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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 12, 1998
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1998-1
(Exact name of registrant as specified in its charter)
New York 333-30759-2 Application Pending
(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Bankers Trust Company
3 Park Plaza, 16th Floor
Irvine, CA 92614
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (714) 253-7575
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
AMRESCO Residential Securities Corporation registered the issuance of up
to $4,000,000,000.00 principal amount of Mortgage Loan Pass-Through Certificates
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Act"), by a Registration Statement on Form S-3
(Registration File No. 333-30759) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1998-1 (the "Registrant" or the "Trust") issued
$1,000,000,000 in aggregate principal amount of its Mortgage Loan Pass-Through
Certificates, Series 1998-1 (the "Certificates"), on February 12, 1998. This
Current Report on Form 8-K is being filed to satisfy an undertaking to file
copies of certain agreements executed in connection with the issuance of the
Certificates, the forms of which were filed as Exhibits to the Registration
Statement.
The Certificates were issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") attached hereto as Exhibit 4.1, dated as
of February 1, 1998, among AMRESCO Residential Securities Corporation (the
"Depositor"), AMRESCO Residential Capital Markets, Inc. (the "Seller"), Advanta
Mortgage Corp. USA, as a Servicer, Ameriquest Mortgage Company, as a Servicer
and Wendover Financial Services Corporation, as a Servicer (collectively, the
"Servicers") and Bankers Trust Company, in its capacity as trustee (the
"Trustee"). The Certificates consist of the following classes: the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7 Certificates
(the "Class A Certificates"), Class M-1F and Class M-1A Certificates (the "Class
M-1 Certificates"), Class M-2F and Class M-2A Certificates (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), the Class B-1F and Class B-1A Certificates (the "Class B-1
Certificates"), Class C-FIO and Class C-AIO Certificates (the "Class C-IO
Certificates"), Class S Interest Only Certificates (the "Class S Certificates"),
the Class D Certificates (the "Class D Certificates") and the Class R
Certificates (the "Class R Certificates" and together with the Class A
Certificates, the Mezzanine Certificates, the Class B-1 Certificates, the Class
C-IO Certificates, the Class S Certificates and the Class D Certificates, the
"Certificates"). Only the Class A Certificates, the Mezzanine Certificates and
the Class B-1 Certificates (collectively, the "Offered Certificates") were
offered pursuant to the Registration Statement. The Certificates evidence, in
the aggregate, 100% of the undivided beneficial ownership interests in the
Trust.
The assets of the Trust initially include a pool of closed-end mortgage
loans (the "Mortgage Loans") secured by mortgages or deeds of trust primarily on
one-to-four family residential properties. Interest distributions on the Offered
Certificates are based on the Certificate Principal Balance thereof and the
applicable Pass-Through Rate thereof. The Pass-Through Rates for the Offered
Certificates are as follows: Class A-1, 6.51%; Class A-2, 6.30%; Class A-3,
6.40%; Class A-4, 6.55%; Class A-5, 7.07%; Class A-6, 6.51%; Class A-7, a
variable rate as defined in the Pooling and Servicing Agreement; Class M-1F,
7.00%; Class M-1A, a variable rate as defined in the Pooling and Servicing
Agreement; Class M-2F, 7.24%; Class M-2A, a variable rate as defined
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in the Pooling and Servicing Agreement; Class B-1F, 7.61% and Class B-1A, a
variable rate as defined in the Pooling and Servicing Agreement. The Offered
Certificates have initial aggregate principal amounts as follows: Class A-1,
$156,000,000; Class A-2, $25,000,000; Class A-3, $78,500,000; Class A-4,
$22,500,000; Class A-5, $32,000,000; Class A-6, $30,000,000; Class A-7,
$486,000,000; Class M-1F, $22,000,000; Class M-1A, $48,000,000; Class M-2F,
$18,000,000; Class M-2A, $36,000,000; Class B-1F, $16,000,000; and Class B-1A,
$30,000,000.
As of the Cut-Off Date, the Mortgage Loans possessed the characteristics
described in the Prospectus dated September 5, 1997 and the Prospectus
Supplement dated January 28, 1998 filed pursuant to Rule 424(b)(5) of the Act on
February 9, 1998. In such Prospectus Supplement, a commitment was made to
provide a description of the pool of Mortgage Loans, including loans acquired
between the Cut-Off Date (February 1, 1998) and the closing date (February 12,
1998), in a current report on Form 8-K. Such description is attached hereto as
Exhibit 99.1
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated January 28, 1998, between AMRESCO
Residential Securities Corporation and Credit Suisse First
Boston, as Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of February 1, 1998,
among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as
Seller, Advanta Mortgage Corp. USA, as a Servicer, Ameriquest
Mortgage Company, as a Servicer, Wendover Financial Services
Corporation, as a Servicer and Bankers Trust Company, as
Trustee.
99.1 Description of the Mortgage Loans as of the closing date
(February 12, 1998).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1998-1
By: AMRESCO Residential Securities Corporation, as
Depositor
By: /s/ Ronald B. Kirkland
----------------------------------------------
Name: Ronald B. Kirkland
Title: Vice President and
Chief Accounting Officer
Dated: February 27, 1998
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated January 28, 1998, ____
between AMRESCO Residential Securities
Corporation and Credit Suisse First Boston, as
Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of ____
February 1, 1998, among AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO
Residential Capital Markets, Inc., as Seller,
Advanta Mortgage Corp. USA, as a Servicer,
Ameriquest Mortgage Company, as a Servicer,
Wendover Financial Services Corporation, as a
Servicer and Bankers Trust Company, as Trustee.
99.1 Description of the Mortgage Loans as of the ____
closing date (February 12, 1998).
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
CREDIT SUISSE FIRST BOSTON
As Representative of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-1
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-1
January 28, 1998
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AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-1
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-1
UNDERWRITING AGREEMENT
February 28, 1998
Credit Suisse First Boston
as Representative of the
several Underwriters
Eleven Madison Avenue
New York, New York 10010
Dear Ladies and Gentlemen:
AMRESCO Residential Securities Corporation (the "Depositor"), a Delaware
corporation, has authorized the issuance and sale of Mortgage Loan Pass-Through
Certificates, Series 1998-1, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7 (the "Class A Certificates"), Class M-1F and Class
M-1A (the "Class M-1 Certificates"), Class M-2F and Class M-2A (the "Class M-2
Certificates" and, collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B-1F and Class B-1A (the "Class B-1 Certificates"), Class
C-FIO and Class C-AIO Certificates (collectively, the "Class C-IO Certificates"
and, collectively, with the Mezzanine Certificates and the Class B-1
Certificates, the "Subordinate Certificates") and the Class S Certificates, the
Class D and the Class R Certificates (the "Retained Certificates," and,
collectively with the Class A Certificates and the Subordinate Certificates, the
"Certificates"), evidencing interests in a pool of fixed and adjustable rate
mortgage loans (the "Mortgage Loans"). The Mortgage Loans are secured primarily
by first and second deeds of trust or mortgages on one- to four-family
residential properties. The Class A Certificates, the Mezzanine Certificates and
the Class B-1 Certificates (collectively, the "Offered Certificates") will be
publicly offered pursuant to the Prospectus described below. The Class C-IO
Certificates and the Retained Certificates will not be publicly offered.
Only the Offered Certificates are being purchased by the Underwriters
named in Schedule A hereto, and the Underwriters are purchasing, severally, only
the Offered Certificates set forth opposite their names in Schedule A, except
that the amounts purchased by the Underwriters may change in accordance with
Section X of this Agreement. Credit Suisse First Boston is acting as
representative of the several Underwriters and in such capacity, is hereinafter
referred to as the "Representative."
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of February 1, 1998 among the
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller (the "Seller"),
Advanta Mortgage Corp. USA ("Advanta"), Ameriquest Mortgage Company
("Ameriquest") and Wendover Funding Inc. ("Wendover") as Servicers (the
"Servicers") and Bankers Trust Company, as trustee (the "Trustee"). The
Certificates will evidence fractional undivided interests in the trust (the
"Trust"). The assets of the Trust will initially include, among other things, a
pool of fixed and adjustable rate Mortgage Loans (the "Initial Mortgage Loans")
and such amounts as may be held by the Trustee in the Pre-Funding Account (the
"Pre-Funding Account"), the Capitalized Interest Account (the "Capitalized
Interest Account") and any other accounts held by the Trustee for the Trust. The
Initial Mortgage Loans will
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be acquired, in part, from the various Originators pursuant to the various
"Transfer Agreements" as such term is defined in the Pooling and Servicing
Agreement.
On the Closing Date, approximately $223,904,630.81 will be deposited by
the Depositor in the name of the Trustee in the Pre-Funding Account from the
sale of the Certificates. It is intended that additional Mortgage Loans
satisfying the criteria specified in the Pooling and Servicing Agreement (the
"Subsequent Mortgage Loans") will be purchased by the Trust for inclusion in the
Trust from the Depositor from time to time on or before May 8, 1998 from funds
on deposit in the Pre-Funding Account at the time of execution and delivery of
each Subsequent Transfer Agreement ("Subsequent Transfer Agreement"). Funds in
the Capitalized Interest Account will be applied by the Trustee to cover
shortfalls in interest during the Funding Period. The Initial Mortgage Loans
will consist of a pool of Mortgage Loans in an amount of approximately
$657,385,694.41 as of the close of business on February 1, 1998 (the
"Statistical Calculation Date") and a pool of additional Mortgage Loans
delivered by the Depositor for inclusion in the Trust on the Closing Date. The
Depositor expects that the actual pool of Initial Mortgage Loans will represent
approximately $223,904,630.81 as of the Closing Date. The Certificates will
initially represent an undivided ownership interest in the sum of (i) the pool
of Initial Mortgage Loans and (ii) approximately $776,095,369.19 on deposit in
the Pre-Funding Account. A form of the Pooling and Servicing Agreement has been
filed as an exhibit to the Registration Statement (hereinafter defined).
The Offered Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement.
SECTION I. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-30759, has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such Registration Statement have been delivered by the Depositor to the
Representative. As used in this Agreement, "Effective Time" means the date and
the time as of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time; "Registration
Statement" means such registration statement, at the Effective Time, including
any documents incorporated by reference therein at such time; "Basic Prospectus"
means such final prospectus dated September 4, 1997; and "Prospectus Supplement"
means the final prospectus supplement relating to the Offered Certificates, to
be filed with the Commission pursuant to paragraphs (2), (3) or (5) of Rule
424(b) of the Rules and Regulations. "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. Reference made herein to the Prospectus
shall be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date
of the Prospectus, any reference to any amendment or supplement to the
Prospectus shall be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934 (the "Exchange Act") after the date of the
Prospectus and incorporated by reference in the Prospectus, and any reference to
any amendment to the Registration Statement shall be deemed to include any
report of the Depositor filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. The Commission has not issued any order
preventing or suspending the use of the Prospectus. There are no contracts or
documents of the Depositor which are required to be filed as exhibits to the
Registration Statement pursuant to the Securities Act or the Rules and
Regulations which have not been so filed or incorporated by reference therein on
or prior to the
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Effective Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor pursuant to
Section VIII D hereof for filing on Form 8-K.
B. The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations. The Registration Statement, as of the Effective Date thereof
and of any amendment thereto, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus as of its date,
and as amended or supplemented as of the Closing Date does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in writing by the
Underwriters expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change, or any development
involving a prospective material adverse change, in the general affairs,
management, financial condition, or results of operations of the Depositor,
otherwise than as set forth or contemplated in the Prospectus as supplemented or
amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and has all
power and authority necessary to own or hold its properties, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement or any Subsequent
Transfer Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a) which
if determined adversely to the Depositor would have a material adverse effect on
the business or financial condition of the Depositor, (b) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement, the
Certificates, or any Subsequent Transfer Agreement, (c) seeking to prevent the
issuance of
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the Certificates or the consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement, this Agreement or any
Subsequent Transfer Agreement, as the case may be, (d) which might individually
or in the aggregate materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, and this Agreement, the Certificates or any
Subsequent Transfer Agreement or (e) which might adversely affect the federal
income tax attributes of the Certificates as described in the Prospectus.
G. This Agreement has been, and the Pooling and Servicing Agreement and
each Subsequent Transfer Agreement when executed and delivered as contemplated
hereby and thereby will have been, duly authorized, executed and delivered by
the Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement when executed and delivered as contemplated herein, will constitute,
legal, valid and binding instruments enforceable against the Depositor in
accordance with their respective terms, subject as to enforceability to (x)
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law), and (z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the Pooling
and Servicing Agreement and any Subsequent Transfer Agreement by the Depositor
and the consummation of the transactions contemplated hereby and thereby,
compliance with the provisions thereof, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the Depositor is bound or
to which any of the properties or assets of the Depositor or any of its
subsidiaries is subject, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the Depositor, nor
will such actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor (which breach or violation would have
a material adverse effect on the business, operations or financial condition of
the Depositor), or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets. The Depositor is not a party to, bound by, or in breach or
violation of, any indenture or other agreement or instrument, or subject to or
in violation of any statute, order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor, which materially and adversely affects, or is reasonably likely in
the future to materially and adversely affect, (i) the ability of the Depositor
to perform its obligations under this Agreement and the Pooling and Servicing
Agreement or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Depositor.
I. The Depositor has no reason to know that Deloitte & Touche, LLP are not
independent public accountants with respect to the Depositor as required by the
Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute, authenticate,
issue and deliver the Certificates has been duly authorized by the Depositor,
and assuming the Trustee has been duly authorized to do so, when executed,
authenticated, issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Pooling and
Servicing Agreement and any Subsequent
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Transfer Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Certificates by the Underwriters or as have been obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus, and there are no proceedings pending with
respect to which the Depositor has received service of process or, to the best
knowledge of the Depositor threatened, relating to the revocation or
modification of any such license, certificate, authority or permit which if
decided adversely to the Depositor would, singly or in the aggregate, materially
and adversely affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Initial Mortgage Loans
conveyed by the Seller, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Initial
Mortgage Loans, in the Pooling and Servicing Agreement or in the Certificates
being issued pursuant thereto; and (iii) have the power and authority to sell
its interest in the Initial Mortgage Loans to the Trustee and to sell the
Offered Certificates to the Underwriters. Upon execution and delivery of the
Pooling and Servicing Agreement by the Trustee, the Trustee will have acquired
beneficial ownership of all of the Depositor's right, title and interest in and
to the Initial Mortgage Loans. Upon delivery to the Underwriters of the Offered
Certificates, the Underwriters will have good title to the Offered Certificates,
free of any Liens.
N. At the time of execution and delivery of any Subsequent Transfer
Agreement, the Depositor will: (i) have good title to the Subsequent Mortgage
Loans conveyed by the Seller, free and clear of any Liens; (ii) not have
assigned to any person any of its right or title in the Subsequent Mortgage
Loans or in the Pooling and Servicing Agreement; and (iii) have the power and
authority to sell the Subsequent Mortgage Loans to the Trustee. Upon execution
and delivery of the Subsequent Transfer Agreement by the Trustee, the Trustee
will have acquired beneficial ownership of all of the Depositor's right, title
and interest in and to the Subsequent Mortgage Loans.
O. As of the Closing Date, each of the Initial Mortgage Loans will meet
the eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
P. As of any Subsequent Transfer Date, each of the Subsequent Mortgage
Loans will meet the eligibility criteria described in the Prospectus and will
conform to the descriptions thereof contained in the Pooling and Servicing
Agreement.
Q. Neither the Depositor nor the Trust created by the Pooling and
Servicing Agreement is an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
R. At the Closing Date, the Offered Certificates, each Transfer Agreement
and the Pooling and Servicing Agreement will conform in all material respects to
the descriptions thereof contained in the Prospectus.
S. At the Closing Date, the Class A Certificates shall have been rated in
the highest rating category by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's, a division of the McGraw-Hill Companies ("Standard & Poor's")
and Fitch IBCA, Inc.("Fitch"). In addition, the Class M-1, Class M-2 and
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Class B-1 Certificates shall receive ratings of at least "Aa2," "A2" and "Baa3,"
respectively from Moody's and at least "AA," "A" and "BBB-," respectively, from
each of Standard & Poor's and Fitch.
T. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Pooling and Servicing
Agreement and the Certificates have been paid or will be paid at or prior to the
Closing Date.
U. At the Closing Date, each of the representations and warranties of the
Depositor set forth in the Pooling and Servicing Agreement will be true and
correct in all material respects.
V. The transfer of the Initial Mortgage Loans to the Trust at the Closing
Date and Subsequent Mortgage Loans on each Subsequent Transfer Date, will be
treated by the Depositor for financial accounting and reporting purposes as a
sale of assets and not as a pledge of assets to secure debt.
W. The Depositor is not aware of (i) any request by the Commission for any
further amendment of the Registration Statement or the Prospectus or for any
additional information, or (ii) any notification with respect to the suspension
of the qualification of the Certificates for sale in any jurisdiction or the
initiating or threatening of any proceeding for such purpose.
X. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
Any certificate signed by an officer of the Depositor and delivered to the
Representative or counsel for the Representative in connection with an offering
of the Offered Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) severally and not jointly to purchase from
the Depositor the aggregate initial principal amounts or percentage interests of
the Offered Certificates set forth opposite their names on Schedule A, at the
purchase price or prices set forth in Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for the Offered
Certificates to be purchased by the Underwriters shall be made at the offices of
Arter & Hadden LLP in Irvine, California, or at such other place as shall be
agreed upon by the Representative and the Depositor at 8:00 A.M. pacific
standard time on February 12, 1998 or at such other time or date as shall be
agreed upon in writing by the Representative and the Depositor (such date being
referred to as the "Closing Date"). Payment shall be made to the Depositor by
wire transfer of same day funds payable to the account of the Depositor.
Delivery of the Offered Certificates shall be made to the Representative for the
accounts of the Underwriters against payment of the purchase price thereof. The
Certificates shall be in such authorized denominations and registered in such
names as the Underwriters may request in writing at least two business days
prior to the Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. eastern time on the
first business day prior to the Closing Date.
SECTION IV. Offering by the Underwriters.
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A. It is understood that, subject to the terms and conditions hereof, the
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
B. It is understood that the Underwriters may prepare and provide to
prospective investors certain Computational Materials and ABS Term Sheets in
connection with the offering of the Offered Certificates, subject to the
following conditions:
1. In connection with the use of Computational Materials, the
Underwriters shall comply with all applicable requirements of the
No-Action Letter, dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured
Asset Corporation, as made applicable to other issuers and underwriters by
the Division of Corporation Finance of the Commission in response to the
request of the Public Securities Association ("PSA"), dated May 23, 1994
(collectively, the "Kidder/PSA Letters"), as well as the PSA Letter
referred to below. In connection with the use of ABS Term Sheets, the
Underwriters shall comply with all applicable requirements of the
No-Action Letter, dated February 17, 1995, issued by the Division of
Corporation Finance to the Commission to PSA (the "PSA Letter" and,
together with the Kidder/PSA Letters, the "No-Action Letters").
2. The term "Computational Materials" as used herein shall have the
meaning given to such term in the No-Action Letters, but shall include
only those Computational Materials that have been prepared or delivered to
prospective investors by or at the direction of the Underwriters. The
terms "ABS Term Sheets," "Collateral Term Sheets" and "Structural Term
Sheets" as used herein shall have the meanings given to such terms in the
PSA Letter, but shall include only those ABS Term Sheets, Collateral Term
Sheets or Structural Term Sheets that have been prepared or delivered to
prospective investors by or at the direction of the Underwriters.
3. All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed pursuant to the
No-Action Letters shall bear a legend on each page in a form previously
agreed upon by the Depositor and the Underwriters.
4. Any Computational Materials and ABS Term Sheets are subject to
review by and approval of the Depositor prior to their distribution to any
prospective investors and a copy of such Computational Materials and ABS
Term Sheets as are delivered to prospective investors shall, in addition
to the foregoing delivery requirements, be delivered to the Depositor
simultaneously with delivery to prospective investors.
5. The Underwriters shall provide to the Depositor, for filing on
Form 8-K as provided in Section V.M, five copies (in such format as
required by the Depositor) of all Computational Materials and ABS Term
Sheets that are required to be filed with the Commission pursuant to the
No-Action Letters. Each delivery of Computational Materials or ABS Term
Sheets to the Depositor pursuant to this paragraph shall be effected by
delivering four copies of such material to counsel for the Depositor on
behalf of the Depositor and one copy of such materials to the Depositor.
The Underwriters may provide copies of the foregoing in a consolidated or
aggregate form that includes all information required to be filed. All
Computational Materials and ABS Term Sheets described in this Section must
be provided to the Depositor not later than 10:00 a.m., New York time, on
the Business Day before the date on which filing thereof is required
pursuant to the terms of this Agreement. Each Underwriter agrees that it
will not provide to any investor or prospective investor in the Offered
Certificates any Computational Materials or ABS Term Sheets on or after
the day on which Computational Materials and ABS Term Sheets are required
to be provided to the Depositor
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pursuant to this Section (other than copies of Computational Materials or
ABS Term Sheets previously submitted to the Depositor in accordance with
this Section for filing pursuant to Section V.M), unless such
Computational Materials or ABS Term Sheets are preceded or accompanied by
the delivery of a Prospectus to such investor or prospective investor.
6. All information included in the Computational Materials and ABS
Term Sheets shall be generated based on substantially the same methodology
and assumptions that are used to generate the information in the
Prospectus Supplement as set forth therein; provided, however, that the
Computational Materials and ABS Term Sheets may include information based
on alternative methodologies or assumptions specified therein. If any
Computational Materials or ABS Term Sheets that are required to be filed
were based on assumptions with respect to the Mortgage Loans that are
incorrect, that differ from the final information about the Mortgage Pool
in any material respect or on Certificate structuring terms that were
revised in any material respect prior to the printing of the Prospectus,
to the extent the Prospectus Supplement does not specifically correct such
inaccuracies, the Underwriters shall prepare revised Computational
Materials or ABS Term Sheets, as the case may be, based on the final
information about the Mortgage Pool and structuring assumptions, circulate
such revised Computational Materials or ABS Term Sheets, as the case may
be, to all recipients of the preliminary versions thereof that indicated
orally to an Underwriter that they would purchase all or any portion of
the Offered Certificates and include such revised Computational Materials
or ABS Term Sheets (marked "as revised") in the materials delivered to the
Depositor pursuant to IV.B.5.
7. The Depositor shall not be obligated to file any Computational
Materials or ABS Term Sheets that (i) in the reasonable determination of
the Depositor and the Underwriters and their respective counsel are not
required to be filed pursuant to the No-Action Letters or (ii) have been
determined to contain any material error or omission, provided that, at
the request of an Underwriter, the Depositor will file Computational
Materials or ABS Term Sheets that contain a material error or omission if
clearly marked "superseded by materials dated _____________" and
accompanied by corrected Computational Materials or ABS Term Sheets that
are marked "material previously dated __________________, as corrected."
In the event that at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Securities Act, any
Computational Materials or ABS Term Sheets are determined, in the
reasonable judgment of the Depositor or the Underwriters to contain a
material error or omission, the applicable Underwriter shall prepare a
corrected version of such Computational Materials or ABS Term Sheets,
shall circulate such corrected version of such Computational Materials or
ABS Term Sheets to all recipients of the prior version thereof that either
indicated orally to such Underwriter that they would purchase all or any
portion of the Offered Certificates, or actually purchased all or any
portion thereof, and shall deliver copies of such Computational Materials
or ABS Term Sheets (marked "as corrected") to the Depositor for filing
with the Commission is a subsequent Form 8-K submission (subject to the
Depositor's obtaining an accountant's comfort letter in respect of such
corrected Computational Materials or ABS Term Sheets, which shall be at
the expense of the applicable Underwriter or Underwriters).
