willful
misconduct on the part of the Custodian, or which shall constitute a willful
breach of its duties hereunder, the indemnification provisions of this Agreement
shall not apply.
Section 3.3. Indemnification by the Custodian. The Custodian agrees to
indemnify the Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses, including attorney's fees, of any kind whatsoever
which may be imposed on, incurred by or asserted against the Trustee as the
result of any act or omission in any way relating to the maintenance and custody
by the Custodian of Mortgage Files relating to the Mortgage Loans; provided,
however, that the Custodian shall not be liable for consequential damages of any
kind
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<PAGE> 209
or any portion of such liabilities, obligations, losses, damages, payments or
costs due to the gross negligence or willful misconduct of the Trustee.
Section 3.4. Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.
Section 3.5. Custodian's Fees and Expenses. In consideration for the
services rendered by the Custodian hereunder, until the Closing Date the Owner,
and thereafter each Master Servicer with respect to the fees and expenses
relating to the Mortgage Loans serviced by it, shall pay such fees and expenses
of the Custodian as are set forth in that certain letter agreement dated August
21, 1997 between the Custodian and the Owner.
Section 3.6. Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans by giving 30 days written notice to the other parties to this Agreement.
Upon receiving such notice of resignation, the Owner, if such notice is received
prior to the Closing Date or the Trustee if such notice is received on or after
the Closing Date, shall either take custody of the Mortgage Files itself and
give prompt notice thereof to the Depositor, the Master Servicers and the
Custodian, or promptly appoint a successor Custodian by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian (with the prior approval of
the Depositor and the Master Servicers in the case of the Trustee). If the Owner
or the Trustee, as applicable, shall not have taken custody of the Mortgage
Files and no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian.
The Owner and its assigns may remove the Custodian at any time. In such
event, the Owner or its assigns shall appoint, or petition a court of competent
jurisdiction to appoint, a successor Custodian hereunder. Any successor
Custodian appointed by the Trustee shall be a depository institution subject to
supervision or examination by federal or state authority and shall be able to
satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Master Servicers or the Depositor.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.5 shall become
effective upon acceptance of appointment by the successor Custodian. The Trustee
shall give prompt notice to the Depositor and the Master Servicers of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Depositor and the
Master Servicers.
In the event that the Trustee becomes the successor Custodian, the Trustee
shall review the Mortgage Files and shall be entitled to such fees and expenses
as agreed upon between the Owner and the Trustee.
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<PAGE> 210
If the Owner or the Trustee removes the Custodian, all costs of the
transfer of the Mortgage Files to the Owner, the Trustee, or the successor
Custodian, as applicable, shall be paid by the Owner, if prior to the Closing
Date, or otherwise by the Trust Fund. If the Custodian resigns, the Custodian
shall bear the costs of the transfer of the Mortgage Files to the Owner, the
Trustee or the successor Custodian, as applicable.
Section 3.7. Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 3.8. Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $10,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV
Miscellaneous Provisions
Section 4.1. Notices. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram, telex
or facsimile, or by registered or certified mail, postage prepaid, return
receipt requested, at the addresses specified on the signature page hereof
(unless changed by the particular party whose address is stated herein by
similar notice in writing), in which case the notice will be deemed delivered
when received.
Section 4.2. Amendments. No modification or amendment of or supplement to
this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and neither the Depositor, the Master Servicers
nor the Trustee shall enter into any amendment hereof that is not permitted by
the Pooling Agreement. The Trustee shall give prompt notice to the Custodian of
any amendment or supplement to the Pooling Agreement and furnish the Custodian
with written copies thereof.
Section 4.3. Governing Law. This Agreement shall be deemed a contract made
under the laws of the State of California and shall be construed and enforced in
accordance with and governed by the laws of the State of California.