C. Each Underwriter represents and warrants and agrees with the Depositor
that, as of the date hereof and as of the Closing Date, that: (i) the
Computational Materials and ABS Term Sheets furnished to the Depositor pursuant
to Section IV.B.5 constitute (either in original, aggregated or consolidated
form) all of the materials furnished to prospective investors by the Underwriter
prior to the time of delivery thereof to the Depositor that are required to be
filed with the Commission with respect to the Offered Certificates in accordance
with the No-Action Letters, and such Computational Materials and ABS Term Sheets
comply with the requirements of the No-Action Letters; (ii) on the date any such
Computational Materials and ABS
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Term Sheets with respect to such Certificates (or any written or electronic
materials furnished to prospective investors on which the Computational
Materials and ABS Term Sheets are based) were last furnished to each prospective
investor and on the date of delivery thereof to the Depositor pursuant to
Section IV.B.5 and on the related Closing Date, such Computational Materials and
ABS Terms Sheets (or materials) were accurate in all material respects when read
in conjunction with the Prospectus (taking into account the assumptions
explicitly set forth in the Computational Materials), except to the extent of
any errors therein that are caused by errors in the Mortgage Pool information
provided to the Underwriters by the Depositor; (iii) the Underwriters have not
and will not represent to potential investors that any Computational Materials
or ABS Term Sheets were prepared or disseminated on behalf of the Depositor; and
(iv) all Computational Materials and ABS Term Sheets (or underlying materials
distributed to prospective investors on which the Computational Materials and
ABS Term Sheets were based) contained and will contain the legend in the form
previously agreed upon by the Depositor and the Underwriters as required by
Section IV.B.3.
Notwithstanding the foregoing, the Underwriters make no representation or
warranty as to whether any Computational Materials or ABS Term Sheets (or any
written or electronic materials furnished to prospective investors on which the
Computational Materials or ABS Term Sheets are based) included or will include
any inaccurate statement resulting directly from any error contained in the
Mortgage Pool information provided to the Underwriters by the Depositor.
D. Each Underwriter that delivers any Computational Materials and ABS Term
Sheets to the Depositor shall deliver to the Depositor a certificate, dated as
of the date hereof, to the effect that the representations and warranties of the
Underwriter contained in this Section IV are true and correct as of such date.
If an Underwriter does not provide any Computational Materials or ABS Term
Sheets to the Depositor pursuant to Section IV.B.4, the Underwriter shall be
deemed to have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Offered Certificates that is required to be
filed with the Commission in accordance with the No-Action Letters.
SECTION V. Covenants of the Depositor. The Depositor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following the
availability of the Prospectus to the Underwriters; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the Closing
Date or any supplement to the Prospectus or any amended Prospectus has been
filed prior to the Closing Date and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Depositor with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and, for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Offered Certificates; to promptly
advise the Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or of: (i) any order preventing or suspending the
use of the Prospectus; (ii) the suspension of the qualification of the Offered
Certificates for offering or sale in any jurisdiction; (iii) the initiation of
or threat of any proceeding for any such purpose; (iv) any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. In the event of the issuance of
any stop order or of any order preventing or suspending the use of the
Prospectus or suspending any such qualification, the Depositor promptly shall
use its best efforts to obtain the withdrawal of such order by the Commission.
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B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon any Underwriter's request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the Underwriters
are required to deliver a Prospectus in connection with sales of any of the
Offered Certificates at any time nine months or more after the Effective Time,
upon the request of an Underwriter but at its expense, the Depositor shall
prepare and deliver to such Underwriter as many copies as such Underwriter may
reasonably request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act. If such amendment or supplement to the
Prospectus is required to be contained in a post-effective amendment to the
Registration Statement, the Depositor will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible.
D. To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Depositor or the Underwriters, be required by the Securities Act
or requested by the Commission.
E. To furnish the Underwriters and counsel for the Underwriters, prior to
filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i)
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates as
soon as practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Trust (which need not
be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Depositor, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates.
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The Depositor will file or cause the filing of such statements and reports as
may be required by the laws of each jurisdiction in which the Offered
Certificates have been so qualified.
H. So long as the Offered Certificates shall be outstanding the Depositor
shall cause the Trustee, pursuant to the Pooling and Servicing Agreement, to
deliver to the Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance delivered to the Trustee
pursuant to Section 8.16 of the Pooling and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to Section 8.17 of the Pooling and Servicing Agreement; (iii) the
monthly servicing report furnished to the Trustee pursuant to Section 8.29 of
the Pooling and Servicing Agreement; (iv) the monthly reports furnished to the
Owners of the Offered Certificates pursuant to Section 7.09 of the Pooling and
Servicing Agreement; and (v) from time to time, any other information concerning
the Trust filed with any government or regulatory authority that is otherwise
publicly available, as the Representative may reasonably request.
I. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing Date, neither
the Depositor nor any trust established, directly or indirectly, by the
Depositor will, without the Representative's prior written consent (which
consent shall not be unreasonably withheld), offer or sell mortgage pass-through
certificates backed by mortgage loans, except pursuant to this Agreement.
K. The Depositor will enter into the applicable agreements, to which it is
a party pursuant to the Pooling and Servicing Agreement, on or prior to the
Closing Date.
L. On each Subsequent Transfer Date, the Depositor shall cause its special
counsel to deliver a favorable opinion substantially to the effect set forth in
Section VI.G (except as it applies to subdivisions 5 and 6 therein) hereof,
appropriately modified to refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Agreement, Subsequent Cut-Off Date and Subsequent Transfer
Date.
M. To cause any Computational Materials with respect to the Certificates
that are delivered to the Depositor as provided in Section IV.B.5 to be filed
with the Commission on a Current Report on Form 8-K at or before the time of
filing of the Prospectus pursuant to Rule 424(b) under the Securities Act; to
cause any ABS Term Sheets with respect to the Certificates that are delivered to
the Depositor as provided in Section IV.B.5 to be filed with the Commission on
one or more Current Reports on Form 8-K (i) at or before the time of filing of
the Prospectus pursuant to Rule 424(b) of the Rules and Regulations in the case
of Structural Term Sheets, and (ii) within two Business Days of first use in the
case of Collateral Term Sheets. Prior to any such filing of Computational
Materials or ABS Term Sheets (other than any Collateral Term Sheets that are not
based on Mortgage Pool information provided to the Underwriters by the
Depositor) by the Depositor, however, the Underwriters must comply with their
obligations pursuant to Section IV.B and the Depositor must receive a letter
from independent, certified public accountants, satisfactory in form and
substance to the Depositor and its counsel, to the effect that such accountants
have performed certain specified procedures, all of which have been agreed to by
the Depositor, as a result of which they determined that all information that is
included in the Computational Materials and ABS Term Sheets (if any) provided by
the Underwriters to the Depositor for filing on Form 8-K, as provided in Section
IV.B and this Section V.M, is accurate except as to such matters that are not
deemed by the Depositor to be material. The Depositor shall file any corrected
Computational Materials or ABS Term Sheets described in Section IV.B.7 as soon
as practicable following receipt thereof.
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SECTION VI. Conditions to the Underwriters' Obligations. The obligations
of the Underwriters to purchase the Offered Certificates pursuant to this
Agreement are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor herein contained
(including those representations and warranties set forth in the Pooling and
Servicing Agreement and incorporated herein); (ii) the performance by the
Depositor of all of its obligations hereunder; (iii) the accuracy of the
statements of the Depositor made in any certificate or other document delivered
pursuant to the provisions hereof; and (iv) the following conditions as of the
Closing Date:
A. The Underwriters shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall have been
complied with. The Prospectus shall have been filed pursuant to Rule 424(b).
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Dewey Ballantine
LLP, counsel for the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and Servicing
Agreement, the Certificates, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriters, and the Depositor shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters. The Representative shall have received the Pooling and
Servicing Agreement and the Offered Certificates in form and substance
satisfactory to the Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
D. Arter & Hadden LLP shall have furnished to the Underwriters their
written opinion, as counsel to the Depositor, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have become
effective under the 1933 Act; to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
and not withdrawn and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement, the Prospectus
and each amendment or supplement thereto, as of their respective effective or
issue dates (other than the financial and statistical information contained
therein, as to which such counsel need express no opinion), complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the rules and regulations thereunder, and such counsel does not know of any
amendment to the Registration Statement required to be filed.
3. There are no material contracts, indentures or other documents of
a character required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as
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exhibits to the Registration Statement other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the
captions "Description of The Securities" and in the Prospectus Supplement under
the captions "Description of The Offered Certificates" and "The Pooling and
Servicing Agreement," to the extent such statements purport to summarize certain
provisions of the Offered Certificates or of the Pooling and Servicing
Agreement, are fair and accurate in all material respects.
5. The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the captions "ERISA Considerations," "Certain
Federal Income Tax Consequences," "Legal Investment Matters" and, "Certain Legal
Aspects of the Mortgage Assets" to the extent that they constitute matters of
federal law, provide a fair and accurate summary of such law or conclusions.
6. The Pooling and Servicing Agreement conforms in all material
respects to the description thereof contained in the Prospectus and the Pooling
and Servicing Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended, and the Trust is not required to be
registered under the Investment Company Act of 1940, as amended.
7. Neither the Depositor nor the Trust is an "investment company" or
under the "control" of an "investment company" as such terms are defined in the
1940 Act.
8. Assuming that (a) the Trustee causes certain assets of the Trust
Estate, as the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as a "real estate mortgage investment conduit"
("REMIC"), as such term is defined in the Internal Revenue Code of 1986, as
amended (the "Code"), and (b) the parties to the Pooling and Servicing Agreement
comply with the terms thereof, the Lower-Tier REMIC and the Upper-Tier REMIC
will be treated as a REMIC, each Class of the Offered Certificates, the Class
C-IO Certificates, the Class S Certificates and the Class D Certificates will be
treated as the "regular interests" in the Upper-Tier REMIC and the Class R
Certificates will be treated as the sole "residual interest" in the Upper-Tier
REMIC and each Lower-Tier Interest will be treated as the "regular interests" in
the Lower-Tier REMIC and the Lower-Tier REMIC Residual Class will be the sole
"residual interest" in the Lower-Tier REMIC. Neither the Trust nor certain
assets and accounts are subject to tax upon its income or assets by any taxing
authority of the State of New York or the City of New York.
9. Assuming that the Class A-7 Certificates and the Class M-1A
Certificates are rated at the time of issuance in one of the two highest rating
categories by a nationally recognized statistical rating organization, such
Certificates at such time will be a "mortgage related security" as such term is
defined in Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the status of
the Lower-Tier REMIC and the Upper-Tier REMIC as a REMIC.
11. As a consequence of the qualification of the Lower-Tier REMIC
and the Upper-Tier REMIC as a REMIC, the Offered Certificates will be treated as
"regular . . . interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code
and "real estate assets" under Section 856(c) of the Code in the same proportion
that the assets in the Trust consist of qualifying assets under such Sections.
In addition, as a consequence of the qualification of the Upper-Tier REMIC as a
REMIC interest on the Offered Certificates will be treated as "interest on
obligations secured by mortgages on real property" under Section 856(c) of
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the Code to the extent that such Offered Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the description
thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters to the effect that no facts have come
to the attention of such counsel which lead them to believe that: (a) the
Registration Statement, at the time such Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading (except as to financial or statistical data
contained in the Registration Statement); (b) the Prospectus, as of its date and
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
E. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Arter & Hadden LLP, special counsel to the Depositor, addressed
to the Depositor and satisfactory to Moody's, Standard & Poor's, Fitch and the
Underwriters, with respect to certain matters relating to the transfer of the
Mortgage Loans to the Depositor and from the Depositor to the Trust, and such
counsel shall have consented to reliance on such opinion by Moody's, Standard &
Poor's, Fitch and the Underwriters as though such opinion had been addressed to
each such party.
F. Dewey Ballantine LLP, counsel for Advanta, Kathleen Eagan, General
Counsel for Wendover and Thacher, Proffit and Wood, counsel for Ameriquest, each
shall have furnished to the Underwriters their written opinion, as counsel to
the related Servicer, addressed to the Underwriters and the Depositor and dated
the Closing Date, in form and substance satisfactory to the Underwriters, to the
effect that:
1. Each Servicer is validly existing in good standing as a
corporation under the laws of its State of incorporation.
2. Each Servicer has full corporate power and authority to serve in
the capacity of servicers of the related Mortgage Loans as contemplated in the
Pooling and Servicing Agreement.
3. The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by each Servicer, and, assuming the due authorization,
execution and delivery of such agreements by the other parties thereto,
constitute the legal, valid and binding agreements of each Servicer, enforceable
against them in accordance with their terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (y) the qualification that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion, with respect to such remedies, of the court before which any
proceedings with respect thereto may be brought.
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4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over each Servicer is required for the consummation by either of
them of the transactions contemplated by the Pooling and Servicing Agreement,
except such consents, approvals, authorizations, registrations and
qualifications as have been obtained.
5. The execution, delivery or performance by each Servicer of the
Pooling and Servicing Agreement and the transactions contemplated thereby do not
(A) conflict with or result in a breach of, or constitute a default under, (i)
any term or provision of the certificate of incorporation or by-laws of such
Servicer; (ii) any term or provision of any material agreement, deed of trust,
mortgage loan agreement, contract, instrument or indenture, or other agreement
to which such Servicer is a party or is bound or to which any of the property or
assets of such Servicer or any of its subsidiaries is subject; (iii) to the best
of such firm's knowledge without independent investigation any order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over such Servicer; or (iv) any law, rule or regulations applicable
to such Servicer; or (B) to the best of such firm's knowledge without
independent investigation, results in the creation or imposition of any lien,
charge or encumbrance upon the Trust Estate or upon the Certificates.
6. There are no actions, proceedings or investigations pending or,
to the best of such counsel's knowledge without independent investigation,
threatened against a Servicer before any court, administrative agency or other
tribunal (a) asserting the validity of the Pooling and Servicing Agreement or
the Certificates, (b) seeking to prevent the consummation of any of the
transactions contemplated by the Pooling and Servicing Agreement or (c) which
would materially and adversely affect the performance by the Servicers of its
obligations under, or the validity or enforceability of, the Pooling and
Servicing Agreement.
G. Counsel for the Depositor and the Seller (which may be in-house
counsel) shall have furnished to the Underwriters such counsel's written
opinion, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification (except where any such failure would
not have a material adverse effect on the Depositor's ability to perform its
obligations under this Agreement or the Pooling and Servicing Agreement) and has
all power and authority necessary to own or hold its properties and to conduct
the business in which it is engaged and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing Agreement, and to
cause the Certificates to be issued.
2. The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse change in the financial condition
of the Depositor or which might materially and adversely affect the properties
or assets, taken as a whole, the Depositor.
3. This Agreement and the Pooling and Servicing Agreement have been
duly authorized, executed and delivered by the Depositor and the Subsequent
Transfer Agreements have been duly authorized, and when duly executed and
delivered by the Depositor and, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto, such agreements
constitute and in the case of any Subsequent Transfer Agreement will constitute
valid and binding obligations, enforceable
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against the Depositor in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (y) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law) and (z) with respect to rights of
indemnity under this Agreement, limitations of public policy under applicable
securities laws.
4. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and each Subsequent Transfer Agreement by the
Depositor, the consummation of the transactions contemplated hereby and thereby,
and the issuance and delivery of the Certificates (i) do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Depositor is
a party or by which the Depositor is bound or to which any of the property or
assets of the Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business, operations or
financial condition of the Depositor, (ii) nor will such actions result in a
violation of the provisions of the articles of incorporation or by-laws of the
Depositor, which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor (or any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets) and (iii)
nor will such actions result in the creation or imposition of any lien, charge
or encumbrance upon the Trust Estate or upon the Certificates, except as
otherwise contemplated by the Pooling and Servicing Agreement.
5. The direction by the Depositor to the Trustee to execute, issue,
authenticate and deliver the Certificates has been duly authorized by the
Depositor and, assuming that the Trustee has been duly authorized to do so, when
executed, authenticated and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits of the Pooling and Servicing
Agreement.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates, and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement and the Pooling and
Servicing Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the 1933 Act or State
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Certificates by the Underwriters or as have been previously
obtained.
7. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or, to the
best of such counsel's knowledge, without independent investigation, to the best
of such counsel's knowledge without independent investigation, threatened by any
court, administrative agency or other tribunal to which the Depositor is a party
or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the business,
results of operations or financial condition of the Depositor; (b) asserting the
invalidity of the Pooling and Servicing Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by the Pooling and Servicing
Agreement or this Agreement, as the case may be; or (d) which might materially
and adversely affect the performance by the Depositor of its obligations under,
or the validity or enforceability of, the Pooling and Servicing Agreement, this
Agreement or the Certificates.
8. The Certificates have been duly and validly authorized and
issued, and, immediately prior to the sale of the Offered Certificates to the
Underwriters, such Certificates are owned by the Depositor, free and clear of
all Liens.
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9. The Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged and to enter into and perform its obligations under the Ameriquest
Transfer Agreement.
10. The Seller is not in violation of its articles of incorporation
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Seller is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Seller or which might materially and
adversely affect the properties or assets, taken as a whole, of the Seller.
11. The Ameriquest Transfer Agreement has been duly authorized,
executed and delivered by the Seller and, assuming the due authorization,
execution and delivery of such agreements by the parties thereto other than the
Seller, such agreements will constitute valid and binding obligations,
enforceable against the Seller in accordance with their respective terms,
subject as to enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally (y) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
12. The execution, delivery and performance of the Ameriquest
Transfer Agreement by the Seller and the consummation of the transactions
contemplated thereby do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Seller is a party or by which the Seller is bound or to
which any of the property or assets of the Seller or any of its subsidiaries is
subject, which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Seller, nor will such actions
result in a violation of the provisions of the articles of incorporation or
by-laws of the Seller or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Seller or any
of its properties or assets, which breach or violation would have a material
adverse effect on the business, operations or financial condition of the Seller.
13. The assignment of rights under the Ameriquest Transfer Agreement
by the Seller to the Depositor and by the Depositor to the Trust is effective to
permit the Trustee to exercise the Seller's rights thereunder.
H. The Underwriters shall have received the favorable opinion of Dewey
Ballantine LLP, counsel to the Trustee, dated the Closing Date, addressed to the
Underwriters and in form and scope satisfactory to counsel to the Underwriters,
to the effect that:
1. The Trustee is a banking corporation duly incorporated and
validly existing under the laws of the State of New York.
2. The Trustee has the full corporate trust power to execute,
deliver and perform its obligations under the Pooling and Servicing Agreement.
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3. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the performance by the Trustee of its obligations under
the Pooling and Servicing Agreement have been duly authorized by all necessary
corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally
binding obligation of the Trustee enforceable against the Trustee.
5. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement does not (a) violate the organization certificate of the
Trustee or the By-laws of the Trustee, (b) to such counsel's knowledge, violate
any judgment, decree or order of any New York or United States federal court or
other New York or United States federal governmental authority by which the
Trustee is bound or (c) assuming the non-existence of any judgment, decree or
order of any court or other governmental authority that would be violated by
such execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or authorization of
any New York or United States federal court or other New York or United States
federal governmental authority.
6. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
7. If the Trustee were acting in the stead of any Servicer under the
Pooling and Servicing Agreement as of the date of such opinion, the Trustee
would have the full corporate trust power to perform the obligations of such
Servicer under the Pooling and Servicing Agreement.
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting the
Trustee before or by any court, arbitrator, administrative agency or other
governmental authority which, if decided adversely to the Trustee, would
materially and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of counsel for the Underwriters, with
respect to the issue and sale of the Offered Certificates, this Agreement, the
Prospectus and such other related matters as the Underwriters may reasonably
require.
J. RESERVED.
K. The Depositor shall have furnished to the Underwriters a certificate,
dated the Closing Date and signed by the Chairman of the Board, the President or
a Vice President of the Depositor to the extent that the signer of such
certificate has carefully examined the Registration Statement (excluding any
documents incorporated therein by reference), the Pooling and Servicing
Agreement and this Agreement and that, to the best of his or her knowledge based
upon reasonable investigation:
1. The representations and warranties of the Depositor in this
Agreement, the Pooling and Servicing Agreement and all related agreements are
true and correct as of the Closing Date; and the Depositor has complied with all
agreements and satisfied all the conditions on its part which are to have been
complied with on or prior to the Closing Date.
2. There has been no amendment or other document filed affecting the
certificate of incorporation or bylaws of the Depositor since November 9, 1995
and no such amendment has been
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authorized. No event has occurred since February 1, 1998 which has affected the
good standing of the Depositor under the laws of the State of Delaware.
3. There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Depositor from September 30, 1997.
4. There are no actions, suits or proceedings pending with respect
to which it has received service of process or, to the best of such officer's
knowledge, threatened against or affecting the Depositor which if adversely
determined, individually or in the aggregate, would be reasonably likely to
adversely affect the Depositor's obligations under the Pooling and Servicing
Agreement or this Agreement in any material way; and no merger, liquidation,
dissolution or bankruptcy of the Depositor is pending or contemplated.
L. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Representative shall reasonably request.
M. RESERVED.
N. The Class A Certificates shall have been rated "Aaa" by Moody's and
"AAA" by Standard & Poor's and Fitch. The Class M-1, Class M-2 and Class B-1
Certificates shall have been rated "Aa2," "A2" and "Baa3," respectively, by
Moody's and "AA," "A" and at least "BBB-," respectively, by Standard & Poor's
and Fitch.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of the
following shall have occurred: (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the over-the counter market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such exchange or
by any other regulatory body or governmental authority having jurisdiction; (ii)
a banking moratorium shall have been declared by Federal or state authorities;
(iii) the United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States; or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States shall be
such) as to make it in each of the instances set forth in clauses (i), (ii),
(iii) and (iv) herein, in the reasonable judgment of the Representative,
impractical or inadvisable to
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proceed with the public offering or delivery of the Certificates on the terms
and in the manner contemplated in the Prospectus.
R. The Representative shall have received a letter from Deloitte & Touche,
LLP, dated on or before the Closing Date, in form and substance satisfactory to
the Representative and special counsel for the Underwriters, addressed to each
of the Underwriters to the effect that they have performed certain specified
procedures requested by the Representative with respect to the information set
forth in the Prospectus and certain matters relating to the Depositor.
S. The Representative and special counsel for the Underwriters shall have
received copies of any opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to each of the Underwriters or
accompanied by reliance letters to the Representative or shall state that each
of the Underwriters may rely upon them.
T. RESERVED.
U. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since September 30, 1997, of the Depositor and
its subsidiaries, that is in the Representative's judgment material and adverse
and that makes it in the Representative's judgment impracticable to market the
Offered Certificates on the terms and in the manner contemplated in the
Prospectus.
If any condition specified in this Section VI shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION VII. Payment of Expenses. If the transaction closes, or if the
transaction fails to close other than as a result of a failure of the
Underwriters to perform hereunder, the Depositor, agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto (including the Prospectus);
(c) the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the fees and expenses of qualifying the Certificates under the securities
laws of the several jurisdictions as provided in Section V(G) hereof and of
preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Representative); (f) any fees charged by securities rating services for rating
the Offered Certificates; (g) the cost of the accountant's letter relating to
the Prospectus except for expenses relating to the accountant's audit of the
loan files; and (h) all other costs and expenses incident to the performance of
the obligations of the Depositor (including costs and expenses of its counsel);
provided that, except as provided in this Section VII, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Offered Certificates which they may sell and
the expenses of advertising any offering of the Offered Certificates made by the
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Underwriters, and the Underwriters shall pay the cost of any accountant's
comfort letters which such Underwriters choose to request relating to any
Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section VI or Section XI, whether or not the transactions
contemplated hereunder are consummated, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses except
that the Depositor shall not be obligated under this Agreement to reimburse such
Underwriter for reasonable out-of-pocket expenses, excluding fees and
disbursements of counsel for such Underwriter, if this Agreement is terminated
by any Underwriter in accordance with Section VI.Q herein.
SECTION VIII. Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 12 of the Exchange Act from and against any and all loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Offered Certificates), to which such
Underwriter or any such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereof or supplement thereto, (ii) the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state in the Prospectus a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and shall
reimburse such Underwriter and each such controlling person promptly upon demand
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus, or any
amendment thereof or supplement thereto, or the Registration Statement, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein (except to the extent that any
untrue statement or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information which is not accurate and complete in
all material respects). The foregoing indemnity agreement is in addition to any
liability which the Depositor may otherwise have to any Underwriter or any
controlling person of any of such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act or Section 12 of the
Exchange Act against any and all loss, claim, damage or liability, or any action
in respect thereof, to which the Depositor or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or supplement
thereto, or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements in the
Prospectus, when considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein, and shall reimburse the
Depositor and
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any such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred, provided, however, that no Underwriter shall be liable to the extent
that such untrue statements or alleged untrue statement or omission or alleged
omission is a result of Seller Provided Information that is not accurate and
complete in all material respects. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Depositor or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section VIII
of notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section VIII, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section VIII except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section VIII.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section VIII for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their controlling persons, or the
Depositor, if the indemnified parties under this Section VIII consist of the
Depositor or any of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section VIII(A) and (B), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent
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or if there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
D. RESERVED.
E. Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Depositor, each of the Depositor's officers and directors and each
person who controls the Depositor within the meaning of Section 15 of the
Securities Act and Section 12 of the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Computational
Materials provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus, and in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred,
provided, however, that no Underwriter shall be liable to the extent that such
untrue statements or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information that is not accurate and complete in all
material respects. The obligations of an Underwriter under this Section VIII (E)
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally applicable
to this Section VIII (E).
F. If the indemnification provided for in this Section VIII shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section VIII (A), (B) or (E) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII (C),
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
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The relative benefits of an Underwriter and the Depositor shall be deemed
to be in such proportion as the total net proceeds from the offering (before
deducting expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied or prepared by the Depositor or by such Underwriter, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII(F) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
VIII(F) shall be deemed to include, for purposes of this Section VIII(F), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section VIII, in no case shall any Underwriter
(except with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered Certificates) be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates over (y)
the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Depositor and each Underwriter expressly waive, and agree not to
assert, any defense to their respective indemnification and contribution
obligations under this Section VIII which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reason of public policy.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by the Seller concerning the assets
comprising the Trust.
SECTION IX. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in agreements delivered pursuant hereto or certificates
of officers of the Depositor submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of the Underwriters or controlling persons thereof, or by or on behalf of
the Depositor and shall survive delivery of any Offered Certificates to the
Underwriters.
SECTION X. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 48 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less
24
<PAGE>
than all, of the Defaulted Certificates in such amounts as may be agreed upon
and upon the terms herein set forth (as used in this Agreement, the term
"Underwriter" includes any underwriter substituted for an Underwriter under this
Section X). If, however, the Underwriters have not completed such arrangements
within such 48-hour period, then:
(i) if the aggregate original principal amount of Defaulted
Certificates does not exceed 10% of the aggregate original principal amount of
the Offered Certificates to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be obligated to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
such non-defaulting Underwriters, or
(ii) if the aggregate original principal amount of Defaulted
Certificates exceeds 10% of the aggregate original principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this Agreement
shall terminate, without any liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
X, each of the Underwriters and the Depositor shall have the right to postpone
the Closing Date for a period not exceeding seven Business Days in order that
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor, at any time at or prior to
the Closing Date if any of the events or conditions described in Section VI(Q)
of this Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity agreement set forth in
Section VIII, and the provisions of Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to the Representative at its address set forth above;
B. if to the Depositor, shall be delivered or sent by overnight mail or
facsimile transmission to 700 North Pearl Street, Suite 2400, LB #342, Dallas,
TX 75201-7424, Attn.: General Counsel, Fax No. 214-953-7757.
SECTION XIII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
25
<PAGE>
SECTION XIV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them. The
provisions of Sections V, VII and VIII hereof shall survive the termination or
cancellation of this Agreement.
SECTION XV. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION XVI. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United States
District Court for the Southern District of New York and any court in the State
of New York located in the City and County of New York, and appellate court from
any thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION XVII. Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
SECTION XIX. Amendments and Waivers. This Agreement may be amended,
modified, altered or terminated, and any of its provisions waived, only in a
writing signed on behalf of the Depositor and the Representative.
26
<PAGE>
If the foregoing correctly sets forth the agreement between the Depositor
and the Underwriters, please indicate your acceptance in the space provided for
the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
By: /s/ Janice M. Cott
-------------------------------------
Name: Janice M. Cott
Title: Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
CREDIT SUISSE FIRST BOSTON
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
By: /s/ Nita Sue Cherry
--------------------------------
Name: Nita Sue Cherry
Title: Director
<PAGE>
SCHEDULE A
Class of Certificates Initial Principal Amount of Purchase
Name of Purchased by the Certificates Purchased by Price
Underwriter Underwriters Underwriters (% of Par)
- - ----------- ------------ ------------ ----------
Credit Suisse
First Boston
A-1 $39,000,000 99.853243%
A-2 6,250,000 99.791903
A-3 19,625,000 99.745115
A-4 5,625,000 99.675186
A-5 8,000,000 99.617344
A-6 7,500,000 99.690760
A-7 121,500,000 99.750000
M-1F 5,500,000 99.696238
M-1A 12,000,000 99.700000
M-2F 4,500,000 99.609729
M-2A 9,000,000 99.650000
B-1F 4,000,000 99.586435
B-1A 7,500,000 99.600000
------------
TOTAL $250,000,000
-----
Deutsche Morgan
Grenfell
A-1 $39,000,000 99.853243%
A-2 6,250,000 99.791903
A-3 19,625,000 99.745115
A-4 5,625,000 99.675186
A-5 8,000,000 99.617344
A-6 7,500,000 99.690760
A-7 121,500,000 99.750000
M-1F 5,500,000 99.696238
M-1A 12,000,000 99.700000
M-2F 4,500,000 99.609729
M-2A 9,000,000 99.650000
B-1F 4,000,000 99.586435
B-1A 7,500,000 99.600000
------------
TOTAL: $250,000,000
------
Morgan Stanley
& Co. Incorporated
A-1 $39,000,000 99.853243%
A-2 6,250,000 99.791903
A-3 19,625,000 99.745115
A-4 5,625,000 99.675186
A-5 8,000,000 99.617344
A-6 7,500,000 99.690760
A-7 121,500,000 99.750000
M-1F 5,500,000 99.696238
M-1A 12,000,000 99.700000
M-2F 4,500,000 99.609729
M-2A 9,000,000 99.650000
B-1F 4,000,000 99.586435
B-1A 7,500,000 99.600000
------------
TOTAL $250,000,000
-----
<PAGE>
Class of Certificates Initial Principal Amount of Purchase
Name of Purchased by the Certificates Purchased by Price
Underwriter Underwriters Underwriters (% of Par)
- - ----------- ------------ ------------ ----------
Prudential
Securities
Incorporated
A-1 $39,000,000 99.853243%
A-2 6,250,000 99.791903
A-3 19,625,000 99.745115
A-4 5,625,000 99.675186
A-5 8,000,000 99.617344
A-6 7,500,000 99.690760
A-7 121,500,000 99.750000
M-1F 5,500,000 99.696238
M-1A 12,000,000 99.700000
M-2F 4,500,000 99.609729
M-2A 9,000,000 99.650000
B-1F 4,000,000 99.586435
B-1A 7,500,000 99.600000
--------------
TOTAL $250,000,000
-----
TOTAL: $1,000,000,000
-----
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1998-1
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller,
ADVANTA MORTGAGE CORP., USA,
AMERIQUEST MORTGAGE COMPANY and
WENDOVER FINANCIAL SERVICES CORPORATION
as Servicers
and
BANKERS TRUST COMPANY,
as Trustee
Dated as of February 1, 1998
<PAGE>
CONTENTS
Page
CONVEYANCE....................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION........................................2
Section 1.01 Definitions................................................2
Section 1.02 Use of Words and Phrases..................................44
Section 1.03 Captions; Table of Contents...............................44
Section 1.04 Opinions..................................................45
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST..............................46
Section 2.01 Establishment of the Trust................................46
Section 2.02 Office....................................................46
Section 2.03 Purposes and Powers.......................................46
Section 2.04 Appointment of the Trustee; Declaration of Trust..........46
Section 2.05 Expenses of the Trust.....................................46
Section 2.06 Ownership of the Trust....................................46
Section 2.07 Situs of the Trust........................................47
Section 2.08 Miscellaneous REMIC Provisions............................47
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS..............................50
Section 3.01 Representations and Warranties of the Depositor...........50
Section 3.02 Representations and Warranties of the Servicers...........51
Section 3.03 Representations and Warranties of the Seller..............53
Section 3.04 Representations and Warranties Relating to the
Mortgage Loans; Covenants of Seller to Take Certain
Actions with Respect to the Mortgage Loans In
Certain Situations........................................55
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage
Loans and Qualified Replacement Mortgages.................63
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee..................66
Section 3.07 Conveyance of the Subsequent Mortgage Loans...............67
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES........................................70
Section 4.01 Issuance of Certificates..................................70
Section 4.02 Sale of Certificates......................................70
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS...................................71
Section 5.01 Terms.....................................................71
Section 5.02 Forms.....................................................71
Section 5.03 Execution, Authentication and Delivery....................71
Section 5.04 Registration and Transfer of Certificates.................72
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.........74
Section 5.06 Persons Deemed Owners.....................................74
<PAGE>
Section 5.07 Cancellation..............................................74
Section 5.08 Limitation on Transfer of Ownership Rights................75
Section 5.09 Assignment of Rights......................................76
ARTICLE VI
COVENANTS................................................................77
Section 6.01 Distributions.............................................77
Section 6.02 Money for Distributions to be Held in Trust; Withholding..77
Section 6.03 Protection of Trust Estate................................78
Section 6.04 Performance of Obligations................................78
Section 6.05 Negative Covenants........................................79
Section 6.06 No Other Powers...........................................79
Section 6.07 Limitation of Suits.......................................79
Section 6.08 Unconditional Rights of Owners to Receive Distributions...80
Section 6.09 Rights and Remedies Cumulative............................80
Section 6.10 Delay or Omission Not Waiver..............................80
Section 6.11 Control by Owners.........................................80
Section 6.12 Access to Owners of Certificates' Names and Addresses.....81
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES.....................................82
Section 7.01 Collection of Money.......................................82
Section 7.02 Establishment of Accounts.................................82
Section 7.03 Flow of Funds.............................................82
Section 7.04 Pre-Funding Account and Capitalized Interest Account......90
Section 7.05 Investment of Accounts....................................91
Section 7.06 Reserved..................................................92
Section 7.07 Eligible Investments......................................92
Section 7.08 Accounting and Directions by Trustee......................94
Section 7.09 Reports by Trustee........................................95
Section 7.10 Additional Reports by Trustee.............................97
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS........................................................98
Section 8.01 Servicers and Subservicers................................98
Section 8.02 Collection of Certain Mortgage Loan Payments..............99
Section 8.03 Subservicing Agreements Between Servicer
and Subservicer..........................................100
Section 8.04 Successor Subservicer....................................100
Section 8.05 Liability of Servicer....................................100
Section 8.06 No Contractual Relationship Between Subservicer and
Trustee or the Owners....................................100
Section 8.07 Assumption or Termination of Subservicing Agreement
by Trustee...............................................100
Section 8.08 Principal and Interest Accounts; Escrow Accounts.........100
Section 8.09 Delinquency Advances and Servicing Advances..............103
Section 8.10 Compensating Interest; Purchase of Mortgage Loans........103
Section 8.11 Maintenance of Insurance.................................104
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements...............................................105
Section 8.13 Realization Upon Defaulted Mortgage Loans................106
Section 8.14 Trustee to Cooperate; Release of Files...................107
Section 8.15 Servicing Compensation...................................109
Section 8.16 Annual Statement as to Compliance........................109
Section 8.17 Annual Independent Certified Public Accountants'
Reports..................................................109
ii
<PAGE>
Section 8.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans.............................109
Section 8.19 Assignment of Agreement..................................110
Section 8.20 Events of Servicing Termination..........................110
Section 8.21 Resignation of a Servicer and Appointment of Successor...112
Section 8.22 Waiver of Past Events of Servicing Termination...........114
Section 8.23 Assumption or Termination of Subservicing Agreement
By the Trustee...........................................114
Section 8.24 Powers and Duties of the Trustee as Successor Servicer...115
Section 8.25 Liability of the Servicers...............................115
Section 8.26 Inspections by Trustee and Seller; Errors and
Omissions Insurance......................................116
Section 8.27 Merger, Conversion, Consolidation or Succession to
Business of Servicer.....................................116
Section 8.28 Notices of Material Events...............................116
Section 8.29 Monthly Servicing Report and Servicing Certificate.......117
Section 8.30 Indemnification by the Servicer..........................119
Section 8.31 Reserved.................................................119
Section 8.32 Servicing Standard.......................................119
Section 8.33 No Solicitation..........................................119
ARTICLE IX
TERMINATION OF TRUST....................................................120
Section 9.01 Termination of Trust.....................................120
Section 9.02 Auction Termination; Servicer Termination................120
Section 9.03 Termination Upon Loss of REMIC Status....................122
Section 9.04 Disposition of Proceeds..................................123
ARTICLE X
THE TRUSTEE.............................................................124
Section 10.01 Certain Duties and Responsibilities......................124
Section 10.02 Removal of Trustee for Cause.............................125
Section 10.03 Certain Rights of the Trustee............................126
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.............................................127
Section 10.05 May Hold Certificates....................................128
Section 10.06 Money Held in Trust......................................128
Section 10.07 Compensation and Reimbursement; No Lien for Fees.........128
Section 10.08 Corporate Trustee Required; Eligibility..................128
Section 10.09 Resignation and Removal; Appointment of Successor........128
Section 10.10 Acceptance of Appointment by Successor Trustee...........130
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee..................................130
Section 10.12 Reporting; Withholding...................................130
Section 10.13 Liability of the Trustee.................................131
Section 10.14 Appointment of Co-Trustee or Separate Trustee............131
Section 10.15 Appointment of Custodians................................132
ARTICLE XI
MISCELLANEOUS...........................................................133
Section 11.01 Compliance Certificates and Opinions.....................133
Section 11.02 Form of Documents Delivered to the Trustee...............133
Section 11.03 Acts of Owners...........................................134
Section 11.04 Notices, etc. to Trustee.................................134
Section 11.05 Notices and Reports to Owners; Waiver of Notices.........134
Section 11.06 Rules by Trustee.........................................135
iii
<PAGE>
Section 11.07 Successors and Assigns...................................135
Section 11.08 Severability.............................................135
Section 11.09 Benefits of Agreement....................................135
Section 11.10 Legal Holidays...........................................135
Section 11.11 Governing Law; Submission to Jurisdiction................136
Section 11.12 Counterparts.............................................136
Section 11.13 Usury....................................................136
Section 11.14 Amendment................................................137
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.......137
Section 11.16 REMIC Status.............................................138
Section 11.17 Additional Limitation on Action and Imposition of Tax....139
Section 11.18 Appointment of Tax Matters Person........................140
Section 11.19 Attorneys' Fees..........................................140
Section 11.20 Notices..................................................140
iv
<PAGE>
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II SCHEDULE OF ADVANTA LOANS AND WENDOVER LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT B-1 FORM OF CLASS M-1F CERTIFICATE
EXHIBIT B-2 FORM OF CLASS M-1A CERTIFICATE
EXHIBIT B-3 FORM OF CLASS M-2F CERTIFICATE
EXHIBIT B-4 FORM OF CLASS M-2A CERTIFICATE
EXHIBIT B-5 FORM OF CLASS B-1F CERTIFICATE
EXHIBIT B-6 FORM OF CLASS B-1A CERTIFICATE
EXHIBIT B-7 FORM OF CLASS C-FIO CERTIFICATE
EXHIBIT B-8 FORM OF CLASS C-AIO CERTIFICATE
EXHIBIT B-9 FORM OF CLASS D CERTIFICATE
EXHIBIT B-10 FORM OF CLASS R CERTIFICATE
EXHIBIT B-11 FORM OF CLASS S CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L RESERVED
EXHIBIT M AUCTION SALE BID PROCEDURES
v
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-1, dated as of February 1, 1998,
by and among AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware corporation,
in its capacity as Depositor (the "Depositor"), AMRESCO RESIDENTIAL CAPITAL
MARKETS, INC., a Delaware corporation, in its capacity as the Seller (the
"Seller"), ADVANTA MORTGAGE CORP. USA, AMERIQUEST MORTGAGE COMPANY and WENDOVER
FINANCIAL SERVICES CORPORATION as the Servicers (collectively, the "Servicers")
and BANKERS TRUST COMPANY, a New York banking corporation, in its capacity as
the Trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a portion of the
Mortgage Loans, respectively, which constitute the principal assets of the Trust
Estate;
WHEREAS, all things necessary to make the Certificates, when executed by
the Depositor and authenticated by the Trustee valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, Bankers Trust Company is willing to serve in the capacity of the
Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Seller, each Servicer and the Trustee
hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on the
Certificates in accordance with their terms, all of the sums distributable under
this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns, and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to any
and all benefits accruing to them from (a) the Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date or
Subsequent Cut-Off Date in the case of Subsequent Mortgage Loans) listed in
Schedules I-A and I-B to this Agreement (or Schedules I-A and I-B to any
Subsequent Transfer Agreement) which the Seller is causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Trustee (and
all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06),
together with the related Mortgage Loan documents and the Seller's and the
Depositor's interest in any Property which secured a Mortgage Loan but which has
been acquired by foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account, the Pre-Funding Account, the Capitalized Interest Account, the
Upper-Tier Group I Distribution Account and the Upper-Tier Group II Distribution
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicers); (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein; and (d)
certain rights of the Seller under the Ameriquest Transfer Agreement that are
being assigned to the Trust hereunder ((a)-(d) above shall be collectively
referred to herein as the "Trust Estate").
<PAGE>
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or 8.08
hereof.
"Accrual Period": With respect to the Group I Certificates and any Payment
Date, the calendar month immediately preceding the month in which the Payment
Date occurs; a "calendar month" shall be deemed to be 30 days. With respect to
the Group II Certificates and any Payment Date, the period commencing on the
preceding Payment Date (or on the Closing Date in the case of the first Payment
Date) and ending on the day immediately preceding the current Payment Date. All
calculations of interest on the Group I Certificates will be made on the basis
of a 360-day year assumed to consist of twelve 30 day months and calculations of
interest on the Group II Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust for inclusion in Group I or Group II pursuant to Section 3.07
hereof, notice given in accordance with Section 3.07(b)(i) regarding the
Depositor's designation of Subsequent Mortgage Loans to be sold to the Trust for
inclusion in Group I or Group II and the aggregate Loan Balance of such
Subsequent Mortgage Loans with respect to each such Group.
"Advanta": Advanta Mortgage Corp. USA, a Delaware corporation.
"Advanta Loans": The Mortgage Loans serviced by Advanta.
"Advisor": As defined in Section 9.02(a) hereof.
"Aggregate Certificate Principal Balance": As of any date of determination
thereof, the sum of the then outstanding Certificate Principal Balance of the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates.
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Ameriquest": Ameriquest Mortgage Company, a Delaware corporation.
"Ameriquest Loans": The Mortgage Loans serviced by Ameriquest.
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"Ameriquest Transfer Agreement": The Continuing Loan Purchase Agreement
dated November 1, 1995, between Ameriquest (formerly known as Long Beach
Mortgage Company), as seller, and the Seller as buyer, as supplemented by the
Supplement to Continuing Loan Purchase Agreement between Ameriquest and the
Seller dated as of February 12, 1998.
"Applied Realized Loss Amount": The Group I Applied Realized Loss Amount
or the Group II Applied Realized Loss Amount, as applicable.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, if such
sales price is less than such appraised value.
"ARMC": AMRESCO Residential Mortgage Corporation, a Delaware corporation.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"Balloon Loan": A Mortgage Loan with respect to which the principal
balance by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to a
Balloon Loan.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the States of California, North
Carolina and Pennsylvania, the City of New York, or in the city in which the
Corporate Trust Office is located, are authorized or obligated by law or
executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(b) hereof and maintained by the
Trustee. Funds on deposit in the Capitalized Interest Account shall be invested
in a trust deposit with the Trustee from the day following the Startup Day until
the end of each Funding Period.
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B-1 Certificates, the Class C-IO Certificates, the Class
D Certificates, the Class S Certificates or the Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The certificate account established in accordance
with Section 7.02(a) hereof and maintained at the Corporate Trust Office;
provided that the funds in such account shall not be commingled with other funds
held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of the
following Classes of Certificates, the Certificate Principal Balances thereof,
as follows:
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Class A-1 Certificates - $156,000,000
Class A-2 Certificates - 25,000,000
Class A-3 Certificates - 78,500,000
Class A-4 Certificates - 22,500,000
Class A-5 Certificates - 32,000,000
Class A-6 Certificates - 30,000,000
Class A-7 Certificates - 486,000,000
Class M-1F Certificates - 22,000,000
Class M-1A Certificates - 48,000,000
Class M-2F Certificates - 18,000,000
Class M-2A Certificates - 36,000,000
Class B-1F Certificates - 16,000,000
Class B-1A Certificates - 30,000,000
The Class S Certificates, the Class C-IO Certificates, the Class D
Certificates and the Class R Certificates do not have a Certificate Principal
Balance.
"Class": Any Class of the Class A Certificates, any Class of the Mezzanine
Certificates, any class of the Class B-1 Certificates, the Class S Certificates,
either class of the Class C-IO Certificates, the Class D Certificates, or the
Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates and Class A-7 Certificates.
"Class A Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A
Certificates less any amounts actually distributed on such Class A Certificates
with respect to the Class A Principal Distribution Amount pursuant to Section
7.03(f) and 7.03(g) hereof with respect to principal thereon on all prior
Payment Dates plus any Preference Amount previously distributed with respect to
principal.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount and the Class A-7 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed to the Owners of
the Class A-1 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-1 Certificates with respect to principal.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-1 Certificate Principal Balance immediately
prior to such Payment Date during the related
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Accrual Period at the Class A-1 Pass-Through Rate plus the Preference Amount
owed to the Owners of the Class A-1 Certificates as it relates to interest
previously paid on the Class A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(f) hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.51% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed to the Owners of
the Class A-2 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-2 Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-2 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-2
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-2
Certificates as it relates to interest previously paid on the Class A-2
Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of Class A-2 Certificates pursuant to Section 7.03(f) hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.30% per annum and (y) the Group I Net Weighted Average Coupon Rate.