Section 4.4. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
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<PAGE> 211
such recordation to be effected by the applicable Master Servicer and at its
expense on direction by the Trustee (pursuant to the request of holders of
Certificates evidencing undivided interests in the aggregate of not less than
25% of the Trust Fund), but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to such Master Servicer to the effect that the
failure to effect such recordation is likely to materially and adversely affect
the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 4.6 No Conflict. In the event of any conflict between the terms of
this Agreement and the terms of the Pooling Agreement, the terms of the Pooling
Agreement shall prevail.
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<PAGE> 212
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
Address: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:______________________________________
Name:
Title:
Address: BA MORTGAGE SECURITIES, INC.,
as Depositor
By:______________________________________
Name:
Title:
Address: BANK OF AMERICA, FEDERAL SAVINGS
BANK,
as Owner and Master Servicer
By:______________________________________
Name:
Title:
Address: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Master Servicer
By:______________________________________
Name:
Title:
Address:
____________________________
as Custodian
By:______________________________________
Name:
Title:
P-11
<PAGE> 213
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and for
said State, personally appeared _______________________, known to me to be a
______________ of Bank of America [National Trust and Savings Association] [,
Federal Savings Bank], a [national banking association] [federal savings bank]
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said [association] [federal savings bank] and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
[SEAL]
<PAGE> 214
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the 18th day of December, 1997, before me, a notary public in and for
said State, personally appeared Shaun M. Maguire, known to me to be an Assistant
Treasurer of Bank of America, Federal Savings Bank, the federal savings bank
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 215
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the 18th day of December, 1997, before me, a notary public in and for
said State, personally appeared David Co, known to me to be an Assistant Vice
President of Bankers Trust Company of California, N.A., the national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 216
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the 18th day of December, 1997, before me, a notary public in and for
said State, personally appeared David James, known to me to be a Vice President
of BA Mortgage Securities, Inc., one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 217
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN FRANCISCO )
On the 18th day of December, 1997, before me, a notary public in and for
said State, personally appeared David M. Grout, known to me to be a Vice
President of Bank of America National Trust and Savings Association, the
national banking association that executed the within instrument, and also known
to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 218
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
_____________, 1997
[name and address
of Owner]
Re: Custodial Agreement dated as of __________, 1997, by and among
Bankers Trust Company of California, N.A., BA Mortgage Securities,
Inc., Bank of America National Trust and Savings Association, Bank
of America, Federal Savings Bank and First Trust, National
Association, Mortgage Pass-Through Certificates, Series 1997-3
Ladies and Gentlemen:
In accordance with Section 2.2(a) of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File
with respect to each Mortgage Loan listed in the Mortgage Loan Schedule attached
hereto, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
FIRST TRUST, NATIONAL
ASSOCIATION, as Custodian
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE> 219
EXHIBIT TWO
FORM OF CUSTODIAN FINAL CERTIFICATION
________________ ____, 1997
[name and address
of Owner or Trustee,
as applicable]
Re: Custodial Agreement dated as of __________, 1997, by and among
Bankers Trust Company of California, N.A., BA Mortgage Securities,
Inc., Bank of America National Trust and Savings Association, Bank
of America, Federal Savings Bank and First Trust, National
Association, Mortgage Pass-Through Certificates, Series 1997-3
Ladies and Gentlemen:
In accordance with Section 2.2(b) of the above-captioned Custodial
Agreement and Section 2.02 of the Pooling Agreement, the undersigned, as
Custodian, hereby certifies that it has received a Mortgage File with respect to
each Mortgage Loan listed in the Mortgage Loan Schedule attached hereto
containing with respect to each such Mortgage Loan, with any exceptions listed
on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank and showing an
unbroken chain of endorsements from the originator thereof to the Person
endorsing it in blank;
(ii) The original Mortgage with evidence of recording indicated
thereon or a copy of the Mortgage certified by the public recording office
in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in blank;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Person assigning it in blank or a copy of such intervening assignment
or assignments of the Mortgage certified by the public recording office in
which such intervening assignment or assignments have been recorded;
<PAGE> 220
(v) The original of each modification or assumption agreement, if
any, relating to such Mortgage Loan or a copy of each modification or
assumption agreement certified by the public recording office in which
such document has been recorded; and
(vi) the original mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract of title.