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"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed to the Owners of
the Class A-3 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-3 Certificates with respect to principal.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-3 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-3
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-3
Certificates as it relates to interest previously paid on the Class A-3
Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-3 Certificates pursuant to Section 7.03(f) hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.40% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed to the Owners of
the Class A-4 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-4 Certificates with respect to principal.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-4 Certificate Principal Balance immediately
prior to such Payment Date during the related
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Accrual Period at the Class A-4 Pass-Through Rate plus the Preference Amount
owed to the Owners of the Class A-4 Certificates as it relates to interest
previously paid on the Class A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-4 Certificates pursuant to Section 7.03(f) hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.55% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed to the Owners of
the Class A-5 Certificates pursuant to Section 7.03(f) hereof thereon on all
prior Payment Dates plus any Preference Amount previously distributed to the
Owners of Class A-5 Certificates with respect to principal.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-5 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-5
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-5
Certificates as it relates to interest previously paid on the Class A-5
Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry Forward
Amount and (z) the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-5 Certificates pursuant to Section 7.03(f) hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date (i) on or prior to the
Group I Step Up Date, the lesser of (x) 7.07% per annum and (y) the Group I Net
Weighted Average Coupon Rate and (ii) after the Group I Step Up Date, the lesser
of (x) 7.57% and (y) the Group I Net Weighted Average Coupon Rate.
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"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed to the Owners of
the Class A-6 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-6 Certificates with respect to principal.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-6 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-6
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-6
Certificates as it relates to interest previously paid on the Class A-6
Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date, the sum
of (w) the Class A-6 Current Interest, (x) the Class A-6 Interest Carry Forward
Amount, (y) the Class A-6 Lockout Distribution Amount payable to the Owners of
the Class A-6 Certificates pursuant to Section 7.03(f) and (z) the Group I Class
A Principal Distribution Amount payable to the Owners of the Class A-6
Certificates pursuant to Section 7.03(f) hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Lockout Distribution Amount": For any Payment Date, the product
of (i) the applicable Class A-6 Lockout Percentage for such Payment Date and
(ii) the Class A-6 Lockout Pro Rata Distribution Amount for such Payment Date.
"Class A-6 Lockout Percentage": For each Payment Date, the percentage set
forth below:
Class A-6
Payment Dates Lockout Percentage
------------- ------------------
March 1998 - February 2001 0%
March 2001 - February 2003 45%
March 2003 - February 2004 80%
March 2004 - February 2005 100%
March 2005 and thereafter 300%
"Class A-6 Lockout Pro Rata Distribution Amount": For any Payment Date, an
amount equal to the product of (x) a fraction, the numerator of which is the
Class A-6 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
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the Class A Certificates relating to Group I immediately prior to such Payment
Date and (y) the Group I Class A Principal Distribution Amount for such Payment
Date.
"Class A-6 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.51% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposed of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed to the Owners of
the Class A-7 Certificate pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-7 Certificates with respect to principal.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the amount
of interest accrued on the Class A-7 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-7
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-7
Certificates as it relates to interest previously paid on the Class A-7
Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry Forward
Amount and (z) the Group II Class A Principal Distribution Amount payable to the
Owners of the Class A-7 Certificates pursuant to Section 7.03(g) hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Pass-Through Rate": With respect to the Payment Date in March
1998, 5.825% per annum. Thereafter, on any Payment Date on or prior to the Group
II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.20% per annum and (y)
the Group II Available Funds Cap Rate for such Payment Date and on any Payment
Date after the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus
0.40% per annum and (y) the Group II Available Funds Cap Rate.
"Class B-1 Certificate": Any one of the Class B-1F Certificates or the
Class B-1A Certificates.
"Class B-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group II Applied Realized
Loss Amount as of such Payment Date.
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"Class B-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1A Certificate, substantially in the form annexed
hereto as Exhibit B-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1A
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1A Certificates with
respect to principal.
"Class B-1A Certificate Termination Date": The Payment Date on which the
Class B-1A Certificate Principal Balance is reduced to zero.
"Class B-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1A Certificates as it relates to interest previously paid on the
Class B-1A Certificates.
"Class B-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B-1A Current Interest, (x) the Class B-1A Principal
Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward Amount,
if any, and (z) the Class B-1A Realized Loss Amortization Amount, if any.
"Class B-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1A
Pass-Through Rate.
"Class B-1A Pass-Through Rate": With respect to the Payment Date in March
1998, 6.825% per annum. Thereafter, on any Payment Date on or prior to the Group
II Step Up Date, the lesser of (x) One-Month LIBOR plus 1.20% per annum and (y)
the Group II Available Funds Cap Rate for such Payment Date and on any Payment
Date after the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus
1.80% per annum and (y) the Group II Available Funds Cap Rate.
"Class B-1A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group II Certificates (after taking into account the payment of the Group II
Class A Principal Distribution Amount, the Class M-1A Principal Distribution
Amount and the Class M-2A Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) 95.20% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $3,000,000.
"Class B-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-2A Realized Loss
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Amortization Amount, the Class M-1A Interest Carry Forward Amount, the Class
M-2A Interest Carry Forward Amount and the Class B-1A Interest Carry Forward
Amount, in each case for such Payment Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group I Applied Realized
Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1F Certificate, substantially in the form annexed
hereto as Exhibit B-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1F Certificates with
respect to principal.
"Class B-1F Certificate Termination Date": The Payment Date on which the
Class B-1F Certificate Principal Balance is reduced to zero.
"Class B-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1F Certificates as it relates to interest previously paid on the
Class B-1F Certificates.
"Class B-1F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B-1F Current Interest, (x) the Class B-1F Principal
Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward Amount,
if any, and (z) the Class B-1F Realized Loss Amortization Amount, if any.
"Class B-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1F
Pass-Through Rate.
"Class B-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.61% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-1F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group I Certificates (after taking into account the payment of the Group I Class
A Principal Distribution Amount, the Class M-1F Principal Distribution Amount
and the Class M-2F Principal Distribution Amount on such Payment Date) over (y)
the lesser of (A) the product of (i) 96.50% and (ii) the outstanding aggregate
Loan Balance of the Mortgage Loans in Group I as of the last day of the related
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Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period minus
$2,000,000.
"Class B-1F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1F
Certificates as of such Payment Date and (y) the excess of (i) the Group I
Monthly Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount, the Class M-1F Realized Loss Amortization Amount, the Class
M-2F Realized Loss Amortization Amount, the Class M-1F Interest Carry Forward
Amount, the Class M-2F Interest Carry Forward Amount and the Class B-1F Interest
Carry Forward Amount, in each case for such Payment Date.
"Class C-AIO Certificate": Any one of the Certificates designated on the
face thereof as a Class C-AIO Certificate, substantially in the form annexed
hereto as Exhibit B-8, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class C-AIO Certificate Termination Date": February 25, 2000.
"Class C-AIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-AIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-AIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-AIO Certificates as it relates to interest previously paid on the
Class C-AIO Certificates.
"Class C-AIO Distribution Amount": With respect to any payment date, the
sum of (x) the Class C-AIO Current Interest and (y) the Class C-AIO Interest
Carry Forward Amount, if any.
"Class C-AIO Interest Carry Forward Amount": With respect to any Payment
Date the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
C-AIO Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class C-AIO Interest Carry Forward Amount from all previous payment dates
exceeds (ii) the amount of the actual distribution made to Owners of the Class
C-AIO Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class C-AIO Pass-Through Rate.
"Class C-AIO Notional Principal Amount": Until the Payment Date occurring
in February 2000, the sum of (x) the Lower-Tier Balance of the Lower-Tier
Interest M-2A and (y) the Lower-Tier Balance of the Lower-Tier Interest B-1A;
thereafter, zero.
"Class C-AIO Pass-Through Rate": On any Payment Date, 6.82% per annum.
"Class C-FIO Certificate": Any one of the Certificates designated on the
face thereof as a Class C-FIO Certificate, substantially in the form annexed
hereto as Exhibit B-7, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class C-FIO Certificate Termination Date": February 25, 2000.
"Class C-FIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-FIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-FIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-FIO Certificates as it relates to interest previously paid on the
Class C-FIO Certificates.
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"Class C-FIO Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class C-FIO Current Interest and (y) the Class C-FIO Carry
Forward Amount, if any.
"Class C-FIO Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
C-FIO Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class C-FIO Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class C-FIO Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class C-FIO
Pass-Through Rate.
"Class C-FIO Notional Principal Amount": Until the Payment Date occurring
in February 2000, the sum of (x) the Lower-Tier Balance of the Lower-Tier
Interest M-1F and (y) the Lower-Tier Balance of the Lower-Tier Interest M-2F;
thereafter, zero.
"Class C-FIO Pass-Through Rate": On any Payment Date, 15.00% per annum.
"Class C-IO Certificate": Any one of the Class C-AIO Certificates or Class
C-FIO Certificates.
"Class D Carry Forward Amount": With respect to any Payment Date the
amount, if any, by which (x) the Class D Distribution Amount as of the
immediately preceding Payment Date exceeds (y) the amount of the actual
distribution made to Owners of the Class D Certificates on such immediately
preceding Payment Date.
"Class D Certificate": Any one of the Certificates designated on the face
thereof as a Class D Certificate, substantially in the form annexed hereto as
Exhibit B-9, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the Upper-Tier REMIC created hereunder for purposes
of the REMIC Provisions.
"Class D Distribution Amount": With respect to any Payment Date beginning
in March 2000, the sum of:
(1) with respect to Mortgage Loans in Group I, one-twelfth of the
product of (x) the sum of the aggregate Loan Balances of such Mortgage
Loans on the immediately preceding Payment Date and (y) the excess, if
greater than zero, of (I) the weighted average of the Coupon Rates of such
Mortgage Loans over (II) the sum of the following payments allocable to
Group I on or in respect of the related Payment Date (in each case
expressed as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial Servicing Fee
Rate), (B) the Trustee Fee and (C) the Class B-1F Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-twelfth of the
product of (x) the sum of the aggregate Loan Balances of such Mortgage
Loans on the immediately preceding Payment Date and (y) the excess, if
greater than zero, of (I) the weighted average of the Coupon Rates of such
Mortgage Loans on such immediately preceding Payment Date (weighted on the
basis of the Loan Balances as of such Payment Date) over (II) the sum of
the following payments allocable to Group II on or in respect of the
related Payment Date (in each case expressed as an annual rate based on
such aggregate outstanding Loan Balance): (A) the Servicing Fee
(calculated at the initial Servicing Fee Rate), (B) the Trustee Fee and
(C) the Class B-1A Pass-Through Rate; and
(3) the Class D Carry Forward Amount, if any.
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"Class M-1 Certificate": Any one of the Class M-1F Certificates or the
Class M-1A Certificates.
"Class M-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M- 1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2A Applied Realized Loss Amount and the Class B-1A Applied Realized Loss
Amount, in each case as of such Payment Date.
"Class M-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1A Certificate, substantially in the form annexed
hereto as Exhibit B-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1A Certificates less the sum of (x) any amounts distributed to the
Owners of the Class M-1A Certificates pursuant to Section 7.03(g) hereof on all
prior Payment Dates, (y) the aggregate, cumulative amount of Class M-1A Applied
Realized Loss Amounts on all prior Payment Dates and (z) any Preference Amount
previously distributed to the Owners of the Class M-1A Certificates with respect
to principal.
"Class M-1A Certificate Termination Date": The Payment Date on which the
Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1A Certificates as it relates to interest previously paid on the
Class M-1A Certificates.
"Class M-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1A Current Interest, (x) the Class M-1A Principal
Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward Amount,
if any, and (z) the Class M-1A Realized Loss Amortization Amount, if any.
"Class M-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1A
Pass-Through Rate.
"Class M-1A Pass-Through Rate": With respect to the Payment Date in March
1998, 6.055% per annum. Thereafter, on any Payment Date on or prior to the Group
II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.43% per annum and (y)
the Group II Available Funds Cap Rate for such Payment Date and on any Payment
Date after the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus
0.645% per annum and (y) the Group II Available Funds Cap Rate.
"Class M-1A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the sum of (i) the Class A-7 Certificate Principal
Balance (after taking into account the payment of the Group II Class A
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Principal Distribution Amount on such Payment Date) and (ii) the Class M-1A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (A) the product of (i) 73.20% and (ii) the outstanding Loan
Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period minus
$3,000,000.
"Class M-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount and the Class M-1A Interest Carry Forward Amount, in each
case for such Payment Date.
"Class M-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2F Applied Realized Loss Amount and the Class B-1F Applied Realized Loss
Amount, in each case as of such Payment Date.
"Class M-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1F Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, and (y) the aggregate, cumulative amount of Class M-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class M-1F Certificates with
respect to principal.
"Class M-1F Certificate Termination Date": The Payment Date on which the
Class M-1F Certificate Principal Balance is reduced to zero.
"Class M-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1F Certificates as it relates to interest previously paid on the
Class M-1F Certificates.
"Class M-1F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1F Current Interest, (x) the Class M-1F Principal
Distribution Amount, if any, (y) the Class M-1F Interest Carry Forward Amount,
if any, and (z) the Class M-1F Realized Loss Amortization Amount, if any.
"Class M-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1F
Pass-Through Rate.
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"Class M-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.00% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-1F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date) and (ii) the Class M-1F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (A) the product of (i) 79.50%
and (ii) the outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period and (B) the aggregate outstanding Loan
Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period minus $2,000,000.
"Class M-1F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-1F as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount and
the Class M-1F Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-2 Certificate": Any one of the Class M-2F Certificates or the
Class M-2A Certificates.
"Class M-2A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M- 2A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1A
Applied Realized Loss Amount as of such Payment Date.
"Class M-2A Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2A Certificate, substantially in the form annexed
hereto as Exhibit B-4, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates, pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of Class M-2A
Applied Realized Loss Amounts on all prior Payment Dates, and (z) any Preference
Amount previously distributed to the Owners of the Class M-2A Certificates with
respect to principal.
"Class M-2A Certificate Termination Date": The Payment Date on which the
Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2A Certificates as it relates to interest previously paid on the
Class M-2A Certificates.
"Class M-2A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2A Current Interest, (x) the Class M-2A Principal
Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward Amount,
if any, and (z) the Class M-2A Realized Loss Amortization Amount, if any.
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"Class M-2A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2A
Pass-Through Rate.
"Class M-2A Pass-Through Rate": With respect to the Payment Date in March
1998, 6.275% per annum. Thereafter, on any Payment Date on or prior to the Group
II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.65% per annum and (y)
the Group II Available Funds Cap Rate for such Payment Date and on any Payment
Date after the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus
0.975% per annum and (y) the Group II Available Funds Cap Rate.
"Class M-2A Principal Distribution Amount": As of any Payment Date on or
after the Group II Stepdown Date and as long as a Group II Trigger Event is not
in effect, the excess of (x) the sum of (i) the Class A-7 Certificate Principal
Balance (after taking into account the payment of the Group II Class A Principal
Distribution Amount on such Payment Date), (ii) the Class M-1A Certificate
Principal Balance (after taking into account the payment of the Class M-1A
Principal Distribution Amount on such Payment Date) and (iii) the Class M-2A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (A) the product of (i) 85.20% and (ii) the outstanding Loan
Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period minus
$3,000,000.
"Class M-2A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-2A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-1A Interest Carry Forward Amount and the Class M-2A Interest Carry Forward
Amount, in each case for such Payment Date.
"Class M-2F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1F
Applied Realized Loss Amount as of such Payment Date.
"Class M-2F Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2F Certificate, substantially in the form annexed
hereto as Exhibit B-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates and (y) the aggregate, cumulative amount of Class M-2F
Applied Realized Loss Amounts on all prior Payment Dates plus any Preference
Amount previously distributed to the Owners of the Class M-2F Certificates with
respect to principal.
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"Class M-2F Certificate Termination Date": The Payment Date on which the
Class M-2F Certificate Principal Balance is reduced to zero.
"Class M-2F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2F Certificates as it relates to interest previously paid on the
Class M-2F Certificates.
"Class M-2F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2F Current Interest, (x) the Class M-2F Principal
Distribution Amount, if any, (y) the Class M-2F Interest Carry Forward Amount,
if any, and (z) the Class M-2F Realized Loss Amortization Amount, if any.
"Class M-2F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2F
Pass-Through Rate.
"Class M-2F Pass-Through Rate": On any Payment Date, the lesser of (x)
7.24% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-2F Principal Distribution Amount": As of any Payment Date on or
after the Group I Stepdown Date and as long as a Group I Trigger Event is not in
effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date), (ii) the Class M-1F Certificate Principal Balance (after taking
into account the payment of the Class M-1F Principal Distribution Amount on such
Payment Date) and (iii) the Class M-2F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (A) the product of (i) 88.50%
and (ii) the outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period and (B) the aggregate outstanding Loan
Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period minus $2,000,000.
"Class M-2F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-2F as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount, the
Class M-1F Realized Loss Amortization Amount, the Class M-1F Interest Carry
Forward Amount and the Class M-2F Interest Carry Forward Amount, in each case
for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the face
thereof as a Class R Certificate, substantially in the form annexed hereto as
Exhibit B-10, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in the Upper-Tier REMIC for the purposes of the REMIC
Provisions.
"Class S Certificate": Any one of the Certificates designated on the face
thereof as a Class S Certificate, substantially in the form annexed hereto as
Exhibit B-11, authenticated and delivered by the Trustee representing the right
to distributions as set forth herein. The Class S Certificates are a "regular
interest" in the Lower-Tier REMIC for the purposes of the REMIC Provisions.
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"Class S Distribution Amount": With respect to any Payment Date, the sum
of (a) the product of (x) the outstanding Loan Balance of each Advanta Loan and
Wendover Loan as of the last day of the related Remittance Period and (y)
one-twelfth of the difference between the Aggregate Servicing Fee Rate and the
Servicing Fee Rate for such Mortgage Loans, and (b) any unpaid Preference
Amount, if any, for the Class S Certificates. The Class S Distribution Amount
shall be calculated on a loan-by-loan basis.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at Bankers Trust Company, 3 Park Plaza, 16th Floor, Irvine, CA 92614,
Attn.: AMRESCO 1998-1 or any other address that the Trustee advises the parties
hereto is its principal corporate trust office.
"Coupon Rate": The rate of interest borne by each Note from time to time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof, the
Cumulative Realized Losses as a percentage of the Maximum Collateral Amount (and
with respect to the Servicer Loss Test the aggregate portion thereof applicable
to the related Servicer as set forth in the definition of Maximum Collateral
Amount).
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans in the
related Group (and with respect to the Servicer Loss Test with respect to the
Mortgage Loans in the related Mortgage Loan Servicing Group) since the Cut-Off
Date.
"Current Interest": With respect to any Payment Date, the sum of the Class
A-1 Current Interest, the Class A-2 Current Interest, the Class A-3 Current
Interest, the Class A-4 Current Interest, the Class A-5 Current Interest, the
Class A-6 Current Interest, the Class A-7 Current Interest, the Class M-1F
Current Interest, the Class M-1A Current Interest, the Class M-2F Current
Interest, the Class M-2A Current Interest, the Class B-1F Current Interest, the
Class B-1A Current Interest, the Class C-AIO Current Interest, the Class C-FIO
Current Interest, and the Class S Distribution Amount for such Payment Date.
"Cut-Off Date": As of the close of business on February 1, 1998.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the corresponding day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on
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the 31st day of such month) then on the last day of such immediately succeeding
month. Similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Seller to the Trustee on the Startup Day pursuant to
Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 55 Water Street, New York, New
York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each Principal and
Interest Account, a trust account maintained by Bankers Trust Company, as long
as it remains the Trustee, or by the trust department of a federal or state
chartered depository institution acting in its fiduciary capacity, having
combined capital and surplus of at least $50,000,000; provided, however, that if
a Principal and Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A" by Standard &
Poor's and "A2" by Moody's and, if rated by Fitch, at least "A" by Fitch and
(ii) the Servicers shall provide the Trustee and the Owners with an Officer's
Certificate identifying the location of the related Principal and Interest
Account.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Due Date": The day of the month on which each Scheduled Payment is due on
a Mortgage Loan, exclusive of any grace period.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Escrow Payment": The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
the Mortgage or any other document.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to Section 3.05(b)
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the File pursuant to this Agreement.
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"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of the Offered Certificates
is as set out in Section 2.08(a).
"First Mortgage": Mortgage Loans secured by a valid Mortgage which
represents a first lien.
"Fitch": Fitch IBCA, Inc.
"Formula Certificates": With respect to any Payment Date, each Class of
Group II Certificates that has a Formula Rate less than the Group II Weighted
Average Coupon Rate.
"Formula Rate": With respect to any Payment Date and a Class of Group II
Certificates, the rate determined in accordance with clause (x) of the
definition of "Pass-Through Rate" for such Class.
"Funding Period": With respect to each of Group I and Group II, the
respective period commencing on the Startup Day and ending on the earliest to
occur of (i) the date on which the amount on deposit in the Pre-Funding Account
with respect to such Group (exclusive of any investment earnings) is less than
$100,000 and (ii) May 8, 1998.
"Group I": The pool of Mortgage Loans identified in the related Schedule
of Mortgage Loans as having been assigned to Group I in Schedule I-A hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group I Applied Realized Loss Amount": As of any Payment Date, the excess
of (x) the aggregate Certificate Principal Balance of the Group I Certificates
on such Payment Date, after taking into account the distribution of the Group I
Principal Distribution Amount on such Payment Date but prior to the application
of the Group I Applied Realized Loss Amount, if any, on such Payment Date over
(y) the aggregate outstanding Loan Balance of the Mortgage Loans in Group I as
of the last day of the related Remittance Period.
"Group I Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate outstanding Certificate Principal Balance of the Group I
Certificates has declined to less than $40,000,000.
"Group I Capitalized Interest Requirement": With respect to the Payment
Dates in March and April 1998 and the Pre-Funding Payment Date, the excess, if
any, of (x) the interest on the Group I Certificates on such Payment Date
calculated at the Group I Weighted Average Pass-Through Rate over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans in
Group I as of the close of business on the last day of the immediately preceding
Remittance Period calculated at a rate equal to 1/12 of the weighted average of
the Coupon Rates of the Mortgage Loans in Group I less the applicable Servicing
Fee Rate as of such Payment Date (or Pre-Funding Payment Date) and (ii) any
Group I Pre-Funding Account Earnings to be transferred to the Capitalized
Interest Account on such Payment Date (or Pre-Funding Payment Date) pursuant to
Section 7.04(d) hereof.
"Group I Certificates": The Class A Certificates (other than the Class A-7
Certificates), the Class M-1F Certificates, the Class M-2F Certificates, the
Class B-1F Certificates and the Class C-FIO Certificates.
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"Group I Class A Principal Distribution Amount": As of any Payment Date
(a) prior to the Group I Stepdown Date or with respect to which a Group I
Trigger Event is in effect, 100% of the Group I Principal Distribution Amount
and (b) on or after the Group I Stepdown Date or as to which a Group I Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates relating to Group I immediately prior to
such Payment Date over (y) the lesser of (A) the product of (i) 68.50% and (ii)
the outstanding Loan Balance of the Mortgage Loans in Group I as of the last day
of the related Remittance Period and (B) the outstanding aggregate Loan Balance
of the Mortgage Loans in Group I as of the last day of the related Remittance
Period minus $2,000,000.
"Group I Extra Principal Distribution Amount": As of any Payment Date, the
lesser of (x) the Group I Monthly Excess Interest Amount for such Payment Date
and (y) the Group I Overcollateralization Deficiency for such Payment Date.
"Group I Interest Amount Available": As of any Payment Date, the Group I
Interest Remittance Amount less the portion of the Trustee Fee related to Group
I.
"Group I Interest Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest collected or required to be
advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group I (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group I, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group I,
(iv) any amounts related to Group I required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group I.
"Group I Monthly Excess Cashflow Amount": For any Payment Date, the sum of
(x) the Group I Monthly Excess Interest Amount (plus any interest on the Group I
Overcollateralization Amount) and (y) the Group I Overcollateralization Release
Amount for such Payment Date.
"Group I Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group I Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group I Certificates on such Payment Date and (y) the Interest Carry Forward
Amount with respect to the Class A Certificates related to Group I.
"Group I Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group I
(weighted by the Loan Balances of the Mortgage Loans in Group I), less 0.50% per
annum.
"Group I Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group I as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group I and
(y) the aggregate Certificate Principal Balance of the Group I Certificates
(after taking into account all distributions of principal on such Group I
Certificates as of such Payment Date).
"Group I Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group I Targeted Overcollateralization Amount for
such Payment Date over (y) the Group I Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group
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I Extra Principal Distribution Amount) on such Payment Date, but prior to taking
into account any Group I Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any Payment Date,
the lesser of (x) the Group I Principal Remittance Amount for such Payment Date
and (y) the excess, if any, of (i) the Group I Overcollateralization Amount for
such Payment Date, assuming that 100% of the Group I Principal Remittance Amount
is applied on such Payment Date to the payment of principal on the Group I
Certificates and (ii) the Group I Targeted Overcollateralization Amount for such
Payment Date, provided that if a Group I Subordinated Trigger Event is in
effect, the Group I Overcollateralization Release Amount shall be zero.
"Group I Pre-Funding Account Earnings": With respect to the March 25, 1998
Payment Date, the actual investment earnings earned during the period from the
Startup Day through March 24, 1998 (inclusive) on the portion of the Pre-Funded
Amount remaining and allocable to Group I during such period as calculated by
the Trustee pursuant to Section 3.07(d) hereof; with respect to the April 27,
1998 Payment Date, the actual investment earnings earned during the period from
March 25, 1998 through April 26, 1998 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof; and, with respect
to the Pre-Funding Payment Date, the actual investment earnings earned during
the period from April 27, 1998 through May 8, 1998 (inclusive) on the portion of
the Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": As of any Payment Date, the sum
of (i) the Group I Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group I Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group I Overcollateralization Release
Amount, if any) and (ii) the Group I Extra Principal Distribution Amount, if
any.
"Group I Principal Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) the principal collected or required to be
advanced by the Servicers with respect to Mortgage Loans in Group I with respect
to the related Remittance Period, (ii) the Loan Balance of each Mortgage Loan in
Group I that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such Loan Balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group I to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, and (iv) all Net Liquidation Proceeds actually collected by the Servicers
with respect to the Mortgage Loans in Group I during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal).
"Group I Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group I and (ii)
the Group I Overcollateralization Amount, in each case after taking into account
the distribution of the Group I Principal Distribution Amount on such Payment
Date, by (y) the Loan Balance of the Mortgage Loans in Group I as of the last
day of the related Remittance Period.
"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means 31.50%.
"Group I Servicer Clean-Up Call Date": The First Monthly Remittance Date
on which the outstanding Certificate Principal Balance of the Group I
Certificates has declined to $20,000,000.
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"Group I Stepdown Date": The later to occur of (x) the Payment Date in
March 2001 and (y) the first Group I Payment Date on which the Group I Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group I on such Payment Date) is equal to or greater than the
Group I Senior Specified Enhancement Percentage.
"Group I Step Up Date": provided that the auction sale described in
Section 9.02(a) hereof with respect to Group I has not occurred, the date that
is 90 days after the Group I Auction Sale Bid Date.
"Group I Subordinated Trigger Event": A Group I Subordinated Trigger Event
has occurred with respect to a Payment Date if both of the following tests are
failed on such Payment Date:
A Group I Cumulative Loss Test is failed with respect to a Payment Date if
the amount of the Cumulative Loss Percentage with respect to Group I equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
March 1998 - February 2000 1.26%
March 2000 - February 2001 1.50%
March 2001 - February 2002 2.60%
March 2002 - February 2003 3.30%
March 2003 - February 2006 3.50%
A Group I Delinquency Test is failed with respect to a Payment Date if the
amount of 60+ Day Delinquent Loans, with respect to Group I as a percentage of
the aggregate outstanding Loan Balance of Group I equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquent Percentage
------------- -----------------------------
March 2000 - February 2002 4.00%
March 2002 - February 2004 5.50%
March 2004 - February 2006 8.00%
"Group I Targeted Overcollateralization Amount": On any Payment Date (x)
prior to the Group I Stepdown Date, 1.75% of the aggregate Certificate Principal
Balance of the Group I Certificates as of the Startup Day and (y) on or after
the Group I Stepdown Date, the greater of (A) 3.50% of the aggregate outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period and (B) $2,000,000.
"Group I Trigger Event": A Group I Trigger Event has occurred with respect
to a Payment Date if the percentage obtained by dividing (x) the principal
amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the
immediately preceding Remittance Period equals or exceeds 50% of the Group I
Senior Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group I Weighted Average Pass-Through Rate": As to any Payment Date, the
weighted average of the Class A-1 Pass-Through Rate, the Class A-2 Pass-Through
Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through Rate, the
Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate, the Class M-1F
Pass-Through Rate, the Class M-2F Pass-Through Rate and the Class B-1F
Pass-Through Rate
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(such rate calculated for this purpose on the basis of 360-day year assumed to
consist of twelve 30 day months) weighted by the respective Certificate
Principal Balance of the related Class as of such Payment Date before taking
into account any distributions to be made on such Payment Date.
"Group II": The pool of Mortgage Loans identified in the related Schedule
of Mortgage Loans as having been assigned to Group II in Schedule I-B hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group II Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group II
Certificates on such Payment Date, after taking into account the distribution of
the Group II Principal Distribution Amount on such Payment Date but prior to the
application of the Group II Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period.
"Group II Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate Certificate Principal Balance of the Group II Certificates
has declined to less than $60,000,000.
"Group II Available Escalation Amount": With respect to any Payment Date,
an amount (but not less than zero) equal to the sum of, with respect to each
Class of Formula Certificates, the product of (i) a rate equal to the Group II
Net Weighted Average Coupon Rate minus the Formula Rate for such Class and (ii)
the Certificate Principal Balance of such Class.
"Group II Available Funds Cap Rate": With respect to Group II, on any
Payment Date, a rate equal to the sum of (i) the Group II Net Weighted Average
Coupon Rate and (ii) the percentage equivalent of a fraction, the numerator of
which is the Group II Available Escalation Amount and the denominator of which
is the sum of the Certificate Principal Balances for each Class of the Group II
Capped Certificates.
"Group II Available Funds Cap Shortfall Amortization Amount": As of any
Payment Date, any amount distributed from the Group II Available Funds Cap
Shortfall Amount Account on such Payment Date.
"Group II Available Funds Cap Shortfall Amount": As of any Payment Date,
the excess, if any, of (x) the excess, if any, of (a) the aggregate amount of
interest due on the Group II Capped Certificates on all prior Payment Dates,
calculated at the related Formula Rate applicable to each such Payment Date over
(b) the aggregate amount of interest due on the Group II Capped Certificates on
all prior Payment Dates, calculated at the related Pass-Through Rates applicable
to each such Payment Date over (y) all Group II Available Funds Cap Shortfall
Amortization Amounts actually funded on all prior Payment Dates.
"Group II Capped Certificates": With respect to any Payment Date, each
Class of Group II Certificates that has a Formula Rate greater than the Group II
Net Weighted Average Coupon Rate.
"Group II Capitalized Interest Requirement": With respect to the Payment
Dates in March and April 1998 and the Pre-Funding Payment Date, the excess, if
any, of (x) the interest on the Group II Certificates on such Payment Date
calculated at the Group II Weighted Average Pass-Through Rate over (y) the sum
of (i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans
in Group II as of the close of business on the last day of the immediately
preceding Remittance Period calculated at a rate equal to 1/12 of the weighted
average of the Coupon Rates of the Mortgage Loans in Group II less
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the applicable Servicing Fee Rate as of such Payment Date (or the Pre-Funding
Payment Date) and (ii) any Group II Pre-Funding Account Earnings to be
transferred to the Capitalized Interest Account on such Payment Date (or the
Pre-Funding Payment Date) pursuant to Section 7.04(d) hereof.
"Group II Certificates": The Class A-7 Certificates, the Class M-1A
Certificates, the Class M-2A Certificates, the Class B-1A Certificates and the
Class C-AIO Certificates.
"Group II Class A Principal Distribution Amount": As of any Payment Date
(a) prior to the Group II Stepdown Date or with respect to which a Group II
Trigger Event is in effect, 100% of the Group II Principal Distribution Amount
and (b) on or after the Group II Stepdown Date or as to which a Group II Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Class A-7 Certificates immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) 57.20% and (ii) the outstanding
Loan Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the outstanding aggregate Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period minus
$3,000,000.
"Group II Extra Principal Distribution Amount": As of any Payment Date,
the lesser of (x) the Group II Monthly Excess Interest Amount for such Payment
Date and (y) the Group II Overcollateralization Deficiency for such Payment
Date.
"Group II Interest Amount Available": As of any Payment Date, the Group II
Interest Remittance Amount less the portion of the Trustee Fee related to Group
II.
"Group II Interest Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest collected or required to be
advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group II (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group II, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group II,
(iv) any amounts related to Group II required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group II.
"Group II Monthly Excess Cashflow Amount": For any Payment Date, the sum
of (x) the Group II Monthly Excess Interest Amount (plus any interest on the
Group II Overcollateralization Amount) and (y) the Group II
Overcollateralization Release Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group II Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group II Certificates on such Payment Date and (y) the Class A-7 Interest Carry
Forward Amount.
"Group II Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group II
(weighted by the Loan Balances of the Mortgage Loans in Group II), less 0.50%
per annum.
"Group II Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group II as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group II and
(y) the aggregate Certificate Principal Balance of the Group II Certificates
(after taking into account
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all distributions of principal on such Group II Certificates as of such Payment
Date).
"Group II Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group II Targeted Overcollateralization Amount for
such Payment Date over (y) the Group II Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group II Certificates resulting from the distribution of the Group II
Principal Remittance Amount (but not the Group II Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group II
Applied Realized Loss Amount on such Payment Date.
"Group II Overcollateralization Release Amount": As of any Payment Date,
the lesser of (x) the Group II Principal Remittance Amount for such Payment Date
and (y) the excess, if any, of (i) the Group II Overcollateralization Amount for
such Payment Date, assuming that 100% of the Group II Principal Remittance
Amount is applied on such Payment Date to the payment of principal on the Group
II Certificates over (ii) the Group II Targeted Overcollateralization Amount for
such Payment Date; provided, that if a Group II Subordinated Trigger Event is in
effect, the Group II Overcollateralization Release Amount shall be zero.
"Group II Pre-Funding Account Earnings": With respect to the March 25,
1998 Payment Date, the actual investment earnings earned during the period from
the Startup Day through March 24, 1998 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof; with respect to
the April 27, 1998 Payment Date, the actual investment earnings earned during
the period from March 25, 1998 through April 26, 1998 (inclusive) in the portion
of the Pre-Funded Amount remaining and allocable to Group II during such period
as calculated by the Trustee pursuant to Section 3.07(d) hereof; and, with
respect to the Pre-Funding Payment Date, the actual investment earnings earned
during the period from April 27, 1998 through May 8, 1998 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group II during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereto.
"Group II Principal Distribution Amount": As of any Payment Date, the sum
of (i) the Group II Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group II Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group II Overcollateralization Release
Amount, if any) and (ii) the Group II Extra Principal Distribution Amount, if
any.
"Group II Principal Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) the principal collected or required to be
advanced by the Servicers with respect to Mortgage Loans in Group II with
respect to the related Remittance Period, (ii) the Loan Balance of each Mortgage
Loan in Group II that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such Loan Balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group II to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, and (iv) all Net Liquidation Proceeds actually collected by the Servicers
with respect to the Mortgage Loans in Group II during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal).
"Group II Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group II and (ii)
the Group II Overcollateralization Amount, in each case after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period.
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"Group II Senior Specified Enhancement Percentage": On any date of
determination thereof means 42.80%.
"Group II Servicer Clean-Up Call Date": The first Monthly Remittance Date
on which the outstanding Certificate Principal Balance of the Group II
Certificates has declined to $30,000,000.
"Group II Stepdown Date": The later to occur of (x) the Payment Date in
March 2001 and (y) the first Group II Payment Date on which the Group II Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group II on such Payment Date) is equal to or greater than the
Group II Senior Specified Enhancement Percentage.
"Group II Step Up Date": Provided that the auction sale described in
Section 9.02(a) hereof with respect to Group II has not occurred, the date that
is 90 days after the Group II Auction Sale Bid Date.
"Group II Subordinated Trigger Event": A Group II Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group II Cumulative Loss Test is failed with respect to a Payment Date
if the Cumulative Loss Percentage with respect to Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
March 1998 - February 2000 1.75%
March 2000 - February 2001 2.10%
March 2001 - February 2002 3.50%
March 2002 - February 2003 4.40%
March 2003 - February 2004 4.80%
March 2004 - February 2005 5.20%
March 2005 - February 2006 5.60%
A Group II Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group II as a percentage
of the aggregate outstanding Loan Balance of Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquency Percentage
------------- ------------------------------
March 2000 - February 2002 4.00%
March 2002 - February 2004 5.50%
March 2004 - February 2006 8.00%
"Group II Targeted Overcollateralization Amount": On any Payment Date (x)
prior to the Group II Stepdown Date, 2.40% of the aggregate Certificate
Principal Balance of the Group II Certificates as of the Startup Day and (y) on
or after the Group II Stepdown Date, the greater of (A) 4.80% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) $3,000,000.
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"Group II Trigger Event": A Group II Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the immediately preceding Remittance Period equals or exceeds 40% of the Group
II Senior Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any Payment Date, the
weighted average of the Class A-7 Pass-Through Rate, the Class M-1A Pass-Through
Rate, the Class M-2A Pass-Through Rate, and the Class B-1A Pass-Through Rate
weighted by the respective Certificate Principal Balance of the related Class as
of such Payment Date before taking into account any distributions to be made on
such Payment Date.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the Trust
by the Depositor on the Startup Day.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Mortgage Loan, provided that any amount remitted under
Section 8.11 hereof shall be considered a payment under an Insurance Policy.
"Interest Rate Adjustment Date": With respect to an adjustable rate
Mortgage Loan, the date on which the Coupon Rate is adjusted with respect to
such Mortgage Loan. The first Interest Rate Adjustment Date for each adjustable
rate Mortgage Loan is the date set forth on the Schedule of Mortgage Loans.
"Interest Remittance Amount": The sum of the Group I Interest Remittance
Amount and the Group II Interest Remittance Amount.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by a Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses and accrued but unpaid Servicing Fees, and any unreimbursed
Servicing Advances expended by that Servicer pursuant to Section 8.09(b) with
respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by a Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan and as of any date of
determination, the outstanding principal balance thereof, on the Cut-Off Date
with respect to the Initial Mortgage Loans or relevant Subsequent Cut-Off Date
with respect to the Subsequent Mortgage Loans, less the sum of (i) any principal
payments relating to such Mortgage Loan (whether received from the related
Mortgagor or advanced by the related Servicer) included in previous Monthly
Remittance Amounts, and (ii) any Cram Down Losses relating to such Mortgage
Loan; provided, however, that the Loan Balance for any Mortgage Loan that has
become a Liquidated Loan shall be zero as of the first day of the Remittance
Period following
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the Remittance Period in which such Mortgage Loan becomes a Liquidated Loan, and
at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04, 3.05,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Mortgage Loan as of the date of purchase (assuming that the related Delinquency
Advance has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, (ii) the interest
portion of any Delinquency Advances which the related Servicer has theretofore
failed to remit with respect to such Mortgage Loan as required by this Agreement
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the percentage obtained
by dividing the Appraised Value into the original principal balance of the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-1 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-2 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-3 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-4 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
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"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-5 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-6 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
A-7 immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date, the Group II Net
Weighted Average Coupon Rate.
"Lower-Tier B-1A Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
B-1A immediately prior to such Payment Date during the related Accrual Period of
the Lower-Tier B-1A Pass-Through Rate.
"Lower-Tier B-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier B-1F Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
B-1F immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier B-1F Pass-Through Rate.
"Lower-Tier B-1F Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payments
Dates pursuant to Section 7.03(c).
"Lower-Tier Group I Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly
Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly
Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly
Interest, the Lower-Tier B-1F Monthly Interest, the Lower-Tier M-1F Monthly
Interest, the Lower-Tier M-2F Monthly Interest, the Class A Group I Principal
Distribution Amount, the Class M-1F Principal Distribution Amount, the Class
M-2F Principal Distribution Amount and the Class B-1F Principal Distribution
Amount. Such Group I Class A Principal Distribution Amount is allocated as
follows: (a) to the Lower-Tier Interest A-6 an amount equal to the Class A-6
Lockout Distribution Amount and (b) as a distribution on the Lower-Tier Interest
A-1 until the Lower-Tier Interest A-1 Termination Date, the Class A-1 Principal
Distribution Amount; as a distribution on the Lower-Tier Interest A-2 until the
Lower-Tier Interest A-2 Termination Date, the Class A-2 Distribution Amount; as
a distribution on the Lower-Tier
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Interest A-3 until the Lower-Tier Interest A-3 Termination Date, the Class A-3
Distribution Amount; as a distribution on the Lower-Tier Interest A-4 until the
Lower-Tier Interest A-4 Termination Date, the Class A-4 Distribution Amount; as
a distribution on the Lower-Tier Interest A-5 until the Lower-Tier Interest A-5
Termination Date, the Class A-5 Distribution Amount; and as a distribution on
the Lower-Tier Interest A-6 until the Lower-Tier Interest A-6 Termination Date,
the Class A-6 Distribution Amount.
"Lower-Tier Group II Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-7 Monthly Interest, the Lower-Tier M-1A
Monthly Interest, the Lower-Tier M-2A Monthly Interest, the Lower-Tier B-1A
Monthly Interest, the Class A Group II Principal Distribution Amount, the
Lower-Tier M-1A Principal Distribution Amount, the Class M-2A Principal
Distribution Amount and the Class B-1A Principal Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest B-1A": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest B-1F": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest M-1A": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest M-1F": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest M-2A": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest M-2F": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
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"Lower-Tier Interest A-3 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest B-1A Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest B-1A is reduced to zero through the
distribution made in respect of Lower-Tier Interest B-1A on such Payment Date.
"Lower-Tier Interest B-1F Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest B-1F is reduced to zero through the
distribution made in respect of Lower-Tier Interest B-1F on such Payment Date.
"Lower-Tier Interest M-1A Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest M-1A is reduced to zero through the
distribution made in respect of Lower-Tier Interest M- 1A on such Payment Date.
"Lower-Tier Interest M-1F Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest M-1F is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-1F on such Payment Date.
"Lower-Tier Interest M-2A Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest M-2A is reduced to zero through the
distribution made in respect of Lower-Tier Interest M- 2A on such Payment Date.
"Lower-Tier Interest M-2F Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest M-2F is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-2F on such Payment Date.
"Lower-Tier M-1A Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
M-1A immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier M-1A Pass-Through Rate.
"Lower-Tier M-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
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"Lower-Tier M-1F Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
M-1F immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier M-1F Pass-Through Rate.
"Lower-Tier M-1F Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier M-2A Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
M-2A immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier M-2A Pass-Through Rate.
"Lower-Tier M-2A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier M-2F Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
M-2F immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier M-2F Pass-Through Rate.
"Lower-Tier M-2F Pass-Through Rate": For any Payment Date, the Group I Net
Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the Trust
Estate, other than the Upper-Tier Group I Distribution Account and the
Upper-Tier Group II Distribution Account which are assets of the Upper-Tier
REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier REMIC,
the interest therein designated as the "residual interest" therein for purposes
of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
the Seller and 0.001% to Bankers Trust Company, as Tax Matters Person. Such
interests shall be non-transferrable, except that Bankers Trust Company may
assign such interest to another person who accepts such assignment and the
designation as Tax Matters Person pursuant to Section 11.18 hereof. The
Lower-Tier REMIC Residual Class is entitled only to any amounts at any time held
in the Certificate Account and not required to be paid to the Upper-Tier REMIC,
which is expected to be zero at all times during the term of this Agreement.
"Maximum Collateral Amount": As to Group I, $400,000,000; and as to Group
II, $600,000,000; provided that for purposes of calculating the Servicer Loss
Test with respect to each Servicer and each Mortgage Loan Group, the Seller will
provide the related Maximum Collateral Amounts per Servicer and Mortgage Loan
Group to the Trustee, each Servicer and the Depositor within 10 days after the
end of the Funding Period for such Mortgage Loan Group.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and the
Class M-2 Certificates.
"Monthly Remittance Amount": The sum of the Interest Remittance Amount and
the Principal Remittance Amount.
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"Monthly Remittance Date": The 20th day of each month or if such day is
not a Business Day, the Business Day succeeding such day, commencing in March
1998.
"Monthly Servicing Report": Any report provided by a Servicer pursuant to
Section 8.29 hereof.
"Moody's": Moody's Investors Service Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case may be.
References herein to the related Class of Offered Certificates, when used with
respect to a Mortgage Loan Group, shall mean (A) in the case of Group I, the
Group I Certificates and (B) in the case of Group II, the Group II Certificates.
"Mortgage Loan Servicing Group": Advanta Loans, Ameriquest Loans or
Wendover Loans, as applicable.
"Mortgage Loans": Such of the mortgage loans (including Initial Mortgage
Loans and Subsequent Mortgage Loans) transferred and assigned to the Trust
pursuant to Section 3.05(a) and 3.07(a) hereof, together with any Qualified
Replacement Mortgages substituted therefor in accordance with this Agreement, as
from time to time are held as a part of the Trust Estate, the Mortgage Loans
originally so held being identified in the Schedules of Mortgage Loans. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Property which is REO Property prior to such
Property's disposition by the Trust. Any mortgage loan which, although intended
by the parties hereto to have been, and which purportedly was, transferred and
assigned to the Trust by the Depositor, in fact was not transferred and assigned
to the Trust for any reason whatsoever, including, without limitation, the
incorrectness of the statement in Section 3.04(a)(i) with respect to such
mortgage loan, shall nevertheless be considered a "Mortgage Loan" for all
purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses, unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued Servicing Fees relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, the Mortgage Loan related to each REO Property and each Mortgage Loan
with respect to which any portion of a Scheduled Payment is, as of the last day
of the prior Remittance Period, 90 days or more Delinquent (including any
Mortgage Loans which have gone into foreclosure or have been discharged by
reason of bankruptcy).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to each
Mortgage Loan Servicing Group and any date of determination thereof, the average
of the percentage equivalents of the fractions determined for each of the three
immediately preceding Remittance Periods the numerator of each of which is equal
to the aggregate Loan Balance of 90+ Day Delinquent Loans in the related
Mortgage Loan Servicing Group as of such date of determination and the
denominator of which is the aggregate Loan Balance of all of the Mortgage Loans
in the related Mortgage Loan Servicing Group as of such date of determination.
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"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B-1 Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for the Group II
Certificates, the rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loans to leading European banks.
"One-Month LIBOR Determination Date": For the initial Accrual Period for
the Group II Certificates, the second London Business Day prior to the Closing
Date. With respect to any Accrual Period thereafter for the Group II
Certificates, the second London Business Day preceding the commencement of such
Accrual Period.
"Operative Documents": Collectively, this Agreement, the Ameriquest
Transfer Agreement, the Subsequent Transfer Agreements and the Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be counsel to
the Depositor, Seller, any Servicer or the Trustee, which counsel shall be
reasonably acceptable to the Trustee.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $776,095,369.19.
"Original Capitalized Interest Amount": $2,356,842.31.
"Original Group I Pre-Funding Amount": $97,573,472.53.
"Original Group II Pre-Funding Amount": $126,331,156.28.
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $223,904,630.81.