With respect to any endorsement described in item (i), the endorsement may
be contained on an allonge.
Custodian hereby further certifies that it has reviewed each Mortgage File
and the Mortgage Loan Schedule attached hereto and has determined that (i) the
documents required to be delivered in the definition of Mortgage File 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 in items
(i)-(vi) of the definition of Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
FIRST TRUST, NATIONAL
ASSOCIATION, as Custodian
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE> 221
EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
<PAGE> 222
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
To: [Address]
Re: Custodial Agreement dated as of __________, 1997, by and among Bankers
Trust Company of California, N.A., BA Mortgage Securities, Inc., Bank of
America National Trust and Savings Association, Bank of America, Federal
Savings Bank and First Trust, National Association, Mortgage Pass-Through
Certificates, Series 1997-3
In connection with the administration of the Mortgage Loans held by you as
the Custodian on behalf of the [Owner][Trustee], we request the release, and
acknowledge receipt, of the Mortgage File/[specify documents] for the Mortgage
Loan described below. Send file/documents to:
------------------------------
------------------------------
------------------------------
Attn: ________________________
Mortgagor's Name, Address & Zip Code:
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
Mortgage Loan Number: __________________
<PAGE> 223
Upon our return of the above documents to you as the Custodian, please
acknowledge your receipt by signing in the space indicated below, and returning
this form.
[Name of Owner or Master Servicer, as applicable]
By:______________________________________________
Name: [Name of Servicing Officer]
--------------------------------------------
Title:___________________________________________
Date:____________________________________________
Acknowledgement of Documents returned to the Custodian:
FIRST TRUST, NATIONAL ASSOCIATION, as
Custodian
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
Date:____________________________________________
<PAGE> 224
EXHIBIT Q
Trustee's Certification
[ ], 1997
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, CA 94104
Re: Pooling and Servicing Agreement dated December 1, 1997 by and
between Bank of America National Trust and Savings Association, BA
Mortgage Securities, Inc., Bank of America, Federal Savings Bank,
and Bank of America National Trust and Savings Association
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that it has
received a mortgage file with respect to each Mortgage Loan listed in the
Mortgage Loan Schedules attached hereto containing with respect to each such
Mortgage Loan, with any exceptions listed on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank and showing an
unbroken chain of endorsements from the originator thereof to the Person
endorsing it in blank, or, in the event of any Mortgage Note, the original
of which was permanently lost or destroyed and has not been replaced, a
copy of a duplicate original of the Mortgage Note, together with an
original lost note affidavit from the originator of the related Mortgage
Loan stating that the original Mortgage Note was lost, misplaced or
destroyed, together with a copy of the related Mortgage Note;
(ii) The original Mortgage with evidence of recording indicated
thereon or a copy of the Mortgage certified by the public recording office
in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in blank ;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Person assigning it in blank or a copy of such intervening assignment
or assignments of the Mortgage
<PAGE> 225
certified by the public recording office in which such assignment or
intervening assignments have been recorded;
(v) The original of each modification or assumption agreement, if
any, relating to such Mortgage Loan or a copy of each modification or
assumption agreement certified by the public recording office in which
such document has been recorded; and
(vi) The original mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract title.
With respect to any endorsement described in item (i), the endorsement may
be contained on an allonge.
The Trustee further certifies [based solely on receipt by it of the Final
Certificate under Section 2.2(b) of the Custodial Agreement] that [it][the
Custodian on its behalf] has reviewed each Mortgage File and the Mortgage Loan
Schedules attached hereto and has determined that (i) the documents required to
be delivered in the definition of Mortgage File 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 in items (i)-(vi) of the
definition of Mortgage Loan Schedule is correct.
The Trustee shall be under no duty of obligation to inspect, review or
examine said documents, instruments, certificates or other papers to verify (i)
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness or any documents in any Mortgage Files or any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Q-2