"Originator": Each of the companies from whom the Seller purchased the
Mortgage Loans.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
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(i) Certificates theretofore canceled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"Overcollateralization Release Amount": For any Payment Date, the sum of
the Group I Overcollateralization Release Amount and the Group II
Overcollateralization Release Amount.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the sum, if any, of (x) with respect to the Group I Certificates, the
excess of (i) interest that would accrue from the related Subsequent Cut-Off
Date through May 8, 1998 on the aggregate Loan Balances of the Subsequent
Mortgage Loans acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (I) the Group I Weighted Average
Pass-Through Rate and (II) the Trustee Fee allocable to Group I (such fees
calculated as an annual rate based on the aggregate Loan Balances of the
Mortgage Loans in Group I), over (ii) interest that would accrue from the
Subsequent Cut-Off Date through May 8, 1998 on the aggregate Loan Balances of
the Subsequent Mortgage Loans related to Group I acquired by the Trust on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date and (y) with respect to
the Group II Certificates the excess of (i) interest that would accrue from the
related Subsequent Cut-Off Date through May 8, 1998 on the aggregate Loan
Balances of the Subsequent Mortgage Loans acquired by the Trust on such
Subsequent Transfer Date, calculated at a rate equal to the sum of (I) the Group
II Weighted Average Pass-Through Rate and (II) the Trustee Fee allocable to
Group II (such fees calculated as an annual rate based on the aggregate Loan
Balances of the Mortgage Loans in Group II), over (ii) interest that would
accrue from the Subsequent Cut-Off Date through May 8, 1998 on the aggregate
Loan Balances of the Subsequent Mortgage Loans related to Group II acquired by
the Trust on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by the Seller or any affiliate
thereof, the Seller or such affiliate shall not be considered an Owner.
"PAG": The Seller's "Performance Assumption Groupings" as described in the
Prospectus Supplement.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 11.15 hereof and is authorized by the Trustee and the Depositor to
make payments on the Certificates on behalf of the Trustee.
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"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs and the
Pre-Funding Payment Date.
"Percentage Interest": With respect to an Offered Certificate or a Class
C-IO Certificate, a fraction, expressed as a decimal, the numerator of which is
the initial Certificate Principal Balance (or, in the case of the Class C-IO
Certificates, the related Notional Principal Amount) represented by such
Certificate and the denominator of which is the aggregate initial Certificate
Principal Balance (or, in the case of the Class C-IO Certificates, the related
Notional Principal Amount) represented by all the Certificates of the same
Class. With respect to a Class S Certificate, a Class D Certificate or a Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate, all of which shall total
100% with respect to the related Class.
"Permitted Exceptions": The following: (a) the lien of current real
property taxes and assessments not yet due and payable; (b) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the related Originator of the Mortgage Loan and
referred to or otherwise considered in the appraisal made for the related
Originator of the Mortgage Loan; (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Property; and (d) a valid and current first lien
for Second Mortgages.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Offered Certificates and the
Class S Certificates, as the case may be, means, any amounts of Current Interest
and principal included in previous distributions to the Owners of such
Certificates which are recovered from such Owners as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Owners.
"Pre-Funded Amount": With respect to the March and April 1998 Payment
Dates and the Pre-Funding Payment Date, the amount remaining on deposit in the
Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in accordance
with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Determination Date": May 8, 1998.
"Pre-Funding Payment Date": May 12, 1998.
"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received by the related Servicer prior
to the scheduled due date for such installment, intended by the Mortgagor as an
early payment thereof and not as a Prepayment with respect to such Mortgage
Loan.
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"Prepayment": Any payment of principal of a Mortgage Loan which is
received by a Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by a Servicer in connection
with a foreclosed Mortgage Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal and Interest Account": Each principal and interest account
established by a Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the sum
of the Group I Principal Remittance Amount and the Group II Principal Remittance
Amount.
"Prohibited Transaction": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated September 5, 1997 constituting part of
the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1998-1 Prospectus Supplement dated January 28, 1998 to the
Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a Coupon
Rate not less than and not more than 1% greater than the Coupon Rate of the
Mortgage Loan being replaced, (ii) is of the same property type (i.e., single
family, condominium, PUD unit, etc.) or is a single family dwelling and the same
occupancy status as the replaced Mortgage Loan or is a primary residence, (iii)
shall mature no later than January 1, 2028, (iv) has a Loan-to-Value Ratio as of
the Subsequent Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Mortgage Loan at such time, (v) shall be of the same or higher credit
quality classification (determined in accordance with the PAGs) as the Mortgage
Loan which such Qualified Subsequent Mortgage replaces, (vi) has a Loan Balance
as of the related Subsequent Cut-Off Date not greater than and not substantially
less than the Loan Balance of the replaced Mortgage Loan as of such Subsequent
Cut-Off Date, (vii) shall not provide for a Balloon Payment if the related
Mortgage Loan did not provide for a Balloon Payment (and if such related
Mortgage Loan provided for a Balloon Payment, such Qualified Replacement
Mortgage shall have an original maturity of not less than the original maturity
of such related Mortgage Loan), (viii) shall be a fixed rate Mortgage Loan if
the Mortgage Loan being replaced is a fixed
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rate Mortgage Loan or an adjustable rate Mortgage Loan if the Mortgage Loan
being replaced is an adjustable rate Mortgage Loan, (ix) if such Mortgage Loan
being replaced is in Group II, (a) has the index of the replaced Mortgage Loan,
(b) has the same amount of time between rate adjustment dates as the replaced
Mortgage Loan and (c) has a margin no less than the replaced Mortgage Loan and
(x) satisfies the criteria set forth from time to time in the definition thereof
at Section 860G(a)(4) of the Code (or any successor statute thereto) and
applicable to the Trust.
"Rating Agencies": Collectively, Moody's, Standard & Poor's and Fitch or
any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by which
(x) the Loan Balance thereof plus any accrued and unpaid interest thereon as of
the date of liquidation exceeds (y) Net Liquidation Proceeds realized thereon
applied in reduction of such Loan Balance and accrued and unpaid interest. As to
any Mortgage Loan as to which there has been a Cram Down Loss, the amount of
such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and each Payment
Date, the last day of the calendar month immediately preceding the calendar
month in which such Payment Date occurs and with respect to the Group II
Certificates and each Payment Date, the day immediately preceding such Payment
Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by the Trustee which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, (ii) not controlling, under the control of or under common
control with the Seller or any affiliate thereof, (iii) whose quotations appear
on Telerate Page 3750 on the relevant One-Month LIBOR Determination Date and
(iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-30759), including all amendments thereto and including the Prospectus
Supplement relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
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"Remittance Period": The calendar month immediately preceding the month in
which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Reporting Date": The date each Servicer will provide the Monthly
Servicing Report described in Section 8.29 hereof to the Trustee, which day
shall be the 20th day of each calendar month (or if such day is not a Business
Day, the next succeeding Business Day).
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Retained Certificates": Collectively, the Class D Certificates and the
Class R Certificates.
"Schedule of Mortgage Loans": Each of the schedules of Mortgage Loans,
segregated by Mortgage Loan Group, with respect to the Initial Mortgage Loans
listing each Initial Mortgage Loan in the related Group to be conveyed on the
Startup Day and with respect to Subsequent Mortgage Loans listing each
Subsequent Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the related Servicer.
Such Schedules of Mortgage Loans shall identify each Mortgage Loan by (1) the
Servicer's loan number, (2) the related Servicing Fee, (3) borrower's name, (4)
address (including the state) of the Property, (5) the lien status thereof, (6)
the Loan-to-Value Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof and (9) the paid-through date for such Mortgage Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or, in
the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Second Mortgage": Mortgage Loans secured by a valid mortgage which
represents a second lien.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Servicers" or "Servicer": Advanta, Ameriquest and Wendover and their
permitted successors and assigns. Any reference to Servicers or Servicer shall
mean the related Servicer with respect to any Mortgage Loan or Mortgage Loan
Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Loss Test": The Servicer Loss Test for each Servicer and with
respect to its related Mortgage Loan Servicing Group for any period set out
below is satisfied if the Cumulative Loss Percentage as it relates to such
Mortgage Loan Servicing Group and such period does not exceed the percentage set
out for such period below (provided, that for purposes of the calculation of the
Servicer Loss Test,
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Realized Losses attributable solely to Cram Down Losses shall be excluded from
the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
------ ----------
February 2, 1998 - February 1, 2000 1.55%
February 2, 2000 - February 1, 2001 1.86%
February 2, 2001 - February 1, 2002 3.14%
February 2, 2002 - February 1, 2003 3.96%
February 2, 2003 - February 1, 2004 4.28%
February 2, 2004 - February 1, 2005 4.52%
February 2, 2005 and thereafter 4.76%
"Servicer Termination Event": As defined in Section 8.20(d) hereof.
"Servicer Termination Test": The Servicer Termination Test for each
Servicer and with respect to the related Mortgage Loan Servicing Group is
satisfied for any date of determination thereof, if either (x) the 90+
Delinquency Percentage (Rolling Three Month) with respect to the related
Mortgage Loan Servicing Group is less than the greater of (i) 50% of the
weighted average of the Group I Senior Enhancement Percentage and the Group II
Senior Enhancement Percentage (weighted based on the outstanding Loan Balance
relating to Group I and Group II as of such date of determination) and (ii) 15%
or (y) the Servicer Loss Test is satisfied.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount retained by
the related Servicer as compensation for servicing and administration duties
relating to such Mortgage Loan pursuant to Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters between the
Seller and the related Servicer, setting forth the Servicing Fee Rate and other
servicing compensation applicable to such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the related
Servicing Fee Letter.
"60+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the prior Remittance
Period, 60 days or more Delinquent (without giving effect to any grace period).
"60+ Day Delinquency Percentage": As of any date of determination thereof,
and as to the related Mortgage Loan Group, a fraction, expressed as a
percentage, the numerator of which is the outstanding aggregate Loan Balance of
60+ Day Delinquent Loans with respect to such Mortgage Loan Group and the
denominator of which is the outstanding aggregate Loan Balance of the Mortgage
Loans in such Mortgage Loan Group.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies.
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"Startup Day": February 12, 1998.
"Subordinate Certificate": With respect to either Group, collectively, the
Mezzanine Certificates, the Class B Certificates and the Class C-IO Certificates
related to such Group.
"Subordinated Trigger Event": A Group I Subordinated Trigger Event or a
Group II Subordinated Trigger Event, as the case may be.
"Subsequent Cut-Off Date": The close of business on the first day of the
month in which a Qualified Replacement Mortgage or a Subsequent Mortgage Loan is
transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust after
the Startup Day pursuant to a fixed price contract for inclusion in Group I or
Group II pursuant to Section 3.07 hereof, which shall be listed on the Schedule
of Mortgage Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Trustee, the Depositor and the
Seller substantially in the form of Exhibit C hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent Mortgage Loans, the
date specified in each Subsequent Transfer Agreement, and with respect to a
Qualified Replacement Mortgage, the date upon which a conveyance of such
Qualified Replacement Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and any
Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate, initially issued to
Bankers Trust Company as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the Class R
Certificates, which shall be issued to and held by Bankers Trust Company
throughout the term hereof unless another Person shall accept an assignment of
such interest and the designation of Tax Matters Person pursuant to Section
11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)(i)
the Group I Weighted Average Pass-Through Rate in the case of Mortgage Loans in
Group I or (ii) the Group II Weighted Average Pass-Through Rate in the case of
Mortgage Loans in Group II, plus (b) any portion of the Trustee
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Fee (calculated as an annual rate based on the outstanding principal amount of
the related Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": As defined in Section 9.02(b) hereof.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan Trust
1998-1, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this Agreement.
"Trustee": Bankers Trust Company, a New York banking corporation, not in
its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": The fee and expenses, if any, set out in a side letter
between the Seller and the Trustee.
"Underwriters": Credit Suisse First Boston, Deutsche Morgan Grenfell,
Morgan Stanley & Co. Incorporated and Prudential Securities Incorporated.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
"Upper-Tier Group I Distribution Account": The Upper-Tier Group I
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier Group II Distribution Account": The Upper-Tier Group II
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08 hereof
with respect to the Certificates. The assets of the Upper-Tier REMIC shall
include the Upper-Tier Group I Distribution Account and the Upper-Tier Group II
Distribution Account, and the right to receive the distributions deposited
therein with respect to each Lower-Tier Interest.
"Wendover": Wendover Financial Services Corporation, formerly known as
Wendover Funding, Inc., a North Carolina corporation.
"Wendover Loans": The Mortgage Loans serviced by Wendover.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
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Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1998-1".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to the
Corporate Trust Office or at such other address as the Trustee may designate by
notice to the Depositor, the Seller, the Servicers and the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning,
holding and disposing of the Mortgage Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either the Lower-Tier REMIC or the Upper-Tier
REMIC as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the Trustee Fee, if any, and (ii)
any reasonable expenses of the Trustee that are "unanticipated expenses of the
REMIC" within the meaning of Treasury Regulations Section 1.860G-1(b)(3), shall
be paid pursuant to Section 7.03(c)(i) and (d)(i). The Seller shall pay directly
the reasonable fees and expenses of counsel to the Trustee pursuant to a fee
letter between the Seller and the Trustee. The reasonable fees and expenses of
the Trustee's counsel in connection with the review and delivery of this
Agreement and related documentation shall be paid by the Seller on the Startup
Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
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Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the situs of the Trust
shall be in the State of New York; provided that it is understood that the Files
may be held by the Trustee outside the State of New York.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows,
including for federal income tax purposes the month in which the Final Scheduled
Payment Dates occur:
Lower-Tier Initial Month and Year
Pass-Through Lower-Tier of Final Scheduled
Class Designation Rate Balance Payment Dates
- - ----------------- ---- ------- -------------
Lower-Tier Interest A-1 (1) $156,000,000 June 2018
Lower-Tier Interest A-2 (1) $25,000,000 March 2020
Lower-Tier Interest A-3 (1) $78,500,000 May 2025
Lower-Tier Interest A-4 (1) $22,500,000 June 2026
Lower-Tier Interest A-5 (1) $32,000,000 October 2027
Lower-Tier Interest A-6 (1) $30,000,000 August 2027
Lower-Tier Interest A-7 (2) $486,000,000 October 2027
Lower-Tier Interest M-1F (1) $22,000,000 January 2028
Lower-Tier Interest M-1A (2) $48,000,000 January 2028
Lower-Tier Interest M-2F (1) $18,000,000 January 2028
Lower-Tier Interest M-2A (2) $36,000,000 January 2028
Lower-Tier Interest B-1F (1) $16,000,000 January 2028
Lower-Tier Interest B-1A (2) $30,000,000 January 2028
Lower-Tier REMIC Residual Class (3) (3)
- - --------------------
(1) On any Payment Date, the Group I Net Weighted Average Coupon Rate.
(2) On any Payment Date, the Group II Net Weighted Average Coupon Rate.
(3) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier
Balance or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests A-1, A-2, A-3, A-4, A-5, A-6, A-7, M-1F,
M-1A, M-2F, M-2A, B-1F and B-1A Certificates shall be issued as non-certificated
interests. The Lower-Tier REMIC Residual Class shall be issued from the
Lower-Tier REMIC as a non-certificated interest.
(c) The Depositor hereby designates Lower-Tier Interest A-1, Lower-Tier
Interest A-2, Lower-Tier Interest A-3, Lower-Tier Interest A-4, Lower-Tier
Interest A-5, Lower-Tier Interest A-6, Lower-Tier Interest A-7, Lower-Tier
Interest M-1F, Lower-Tier Interest M-1A, Lower-Tier Interest M-2F, Lower-Tier
Interest M-2A, Lower-Tier Interest B-1F and Lower-Tier Interest B-2A as "regular
interests" and the Lower-Tier REMIC Residual Class as the single class of
"residual interests" in the Lower-Tier REMIC for purposes of the REMIC
Provisions.
(d) The Depositor hereby designates the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class M-1F, Class M-1A, Class M-2F,
Class M-2A, Class B-1F, Class B-1A, Class C-FIO, Class C-AIO, Class D and Class
S as "regular interests," and the Class R Certificates as the single class of
"residual interests" in the Upper-Tier REMIC for purposes of the REMIC
Provisions. The Depositor hereby designates the Lower-Tier Interest A-1, the
Lower-Tier Interest A-2, the Lower-Tier Interest A-3,
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the Lower-Tier Interest A-4, the Lower-Tier Interest A-5, the Lower-Tier
Interest A-6, the Lower-Tier Interest A-7, Lower-Tier Interest M-1F, Lower-Tier
Interest M-1A, Lower-Tier Interest M-2F, Lower-Tier Interest M-2A, Lower-Tier
Interest B-1F, Lower-Tier Interest B-1A, the Upper-Tier Group I Distribution
Account and the Upper-Tier Group II Distribution Account as the only assets of
the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC included therein shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier REMIC
each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee to
the Owners of the Class R Certificates shall be treated as distributions by the
Upper-Tier REMIC and amounts, if any, distributed on the Lower-Tier REMIC
Residual Class shall be treated as distributions by the Lower-Tier REMIC. It is
expected that there shall not be any distributions to the Lower-Tier REMIC
Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) For federal income tax purposes, the month in which Final Scheduled
Payment Date for each Class of the Offered Certificates is hereby set to be the
Payment Date indicated below:
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Month and Year of
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates June 2018
Class A-2 Certificates March 2020
Class A-3 Certificates May 2025
Class A-4 Certificates June 2026
Class A-5 Certificates October 2027
Class A-6 Certificates August 2027
Class A-7 Certificates October 2027
Class M-1F Certificates January 2028
Class M-1A Certificates January 2028
Class M-2F Certificates January 2028
Class M-2A Certificates January 2028
Class B-1F Certificates January 2028
Class B-1A Certificates January 2028
Class C-FIO Certificates February 2000
Class C-AIO Certificates February 2000
Class D Certificates January 2028
Class R Certificates January 2028
Class S Certificates January 2028
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller, the Servicers and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery by the Depositor and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the Operative Documents to which the Depositor
is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered, or to be delivered, pursuant to the terms hereof by the Depositor
contains or will contain any untrue statement of
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a material fact or omits or will omit to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which describe
the Depositor or matters or activities for which the Depositor is responsible in
accordance with the Operative Documents or which are attributable to the
Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to the Depositor that materially adversely affects or in the
future may (so far as the Depositor can now reasonably foresee) materially
adversely affect the Depositor or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the acquisition by the
Depositor of the Mortgage Loans, the conveyance by the Depositor of the Mortgage
Loans, the purchase and sale of the Certificates and the execution, delivery and
performance by the Depositor of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the Depositor of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(i) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the Mortgages
by the Depositor hereunder are not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicers.
Each Servicer hereby represents and warrants to the Trustee, the
Depositor, the Seller and the Owners, as to itself and its Mortgage Loan
Servicing Group only, that as of the Startup Day:
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(a) It is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its business, or
the properties owned or leased by it make such qualification necessary. Such
Servicer has all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under the Operative
Documents to which it is a party.
(b) The execution and delivery of the Operative Documents to which such
Servicer is a party by such Servicer and its performance and compliance with the
terms thereof have been duly authorized by all necessary corporate action on the
part of such Servicer and will not violate such Servicer's articles or
certificate of incorporation or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material contract, agreement or other instrument
to which such Servicer is a party or by which such Servicer is bound or violate
any statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over such Servicer or any of its
properties.
(c) Each Operative Document to which such Servicer is a party, assuming
due authorization, execution and delivery by the other parties thereto,
constitutes a valid, legal and binding obligation of such Servicer, enforceable
against it in accordance with the terms thereof, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) Such Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which would materially and adversely affect the condition
(financial or otherwise) or operations of such Servicer or its properties or
would materially and adversely affect its performance hereunder.
(e) No litigation is pending with respect to which such Servicer has
received service of process or, to the best of such Servicer's knowledge,
threatened against such Servicer which litigation would prohibit its entering
into the Operative Documents to which such Servicer is a party or would
materially and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which such Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by such Servicer contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which such Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution, delivery and
performance by such Servicer of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by such Operative
Documents on the part of such Servicer
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and the performance by such Servicer of its obligations under such Operative
Documents to which it is a party.
(h) The collection practices used by such Servicer with respect to the
Mortgage Loans serviced by it have been, in all material respects, legal,
proper, prudent and customary in the mortgage servicing business.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of such Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Mortgage Loans to the
Trustee.
Upon discovery by any of the Seller, a Servicer, the Depositor or the
Trustee (each, for purposes of this paragraph, a "party") of a breach of any of
the representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties
(provided that one Servicer need not give such notice to the other Servicers).
Within 60 days of its discovery or its receipt of notice of such breach, (A) the
related Servicer shall cure such breach in all material respects, (B) to the
extent such breach relates to an Ameriquest Loan and can only be cured through
repurchase or substitution of one or more Mortgage Loans, Ameriquest may so
repurchase or substitute in the manner set forth in Section 3.04(b), and (C) to
the extent that such breach is not cured in accordance with clause (A) or (B)
above, the related Servicer may thereafter be removed pursuant to Section
8.20(a)(iv) hereof; provided, however, that if such Servicer can establish to
the reasonable satisfaction of the Seller that it is diligently pursuing
remedial action, then the cure period may be extended with the written approval
of the Seller, which such written approval shall not be unreasonably withheld.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee, the
Depositor, the Servicers and the Owners as of the Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's certificate of incorporation or bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
constitutes a valid, legal and binding obligation of the Seller, enforceable
against it in accordance with the terms hereof and thereof, except as
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the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has received
service of process or, to the best of the Seller's knowledge, threatened against
the Seller, which litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance under
the Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered or to be delivered pursuant to the terms hereof by the Seller contains
or will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the certificate, statement or report
not misleading.
(g) The statements contained in the Registration Statement which describe
the Seller or matters or activities for which the Seller is responsible in
accordance with the Operative Documents or which are attributable to the Seller
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Seller required to be stated therein or necessary to make the statements
contained therein with respect to the Seller, in light of the circumstances
under which they were made, not misleading. There is no fact known to the Seller
that materially adversely affects or in the future may (so far as the Seller can
now reasonably foresee) materially adversely affect the Seller or the Mortgage
Loans or the ownership interests therein represented by the Certificates that
has not been set forth in the Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the related Note)
and other items of the Trust Estate by the Trustee under this Agreement, the
Trust will have good title to such Mortgage Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution, delivery and performance by the Seller of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by the other Operative Documents
on the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
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(j) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is it aware of any insolvency pending.
(l) The transfer, assignment and conveyance of the Notes and the Mortgages
by the Seller hereunder are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(m) The Seller is not aware that any Mortgage Loan breaches any
representation or warranty hereof or in the Ameriquest Transfer Agreement that
as of the Startup Date is not subject to cure.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the Seller or the
Trustee (each, for purposes of this paragraph, a "party") of a breach of any of
the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties.
The Seller hereby covenants and agrees that within 60 days of its discovery or
its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, it shall on the
Monthly Remittance Date next succeeding such discovery or receipt of notice (i)
within two years of the Startup Day, substitute in lieu of any Mortgage Loan not
in compliance with clause (h) a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Subsequent Cut-Off Date is less than the Loan Balance of such
Mortgage Loan as of such Subsequent Cut-Off Date, deliver an amount equal to
such difference together with the aggregate amount of (A) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Mortgage Loan and (B) the interest portion of any Delinquency Advances
which the related Servicer has theretofore failed to remit with respect to such
Mortgage Loan (a "Substitution Amount") to the related Servicer for deposit in
the related Principal and Interest Account or (ii) purchase such Mortgage Loan
from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the related Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary, with
respect to any Mortgage Loan which is not in default or as to which no default
is imminent, no repurchase or substitution pursuant hereto shall be made unless
the Seller obtains for the Trustee an opinion of counsel experienced in federal
income tax matters to the effect that such a repurchase or substitution would
not constitute a Prohibited Transaction for the Trust or any REMIC therein or
otherwise subject the Trust or any REMIC therein to tax and would not jeopardize
the status of either the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC (a
"REMIC Opinion") addressed to the Servicers and the Trustee and acceptable to
the Servicers and the Trustee. Any Mortgage Loan as to which repurchase or
substitution was delayed pursuant to this Section because of the inability to
deliver a REMIC Opinion shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Mortgage Loan and (b) receipt by the Trustee of a REMIC Opinion.
Section 3.04 Representations and Warranties Relating to the Mortgage
Loans; Covenants of Seller to Take Certain Actions with Respect to the Mortgage
Loans In Certain Situations.
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(a) With respect to each Mortgage Loan (other than the Ameriquest Loans),
the Seller represents and warrants to, and covenants to the Trustee, the
Depositor, the Servicers and the Owners that, as of the Startup Date (with
respect to the Initial Mortgage Loans) and as of the Subsequent Transfer Date
(with respect to the Subsequent Mortgage Loans):
(i) Title to the Mortgage Loans. Immediately prior to the transfer
and assignment of the Mortgage Loans by the Seller to the Depositor and by
the Depositor to the Trust contemplated herein, the Seller held good title
to and was the sole owner of record and holder of the Mortgage Loan and
the indebtedness evidenced by each Note. There has been no sale or
hypothecation by Seller of the Mortgage Loan. The Mortgage Loan has not
been assigned or pledged, and the Seller has good, indefeasible and
marketable title thereto, and has full right to transfer and sell the
Mortgage Loan free and clear of any encumbrance, equity interest,
participation interest, lien, pledge, charge, claim or security interest,
and has full right and authority subject to no interest or participation
of, or agreement with, any other party, to sell and assign each Mortgage
Loan pursuant to this Agreement, and following the sale of each Mortgage
Loan, the Trustee will own such Mortgage Loan free and clear of any
encumbrance, equity interest, participation interest, lien, pledge,
charge, claim or security interest.
(ii) Accuracy of the Schedule of Mortgage Loans. Each Initial
Mortgage Loan or Subsequent Mortgage Loan is as described in the related
Schedule of Mortgage Loans, and the information contained in each Schedule
of Mortgage Loans is true and correct as of the Cut-Off Date (or in the
case of the Subsequent Mortgage Loans, as of the Subsequent Cut-Off Date).
(iii) Payments. As of the Cut-Off Date, no Initial Mortgage Loan is
thirty (30) or more days Delinquent except that there are 91 and 107
Initial Mortgage Loans in Group I and Group II, respectively, with an
outstanding aggregate Loan Balance of $6,104,428.46 and $10,739,682.83 in
Group I and Group II, respectively, that are 30 or more days Delinquent
but not more than 59 days Delinquent.
(iv) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, nor, with respect to any Second Mortgage, the
terms of any senior mortgage. All taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is
not yet due and payable. The Seller has not advanced funds, or induced or
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 under the Mortgage Loan, except for interest accruing from the
date of the Note or date of disbursement of the Mortgage Loan proceeds,
whichever occurred later, to the day which precedes by one month the Due
Date of the first Scheduled Payment.
(v) Original Terms Unmodified. The terms of the Note and the
Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary to protect the interests of the Trust. The substance of any such
waiver, alteration or modification has been approved by the title insurer,
to the extent required by the policy, and its terms are reflected on the
related Schedule of Mortgage Loans. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy, and
which assumption agreement is part of the File.
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(vi) Absence of Defenses. The Mortgage and the Note are not subject
to any right of rescission, set-off, counterclaim, or defense (including
the defense of usury), based on the invalidity or unenforceability of the
Note and/or Mortgage or on any conduct of the Seller, the Depositor or any
of their officers, employees, representatives, affiliates or assignors in
originating or servicing the Initial Mortgage Loan prior to the Cut-Off
Date (or, in the case of a Subsequent Mortgage Loan, the Subsequent
Cut-Off Date), nor will the operation of any of the terms of the Mortgage
or the Note, or the exercise of any right thereunder, render the Mortgage
or the Note unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim, or defense (including the defense of
usury) based on any such invalidity, unenforceability or conduct. No right
of rescission, set-off, counterclaim, or defense with respect thereto has
been asserted to the Seller or, to Seller's knowledge, has been asserted
to any other person and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated.
(vii) Hazard Insurance. Pursuant to the terms of the Mortgage, all
improvements upon the Mortgaged Property are insured by an insurer
acceptable to FannieMae against loss by fire and such other risks as are
usually insured against in the broad form of extended coverage hazard
insurance available from time to time, including flood hazards if upon
origination of the Mortgage Loan, the Property was in an area identified
in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and if flood insurance was required by
federal regulation and such flood insurance has been made available). All
such insurance policies (collectively, the "hazard insurance policy") meet
the requirements of the current guidelines of the Federal Insurance
Administration, conform to the requirements of the FannieMae Seller's
Guide and the FannieMae Servicers' Guide and are a standard policy of
insurance for the locale where the Property is located. The amount of the
insurance is at least in the amount of the full insurable value of the
Property on a replacement cost basis or the unpaid balance of the Mortgage
Loan, whichever is less. The hazard insurance policy names (and will name)
the Mortgagor as the insured and contains a standard mortgagee loss
payable clause in favor of the related Originator and its successors and
assigns. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense,
and to seek reimbursement therefor from the Mortgagor. Where required by
state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance policy, provided the
policy is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common facilities
of a planned unit development. The hazard insurance policy is the valid
and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of Trust upon
the consummation of the transactions contemplated by this Agreement. The
Seller has not engaged in, and has no knowledge of the Mortgagor's or any
other party's having engaged in, any act or omission which would impair
the coverage of any such policy, the benefits of the endorsement provided
for therein, or the validity and binding effect of either.
(viii) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with. The consummation of the
transactions contemplated hereby will not involve the violation of any
such laws or regulations.
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(ix) No Satisfaction of Mortgage or Note. Neither the Mortgage nor
the Note has been satisfied, canceled, subordinated or rescinded, in whole
or in part, and the Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission.
(x) Location and Type of Property. The Property consists of a parcel
of real property with a residential dwelling erected thereon. The Property
is either a fee simple estate or a long-term residential lease. If the
Mortgage Loan is secured by a long-term residential lease, (A) the terms
of such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent (or the lessor's
consent has been obtained and such consent is in the File) and the
acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure to provide the holder of
the Mortgage with substantially similar protection; (B) the terms of such
lease do not (i) allow the termination thereof upon the lessee's default
without the holder of the Mortgage being entitled to receive written
notice of, and opportunity to cure, such default, (ii) allow the
termination of the lease in the event of damage or destruction as long as
the Mortgage is in existence or (iii) prohibit the holder of the Mortgage
from being insured under the hazard insurance policy relating to the
Property; (C) the original term of such lease is not less than fifteen
(15) years; (D) the term of such lease does not terminate earlier than
five (5) years after the maturity date of the Note; and (E) the Property
is located in a jurisdiction in which the use of leasehold estates for
residential properties is a widely accepted practice.
(xi) Valid Lien. The Mortgage for any First Mortgage creates a
valid, subsisting, enforceable and perfected first lien on the Property,
and the Mortgage for any Second Mortgage creates a valid, subsisting,
enforceable and perfected second lien on the Property, and in each case
includes all buildings on the Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing. The lien
of the Mortgage is subject only to Permitted Exceptions. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with a First Mortgage established and created a
valid, subsisting, enforceable and perfected first lien and first priority
security interest on the property described therein, and with respect to a
Second Mortgage, a second lien and second priority security interest, and
the Seller has full right to sell and assign the same to the Trust.
(xii) Validity of Mortgage Documents. The Note and the Mortgage and
every other agreement, if any, executed and delivered by the Mortgagor in
connection with the Mortgage Loan are genuine, and each is the legal,
valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Note, the Mortgage and each
other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Note, the Mortgage and each other such
related agreement, and the Note, the Mortgage and each other such related
agreement have been duly and properly executed by the respective
Mortgagors. The Seller has reviewed all of the documents constituting the
File and has made such inquiries as it deems necessary to make and confirm
the accuracy of the representations set forth herein.
(xiii) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing the Mortgage
Loan and the recording of
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the Mortgage were paid, and the Mortgagor is not entitled to any refund of
any amounts paid or due under the Note or Mortgage.
(xiv) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all applicable licensing requirements
of the laws of the state where the Property is located, and (2)(a)
organized under the laws of such state, or (b) qualified to do business in
such state, or (c) federal savings and loan associations, savings banks,
or national banks having principal offices in such state, or (d) not doing
business in such state.
(xv) Loan-to-Value Ratio. The Loan-to-Value Ratio for each First
Mortgage was no greater than 90%, and the Combined Loan-to-Value Ratio for
each Second Mortgage was no greater than 90.49%.
(xvi) Title Insurance. The Mortgage Loan is covered by either (a) an
attorney's opinion of title and abstract of title the form and substance
of which is acceptable to FannieMae, or (b) an ALTA lender's title
insurance policy or other generally acceptable form of policy of insurance
issued by a title insurer qualified to do business in the jurisdiction
where the Property is located, insuring the related Originator, its
successors and assigns, as to the first priority lien of the Mortgage in
the original principal amount of the First Mortgage, and as to the second
priority lien of the Mortgage in the original principal amount of the
Second Mortgage, subject only to the Permitted Exceptions, and against any
loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment in the Coupon
Rate and Scheduled Payment. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress, and against encroachments
by or upon the Property or any interest therein. Where required by state
law or regulation, the Mortgagor has been given the opportunity to choose
the carrier of such lender's title insurance policy. The related
Originator, its successors and assigns, are the sole insureds (except in
the case of a joint protection policy, in which case the related
Originator's interest is insured) of such lender's title insurance policy,
and such lender's title insurance policy is valid and remains in full
force and effect and will be in full force and effect upon the sale of the
Mortgage Loan to the Trust. No claims have been made under such lender's
title insurance policy, and no prior holder of the Mortgage, including the
Seller, has done anything which would impair the coverage of such lender's
title insurance policy.
(xvii) No Defaults. Except for payment delinquencies noted on the
related Mortgage Loan Schedule, there is no default, breach, violation or
event of acceleration existing under the Mortgage or the Note or related
documents and no event which, with the passage of time or with notice and
the expiration of any applicable grace or cure period, would constitute a
default, breach, violation or event of acceleration, and neither the
Seller nor any of its predecessors have waived any default, breach,
violation or event of acceleration.
(xviii) No Mechanics' Liens. There are no mechanics' or similar
liens or claims which have been filed for work, labor or material (and no
rights are outstanding that under the law could give rise to such liens)
affecting the related Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage.
(xix) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Property
lay wholly within the boundaries and building restriction lines of the
Property and no improvements on adjoining properties
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encroach upon the Property. No improvement located on or being part of the
Property is in violation of any applicable zoning law or regulation;
provided, that in no event shall a legal non-conforming use of the
Property be considered a violation of any such zoning law or regulation.
(xx) Payment Terms. For fixed rate Mortgage Loans, the Note is
payable on the same (or corresponding) day of each month in equal monthly
installments (other than the last payment) of principal and interest
sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than thirty years from inception
of the Mortgage Loan. For adjustable rate Mortgage Loans, the Coupon Rate
is adjusted in accordance with the terms of the Note and the Note is
payable on the same (or corresponding) day of each month and, during an
adjustment period or initial period, in equal monthly installments of
principal and interest. Installments of interest are subject to change due
to the adjustments to the Coupon Rate on each Interest Rate Adjustment
Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an
original term of not more than thirty years from inception of the Mortgage
Loan.
(xxi) Interest Rate Adjustments. All required notices of interest
rate and payment amount adjustments have been sent to the Mortgagor on a
timely basis and the computations of such adjustments were properly
calculated. All interest rate adjustments applicable to the Mortgage Loans
have been made in strict compliance with state and federal law and the
terms of the related Note. Any interest required to be paid pursuant to
state and local law has been properly paid and credited.
(xxii) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial or nonjudicial foreclosure. Upon default by an
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Property.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Property at a trustee's sale or
the right to foreclose the Mortgage subject to applicable federal and
state laws and judicial precedent with respect to bankruptcy and right of
redemption.
(xxiii) Occupancy of the Property. All inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the 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.
(xxiv) No Additional Collateral. The Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in subsection 3.04(a)(xi) above.
(xxv) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable
by Trust to such trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor.
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(xxvi) Due on Sale. Each Mortgage, together with any such documents
as may be required under applicable law, contains a provision for the
acceleration of the payment of the unpaid Loan Balance of the Mortgage
Loan in the event that the Property is sold or transferred without the
prior written consent of the mortgagee thereunder, at the option of the
mortgagee. This provision provides that the mortgagee cannot exercise its
option if either (a) the exercise of such option is prohibited by federal
law or (b)(i) the Mortgagor causes to be submitted to the mortgagee
information required by the mortgagee to evaluate the intended transferee
as if a new loan were being made to such transferee and (ii) the mortgagee
reasonably determines that the mortgagee's security will not be impaired
by the assumption of such Mortgage Loan by the transferee and that the
risk of breach of any covenant or agreement in the documents evidencing
such Mortgage Loan is acceptable to the mortgagee. To the best of the
Seller's knowledge, such provision is enforceable.
(xxvii) Transfer of Loans. Each of the Mortgages is in recordable
form and is acceptable for recording under the laws of the jurisdiction in
which the Property is located, and each Mortgage has been delivered to the
appropriate recorder's office for recording.
(xxviii) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor or anyone on
behalf of the Mortgagor, or paid by any source other than the Mortgagor,
nor does it contain any other similar provisions currently in effect which
may constitute a "buydown" provision. The Mortgage Loan is not a graduated
payment mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature.
(xxix) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Startup Day have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured
principal amount, as consolidated, bears a single interest readjustment
feature or rate and single repayment term. For First Mortgages, the lien
of the Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest
or by other title evidence acceptable to the Trustee. For Second
Mortgages, the lien of the Mortgage securing the consolidated principal
amount is expressly insured as having second lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to Trustee.
The consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan. With respect to Second Mortgages, no future
advances are permitted under the senior mortgage.
(xxx) Property Undamaged; No Condemnation Proceedings. There is no
proceeding pending or, threatened for the total or partial condemnation of
the Property. The Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, water, tornado or other casualty so as
to adversely affect the value of the Property as security for the Mortgage
Loan or the use for which the premises were intended and each Property is
in good repair. There have not been any condemnation proceedings with
respect to the Property and the Seller and the Depositor have no knowledge
of any such proceedings in the future.
(xxxi) Appraisals. The related Originator has delivered to the
Seller an appraisal of the Property signed by a qualified appraiser, who
(i) is licensed in the state where the Property is located, (ii) has no
interest, direct or indirect, in the Property or in any Mortgage Loan or
the security therefor, and (iii) does not receive compensation that is
affected by the approval or
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disapproval of the Mortgage Loan. The appraisal shall have been made
within ninety (90) days of the origination of the Mortgage Loan, be
completed in compliance with the Uniform Standards of Professional
Appraisal Practice, and all applicable Federal and state laws and
regulations.
(xxxii) Soldier's and Sailors' Relief Act. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Solider's and Sailors'
Civil Relief Act of 1940.
(xxxiii) Environmental Matters. There exists no violation of any
local, state or federal environmental law, rule or regulation in respect
of the Property which violation has or could have a material adverse
effect on the market value of such Property. The Seller has no knowledge
of any pending action or proceeding directly or indirectly involving the
related Property in which compliance with any environmental law, rule or
regulation is in issue; and, to the best of the Seller's knowledge,
nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to the use
and enjoyment of such Property.
(xxxiv) Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure
materials required by applicable law with respect to the making of
adjustable rate mortgage loans. The Seller shall deliver such statement to
the Trustee in the related File.
(xxxv) No Construction Loans. The Mortgage Loan was not made in
connection with (a) the construction or rehabilitation of a Property or
(b) facilitating the trade-in or exchange of a Property.
(xxxvi) Circumstances Affecting Value, Marketability or Prepayment.
Except as otherwise disclosed to Trustee, the Seller has no knowledge of
any circumstances or conditions with respect to the Mortgage, the
Property, or the Mortgagor, that could reasonably be expected to adversely
affect the value or the marketability of any Property or Mortgage Loan,
subject to the economic and geological conditions generally and
specifically to the area in which the Mortgaged Property is located, or
cause the Mortgage Loan to become delinquent.
(b) Upon the earliest to occur of the Seller's discovery, its receipt of
notice of breach of a representation or warranty set out in subsection (a) above
from any one of the other parties hereto or such time as a breach of any
representation and warranty materially and adversely affects the interests of
the Owners, the Seller hereby covenants and warrants that it shall promptly cure
such breach in all material respects or, if such breach is not cured, the Seller
shall, subject to the further requirements of this paragraph (but in any case
for a Mortgage Loan that is not a "qualified mortgage", within 90 days of
discovery thereof) (i) within two years of the Startup Day, substitute in lieu
of each Mortgage Loan which has given rise to the requirement for action a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, to the related Servicer for deposit in the related Principal and
Interest Account or (ii) purchase such Mortgage Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the related Servicer for deposit in the related Principal
and Interest Account by the Seller. In connection with any such proposed
purchase or substitution, the Seller may deliver to the related Servicer and the
Trustee an opinion of counsel experienced in federal income tax matters stating
whether or not such a proposed purchase or substitution would constitute a
Prohibited Transaction for the Trust or would jeopardize the status of the Trust
as a REMIC, and the Seller shall only be required to take either such action to
the extent such action would not constitute a Prohibited Transaction for the
Trust or would not jeopardize the status of the Trust as a REMIC. Any required
purchase or substitution, if delayed by the absence of such opinion, shall
nonetheless occur upon the earlier
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of (i) the occurrence of a default or imminent default with respect to the
Mortgage Loan or (ii) the delivery of such opinion by the Seller. Any repurchase
or substitution shall occur prior to the related Monthly Remittance Date and the
Seller shall provide the related Servicer with written notice no less than five
Business Days in advance of such repurchase or substitution. It is understood
and agreed that the obligation of the Seller to cure the defect, or substitute
for or purchase any Mortgage Loan as to which a representation or warranty is
untrue in any material respect and has not been remedied shall constitute the
sole remedy available to the Owners, the Depositor and the Trustee.
(c) Notwithstanding subsection (a) above, with respect to the Ameriquest
Loans, other than the Seller's right to recapture any premium paid by it in
connection with its purchase of Ameriquest Loans, the Seller hereby assigns to
the Trustee for the benefit of the Owners all its right, title and interest
under the Ameriquest Transfer Agreement but none of its obligations thereunder.
Insofar as the Ameriquest Transfer Agreement provides for representations and
warranties made by Ameriquest in respect of an Ameriquest Loan and any remedies
provided thereunder for any breach of such representations and warranties, such
right, title and interest may be enforced against Ameriquest directly by the
Seller, the Depositor or the Trustee on behalf of the Owners; provided, that the
Trustee must enforce such remedies if such other parties do not so enforce such
remedies. Upon the discovery by the Seller, the Depositor, Ameriquest or the
Trustee of a breach of any of the representations and warranties made in the
Ameriquest Transfer Agreement in respect of any Ameriquest Loan, without regard
to any limitation set forth in such representation or warranty concerning the
knowledge of Ameriquest as to the facts stated therein, which materially and
adversely affects the interests of the Owners in such Ameriquest Loan, the party
discovering such breach shall give prompt written notice to the other parties.
A breach of any representation or warranty (x) relating to marketability
of title sufficient to transfer unencumbered title to a Mortgage Loan set forth
in the Ameriquest Transfer Agreement, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property set forth in the
Ameriquest Transfer Agreement or (z) the status of such Mortgage Loan as a
"qualified mortgage" under Section 860G(a)(3) of the Code, is a priori the
breach of a representation or warranty which "materially and adversely affects
the interests of the Owners" in such Mortgage Loan; provided that Ameriquest
shall nevertheless have the opportunity to cure, substitute or repurchase in
accordance with the Ameriquest Transfer Agreement and this Agreement.
(d) In the event that any Qualified Replacement Mortgage is delivered by
the Seller or Ameriquest to the Trust pursuant to this Section 3.04 or Section
3.06 hereof, the Seller shall take the actions described in Section 3.04(b) with
respect to such Qualified Replacement Mortgage upon the discovery by any of the
Owners, the Seller, a Servicer or the Trustee that the representations and
warranties set forth in Section 3.04(a) above, are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the Trust
such that the interests of the Owners in the related Qualified Replacement
Mortgage are materially and adversely affected; provided, however, that for the
purposes of this subsection (d) the representations and warranties as set forth
in Section 3.04(a) above or in the Ameriquest Transfer Agreement referring to
items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the related Subsequent Cut-Off Date.
(e) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee and the Servicers (in their capacities as Servicers) shall
have no duty to conduct any affirmative investigation other than as specifically
set forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this Section or the
eligibility of any Mortgage Loan for purposes of this Agreement.
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Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage Loans
and Qualified Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners, all
their respective right, title and interest in and to the Trust Estate; provided,
however, that the Seller reserves and retains all its right, title and interest
in and to principal (including Prepayments collected) and interest due on each
Initial Mortgage Loan on or prior to the CutOff Date. The transfer by the
Depositor of the Initial Mortgage Loans set forth on the Schedule of Mortgage
Loans to the Trustee is absolute and is intended by the Owners and all parties
hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance herein
contemplated constitute a sale of the Initial Mortgage Loans conveying good
title thereto free and clear of any liens and encumbrances from the Seller to
the Depositor and from the Depositor to the Trust and that the Initial Mortgage
Loans not be part of the Depositor's or the Seller's estate in the event of
insolvency. In the event that either such conveyance or a conveyance of a
Qualified Replacement Mortgage or a conveyance pursuant to Section 3.07 and any
Subsequent Transfer Agreement is deemed to be a loan, the parties intend that
the Seller shall be deemed to have granted to the Depositor and the Depositor
shall be deemed to have granted to the Trustee a security interest in the Trust
Estate, and that this Agreement shall constitute a security agreement under
applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to be
delivered to the Depositor and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of the
Seller as a debtor and the Depositor as the secured party on such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's and the Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance, from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to be
delivered to the Trust and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of the
Depositor as a debtor and the Trustee as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Depositor's entire right, title and interest in the Trust Estate.
In connection with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take or cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Trustee's and the Owners' interest in the Trust Estate.
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(b) In connection with the transfer and assignment of the Initial Mortgage
Loans and prior to each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees to:
(i) deliver without recourse to the Trustee, on the Startup Day with
respect to each Initial Mortgage Loan or on each Subsequent Transfer Date
with respect to the Qualified Replacement Mortgage or Subsequent Mortgage
Loans, (A) the original Notes endorsed in blank or to the order of the
Trustee, (B) the original title insurance policy or any one of an original
title binder, an original preliminary title report or an original title
commitment or a copy of any of the foregoing certified by the issuer of
the title insurance policy, or the attorney's opinion of title, (C)
originals or certified copies of all intervening recorded assignments,
showing a complete chain of title from origination to the Trustee, if any,
with evidence of recording thereon, (D) originals of all assumption,
modification, written assurance or substitution agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording thereon, (2)
a certified copy if such original Mortgage has not been returned by the
applicable recording office, or (3) a copy of the Mortgage certified by
the public recording office in those instances where the original recorded
Mortgage has been lost;
(ii) cause the Trustee, within 60 days following the Startup Day
with respect to the Initial Mortgage Loans or on each Subsequent Transfer
Date with respect to the Qualified Replacement Mortgages or Subsequent
Mortgage Loans to complete the assignments of the Mortgages to "Bankers
Trust Company, as Trustee of AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1998-1 under the Pooling and Servicing Agreement dated
as of February 1, 1998" to be submitted to the Seller for recording in the
appropriate jurisdictions (unless the Originator of the related Mortgage
Loan is Ameriquest, in which case Ameriquest shall so submit such
assignments) for recording in the appropriate jurisdictions; provided,
however, that the Depositor shall not be required to cause the Trustee to
complete and cause the Seller to record (and Ameriquest shall not be
required to record) an assignment for any Mortgage with respect to a
Property located in California or with respect to which the original
recording information is lacking;
(iii) if not delivered on the Startup Day, deliver the title
insurance policy or title searches, the original Mortgages and such
recorded assignments, together with originals or duly certified copies of
any and all prior assignments, to the Trustee within 15 days of receipt
thereof by the Depositor (but in any event, with respect to any Mortgage
as to which original recording information has been made available to the
Depositor, within one year after the Startup Day with respect to the
Initial Mortgage Loans or on each Subsequent Transfer Date with respect to
the Qualified Replacement Mortgages or Subsequent Mortgage Loans); and
(iv) with respect to each Subsequent Transfer Date only, furnish to
the Trustee at the Depositor's expense, an opinion of counsel with respect
to the sale and perfection of the Subsequent Mortgage Loans delivered to
the Trust, corporate and enforceability matters and an opinion of counsel
as to the tax consequences to the Trust, if any, resulting from the
conveyance of Subsequent Mortgage Loans, each in form and substance
satisfactory to the Trustee.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or
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assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 shall be accomplished
at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) The Seller shall transfer, or, if related to an Ameriquest Loan, cause
Ameriquest to transfer, assign, set over and otherwise convey without recourse,
to the Trustee all right, title and interest of such party in and to any
Qualified Replacement Mortgage delivered to the Trustee on behalf of the Trust
by such party pursuant to Section 3.03, 3.04 or 3.06 hereof and all such party's
right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Subsequent Cut-Off Date; provided,
however, that such party shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Subsequent Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such released Mortgage Loan
on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt thereof by the Seller (but
in any event within 120 days after the date of conveyance of such Qualified
Replacement Mortgage), (iv) deliver the title insurance policy, or where no such
policy is required to be provided under Section 3.05(b)(i)(B), the other
evidence of title in same required in Section 3.05(b)(i)(B) and (v) originals of
all assumption, modification, written assurance or substitution agreements, if
any.
(g) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage the Trustee shall deliver on
the date of conveyance of such Qualified Replacement Mortgage to the party
providing such Qualified Replacement Mortgage (i) the original Note relating
thereto, endorsed without recourse or representation, to such party, (ii) the
original Mortgage so released and all assignments relating thereto and (iii)
such other documents as constituted the File with respect thereto.
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(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, the
Seller shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by the Seller or the Depositor
in the form attached as Exhibit E hereto, and declares that it will hold such
documents and any amendments, replacement or supplements thereto, as well as any
other assets included in the definition of Trust Estate and delivered to the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners. The Trustee agrees to review, for the benefit of
the Owners, such items within 45 days after the Startup Day (or, with respect to
any document delivered after the Startup Day, within 45 days of receipt and with
respect to any Subsequent Mortgage Loan or Qualified Replacement Mortgage,
within 45 days after the Subsequent Transfer Date) and to deliver to the
Depositor, the Seller and the related Servicer a certification in the form
attached hereto as Exhibit F (a "Pool Certification") to the effect that, as to
each Mortgage Loan listed in the Schedule of Mortgage Loans (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing documents, the information set
forth on items (1), (3) and (4) of the Schedule of Mortgage Loans accurately
reflects the information set forth in the File. The Trustee shall not have any
responsibility for reviewing any File except as expressly provided in this
subsection 3.06(a). Without limiting the effect of the preceding sentence, in
reviewing any File, the Trustee shall not have any responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document (other than the assignments) has been recorded
in accordance with the requirements of any applicable jurisdiction or whether a
blanket assignment is permitted in any applicable jurisdiction, but shall only
be required to determine whether a document has been executed, that it appears
to be what it purports to be, and, where applicable, that it purports to be
recorded. The Trustee shall not be under any duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Mortgage Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Mortgage Loans identified in the Schedule of Mortgage Loans,
or that any Mortgage Loan does not conform to the description thereof as set
forth in the Schedule of Mortgage Loans, the Trustee shall promptly so notify
the Depositor, the Seller and the related Servicer. In performing any such
review, the Trustee may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's review of the items delivered by the Seller
pursuant to Section 3.05(b)(i) is limited solely to confirming that the
documents listed in Section 3.05(b)(i) have been executed and received, relate
to the Files identified in the Schedule of Mortgage Loans and conform to the
description thereof in the Schedule of Mortgage Loans. The Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Trustee. If, however, within 60 days
after the Trustee's notice to the Seller respecting such defect the Seller has
not remedied the defect and the defect materially and adversely affects the
interest in the related Mortgage Loan of the Owners, the Seller
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will (i) substitute in lieu of such Mortgage Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the applicable Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the applicable Servicer for deposit in the
related Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to provide an
updated report during the 12th month after the Startup Day indicating the
current status of the exceptions previously indicated on the Pool Certification
(the "Final Certification"). After delivery of the Final Certification, the
Trustee shall provide to the Servicers no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b) and (c) below in consideration of the Trustee's delivery
on the relevant Subsequent Transfer Dates to or upon the order of the Depositor
of all or a portion of the balance of funds in the Pre-Funding Account, the
Depositor shall on each Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee, all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from the Subsequent Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the relevant Subsequent Cut-Off
Date) which the Depositor will cause to be delivered to the Trustee therewith
(and all substitutions therefor as provided by Sections 3.03, 3.04 and 3.06),
together with the related Subsequent Mortgage Loan documents and the Depositor's
interest in any Property and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing and proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Subsequent Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on the Schedule of
Mortgage Loans by the Seller to the Depositor and by the Depositor to the Trust
shall be absolute and shall be intended by the Owners and all parties hereto to
be treated as a sale by the Seller to the Depositor and by the Depositor to the
Trust. Any Subsequent Mortgage Loan so transferred will be included in the
related Mortgage Loan Group. The amount released from the Pre-Funding Account
shall be one-hundred percent (100%) of the aggregate principal balances of the
Subsequent Mortgage Loans so transferred. Upon the transfer by the Depositor of
the Subsequent Mortgage Loans hereunder, such Subsequent Mortgage Loans (and all
principal (including Prepayments collected) and interest due thereon subsequent
to the Subsequent Cut-Off Date) and all other rights and interests with respect
to such Subsequent Mortgage Loans transferred pursuant to a Subsequent Transfer
Agreement shall be deemed for all purposes hereunder to be part of the Trust
Estate. The Seller hereby covenants and agrees to use its best efforts to ensure
that a sufficient amount of Subsequent Mortgage Loans will be transferred to the
Depositor and by the Depositor to the Trust during the Funding Period to enable
the Pre-Funded Amount with respect to each Group to be reduced to less than
$100,000.
(b) The obligation of the Trustee to accept the transfer of the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
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(i) the Depositor shall have provided the Trustee with an Addition
Notice not less than ten (10) calendar days prior to the proposed
Subsequent Transfer Date (unless the Trustee agrees to a shorter time
period) and shall have provided any information reasonably requested by
any of the foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit C, which shall include a Schedule of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Depositor shall have deposited in the applicable Principal
and Interest Account all principal collected and interest accruing in
respect of such Subsequent Mortgage Loans on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Depositor nor
the Seller was insolvent, nor will either of them be made insolvent by
such transfer, nor is either of them aware of any pending insolvency;
(v) the Funding Period for the related Group shall not have ended;
(vi) the Depositor shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and in the related Subsequent Transfer
Agreement; and
(vii) such sale will not result in a materially adverse tax
consequence to the Trust as evidenced by an Opinion of Counsel delivered
to the Trustee by the Depositor at its own expense.
(c) The obligation of the Trust to purchase Subsequent Mortgage Loans on a
Subsequent Transfer Date is subject to the following requirements, among others:
(i) the ratings on the Offered Certificates shall not have been downgraded by
any Rating Agency; (ii) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (iii) the
remaining term to maturity of such Subsequent Mortgage Loan may not exceed 360
months; and (iv) following the purchase of all of the Subsequent Mortgage Loans
by the Trust, the Subsequent Mortgage Loans, as a whole, (a) will have a
weighted average Combined Loan-to-Value Ratio of not more than 71.75% for Group
I and a weighted average Loan-to-Value Ratio of not more than 77% for Group II;
(b) will have a weighted average gross margin for Group II that is not more than
25 basis points less than the weighted average gross margin for Group II as of
the Cut-Off Date; (c) will have no more than 17% in the case of Group I of such
Subsequent Mortgage Loans with Combined Loan-to-Value Ratios and 26% in the case
of Group II of such Subsequent Mortgage Loans with Loan-to-Value Ratios in
excess of 80%; (d) will have no more than 59% in the case of Group I and 38% in
the case of Group II with cash out refinancings; (e) in the case of Group II
only, will not be comprised of more than 74% in the aggregate of 2/28 Loans and
3/27 Loans; (f) will have weighted average PAG codes of less than 2.6 in the
case of the Group I and less than 2.8 in the case of Group II; (g) will include
Subsequent Mortgage Loans classified as PAG IV or PAG V comprising not more than
20.0% of Group I and 24.0% of Group II; and (h) will have not more than 12.0% of
Group I and 8.0% of Group II that are secured by non-owner occupied properties.
(d) In connection with each Subsequent Transfer Date and on the Payment
Dates occurring in March and April 1998 and the Pre-Funding Payment Date, the
Trustee shall determine: (i) the amount
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and correct dispositions of each of the Group I and Group II Capitalized
Interest Requirements, Overfunded Interest Amounts, Pre-Funding Account Earnings
and the Pre-Funded Amount and (ii) any other necessary matters in connection
with the administration of the Pre-Funding Account and of the Capitalized
Interest Account. In the event that any amounts are released as a result of an
error in calculation to the Owners or Depositor from the Pre-Funding Account or
from the Capitalized Interest Account, such Owners or the Depositor shall
immediately repay such amounts to the Trustee.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 8 a.m., Pacific time on the Startup Day (the "Closing"), at the offices
of Arter & Hadden LLP, 5 Park Plaza, Irvine, California (or at such other
location acceptable to the Seller), the Seller will sell and convey the Initial
Mortgage Loans and the money, instruments and other property related thereto to
the Depositor and the Depositor will sell and convey the Initial Mortgage Loans
and the money, instruments and other property related thereto to the Trustee,
and the Trustee will deliver (i) to the Underwriters, the Offered Certificates
with an aggregate Percentage Interest in each Class equal to 100%, registered in
the name of Cede & Co., or in such other names as the Underwriters shall direct,
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Trustee, (ii) to the initial purchasers thereof, Class S
Certificates with a cumulative Percentage Interest equal to 100%, (iii) to the
initial purchasers thereof, Class C-IO Certificates with an aggregate Percentage
Interest in each Class of 100%, (iv) to the respective registered owners
thereof, a Class D Certificate with a Percentage Interest equal to 100% and a
Class R Certificate with a Percentage Interest equal to 99.999%, registered in
the names designated by the Depositor and (v) to the Trustee, the Tax Matters
Person Residual Interest.
Upon the Trustee's receipt of the entire net proceeds of the sale of the
Certificates the Depositor shall instruct the Trustee to deposit (a) an amount
equal to the Original Pre-Funded Amount in the Pre-Funding Account and (b) an
amount equal to the Original Capitalized Interest Amount to the Capitalized
Interest Account contributed by the Depositor out of such proceeds or otherwise.
The Trustee shall then remit the entire balance of such net proceeds to the
Depositor in accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law). The Certificates are payable
solely from payments received on or with respect to the Mortgage Loans (other
than the Servicing Fees), money in the Principal and Interest Account, except as
otherwise provided herein, money in the Pre-Funding Account and the Capitalized
Interest Account, earnings and the proceeds of property held as a part of the
Trust Estate. Each Certificate entitles the Owner thereof to receive monthly on
each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Mortgage Loans, pro rata in accordance with such
Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate prior to receiving the final distribution due thereon. Any such
Certificate as to which the Trustee has made the final distribution thereon
shall be deemed cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class M-1F Certificates, the
Class M-1A Certificates, the Class M-2F Certificates, the Class M-2A
Certificates, the Class B-1F Certificates, the Class B-1A Certificates, the
Class C-FIO Certificates, the Class C-AIO Certificates, the Class D
Certificates, the Class R Certificates and the Class S Certificates shall be in
substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7,
B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, B-9, B-10 and B-11 hereof, respectively,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Agreement or as may in the Depositor's
judgment be necessary, appropriate or convenient to comply, or facilitate
compliance, with applicable laws, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any applicable securities laws or as
may, consistently herewith, be determined by the Authorized Officer of the
Depositor executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Depositor shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners and the Trustee shall have the right to inspect the
Register during the Trustee's normal hours and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Registrar by an Authorized Officer thereof as to the names and addresses of
the Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the Owners
of a majority of the aggregate Percentage Interests represented by the Offered
Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates, the Trustee will give the Owners prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange
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of Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Offered Certificate of such Class. Upon initial issuance, the ownership of each
such Offered Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Offered Certificates shall be issued in
denominations of less than $1,000 except that one certificate in each class may
be in an amount less than $1,000. No Class C-IO Certificates shall be issued in
denominations of less than $1,000 (based on the Notional Principal Amount
thereof). The Class D Certificates, the Class R Certificates and the Class S
Certificates (other than the Tax Matters Person Residual Interest) shall be
issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicers,
the Seller and the Trustee shall have no responsibility or obligation to Direct
or Indirect Participants or beneficial owners for which the Depository holds
Offered Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Servicers, the Seller and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the Register,
of any notice with respect to the Offered Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or
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names registered Owners of Offered Certificates transferring Offered
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Offered Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal or interest on such
Offered Certificates and all notices with respect to such Offered Certificates
shall be made and given, respectively, in the manner provided in the
Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee harmless, then, in the absence of notice to the Trustee or the
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Registrar
or Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the Owner of such Certificate for the
purpose of receiving distributions with respect to such Certificate and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
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Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or
assignment of an interest in a Class R Certificate or assignment of an interest
in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class R
Certificate or assignment of an interest in the Lower-Tier REMIC Residual Class
(whether pursuant to a purchase, a transfer resulting from a default under a
secured lending agreement or otherwise) to a Disqualified Organization shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate or
Lower-Tier REMIC Residual Class. Furthermore, in no event shall the Trustee
accept surrender for transfer, registration of transfer, or register the
transfer, of any Class R Certificate nor authenticate and make available any new
Class R Certificate unless the Trustee has received an affidavit from the
proposed transferee in the form attached hereto as Exhibit I. Each holder of a
Class R Certificate by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 5.08(a). The Lower-Tier
REMIC Residual Class is not transferable except that the Owner of the Tax
Matters Person Residual Interest in the Lower-Tier REMIC may assign its interest
to another Person who accepts such assignment and the designation as Tax Matters
Person pursuant to Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership of a
Class C-IO Certificate, a Class D Certificate, a Class R Certificate, or a Class
S Certificate (collectively, the "Exempt Certificates") shall be made unless
such transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and any applicable state securities
laws or is made in accordance with said Securities Act and laws. In the event
such a transfer is to be made within three years from the Startup Day, (i) the
Trustee or the Depositor shall require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Depositor in the event that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Securities Act and laws or is being
made pursuant to said Securities Act and laws, which Opinion of Counsel shall
not be an expense of the Trustee, the Trust Estate or the Servicers and (ii) the
Trustee shall require the transferee to execute an investment letter in
substantially the form of Exhibit J hereto acceptable to and in form and
substance satisfactory to the Seller certifying to the Trustee and the Seller
the facts surrounding such transfer, which investment letter shall not be an
expense of the Trustee, the Trust Estate or the Seller. The Owner of an Exempt
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Servicers, the Depositor and the Seller against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(c) No transfer of a Class D Certificate or Class R Certificate shall be
made unless the Trustee shall have received a representation letter in
substantially the form of Exhibit J hereto from the transferee of such Class D
Certificate or Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act ("ERISA") nor a plan or other arrangement subject to Section 4975
of the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor
using the assets of any Plan to effect such transfer. Notwithstanding anything
else to the contrary herein, any purported transfer of a Class D Certificate or
Class R Certificate to or on behalf of any Plan shall be null and void and of no
effect. Each transferee of a Mezzanine Certificate or a Class B-1 Certificate
shall be deemed to have represented either that it is not a Plan or that it is
an insurance company general account and that Prohibited Transaction Exemption
95-60 covers its acquisition and holding of such Certificates.
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(d) No sale or other transfer of any Offered Certificate may be made to
the Depositor or the Seller or any Originator. No sale or other transfer of any
Offered Certificate may be made to a Seller affiliate unless the Trustee shall
have been furnished with an Opinion of Counsel acceptable to the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. No sale or other transfer of the Class R
Certificate issued to the Tax Matters Person appointed on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the related
Account(s) and make the distributions with respect to the Certificates in
accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate having an original
principal balance of not less than $1,000,000, (B) a Class C-IO Certificate
having a Notional Principal Amount of not less than $1,000,000, or (C) a Class
D, a Class R or Class S Certificate having a Percentage Interest of not less
than 10% in writing not later than five Business Days prior to the applicable
Record Date (which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, made on each Payment Date, in each case to each Owner of record on the
immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the Trustee
on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and Class S
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Offered
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent before being required to make any such payment, may
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall
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Street Journal, notice that such money remains unclaimed and that, after a date
specified therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Owners of the Class R Certificates. The Trustee shall, at the direction of
the Depositor, also adopt and employ, at the expense of the Trust, any other
reasonable means of notification of such payment (including but not limited to
mailing notice of such payment to Owners whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Registrar, the Trustee or any Paying Agent, at the last address of record for
each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of the
Owners and, at the request of the Depositor, will from time to time execute and
deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the interests of the Owners represented thereby, in such
Trust Estate against the contrary claims of all Persons and parties.
The Trustee shall send copies of any request received from the Depositor
to take any action pursuant to this Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the Owners, by
action, suit or proceeding at law or equity; provided, however, that nothing in
this Section shall require any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by this Agreement, have been requested by the Owners of a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding or, if there are no longer any Offered Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
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The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the Depositor and
the Trustee of such Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding or, if
there are no Offered Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the Class D
Certificates and the Class R Certificates, shall have made written
request to the Trustee to institute such proceeding in its own name
as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a majority
of the Percentage Interests represented by the Offered Certificates
or, if there are no Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class D
Certificates and the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee or to the Owners is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
Except as otherwise provided herein, the assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Seller or any Owner of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein. Every right
and remedy given by this Article VI or by law to the Trustee or to the Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
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(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee,
as the case may be, which is not inconsistent with such direction;
provided, however, that the Seller or the Trustee, as the case may
be, need not take any action which it determines might involve it in
liability or may be unjustly prejudicial to the Owners not so
directing.
Section 6.12 Access to Owners of Certificates' Names and Addresses. (a) If
any Owner (for purposes of this Section 6.12, an "Applicant") applies in writing
to the Trustee, and such application states that the Applicant desires to
communicate with other Owners with respect to their rights under this Agreement
or under the Certificates and is accompanied by a copy of the communication
which such Applicant proposes to transmit, then the Trustee shall, at the
expense of such Applicant, within ten (10) Business Days after the receipt of
such application, furnish or cause to be furnished to such Applicant a list of
the names and addresses of the Owners of record as of the most recent Payment
Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Trustee by the related
Servicer or by any Subservicer. The Trustee shall hold all such money and
property received by it, other than pursuant to or as contemplated by Section
6.02(e) hereof, as part of the Trust Estate and shall apply it as provided in
this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain at the Corporate Trust Office as a segregated
account, the Certificate Account, to be held by the Trustee on behalf of the
Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office two segregated accounts, referred to
herein as the "Pre-Funding Account" and the "Capitalized Interest Account" to be
held by the Trustee in the name of the Trust for the benefit of the Owners. For
federal income tax purposes, the Depositor shall be the owner of such accounts.
(c) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office , as two segregated accounts, the
Upper-Tier Group I Distribution Account and the Upper-Tier Group II Distribution
Account to be held by the Trustee in the name of the Upper-Tier REMIC for the
benefit of the Owners.
Section 7.03 Flow of Funds.
(a) (i) With respect to Group I, the Servicers shall, no later than the
related Monthly Remittance Date, remit and the Trustee shall deposit to the
Certificate Account, without duplication, (v) any Net Liquidation Proceeds and
any proceeds received upon liquidation of the Trust insofar as such proceeds
relate to Group I, (w) all remittances made to the Trustee pursuant to Section
8.09 insofar as such remittances relate to Group I, (x) each portion of the
Monthly Remittance Amount relating to Group I remitted by the related Servicer,
(y) on the Payment Dates in March and April 1998 and the Pre-Funding Payment
Date, the Group I Capitalized Interest Requirement and the Group I Pre-Funding
Account Earnings to be transferred on such Payment Date from the Capitalized
Interest Account, pursuant to Section 7.04(e) hereof and (z) on the Payment
Dates in March and April 1998 and the Pre-Funding Payment Date, the amount, if
any, to be transferred on such Payment Date (or Pre-Funding Payment Date) from
the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(ii) On each Payment Date, the Trustee shall transfer the Lower-Tier Group
I Distribution Amount from the Certificate Account to the Upper-Tier Group I
Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute from the
Certificate Account to the Owners of the Class S Certificates, the Class S
Distribution Amount relating to Group I.
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(b) (i) With respect to Group II, the Servicers shall, no later than the
related Monthly Remittance Date, remit and the Trustee shall deposit to the
Certificate Account without duplication, (v) any Net Liquidation Proceeds and
any proceeds received upon liquidation of the Trust insofar as such proceeds
relate to Group II, (w) all remittances made to the Trustee pursuant to Section
8.09 insofar as such remittances relate to Group II, (x) each portion of the
Monthly Remittance Amount relating to Group II remitted by the related Servicer,
(y) on the Payment Dates in March and April 1998 and the Pre-Funding Payment
Date, the Group II Capitalized Interest Requirement and the Group II Pre-Funding
Account Earnings to be transferred on such Payment Date from the Capitalized
Interest Account, pursuant to Section 7.04(e) hereof and (z) on the Payment
Dates in March and April 1998 and the Pre-Funding Payment Date, the amount, if
any, to be transferred on such Payment Date (or Pre-Funding Payment Date) from
the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(ii) On each Payment Date, the Trustee shall transfer the Lower-Tier Group
II Distribution Amount from the Certificate Account to the Upper-Tier Group II
Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute from the
Certificate Account to the Owners of the Class S Certificates, the Class S
Distribution Amount relating to Group II.
(c) With respect to the Upper-Tier Group I Distribution Account, on each
Payment Date, the Trustee shall make the following disbursements from the Group
I Interest Remittance Amount transferred thereto pursuant to subsection (a)(ii),
in the following order of priority, and each such disbursement shall be treated
as having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee and reasonable
expenses, if any, incurred by the Trustee relating to Group I;
(ii) Second, to the Owners of the Class A Certificates related to Group
I, the related Class A Current Interest plus the related Class A
Interest Carry Forward Amount with respect to each such Class of
Class A Certificates without any priority among such Class A
Certificates; provided, that if the Group I Interest Amount
Available is not sufficient to make a full distribution of interest
with respect to all Classes of the Class A Certificates related to
Group I, the Group I Interest Amount Available will be distributed
among the outstanding Classes of Class A Certificates related to
Group I pro rata based on the aggregate amount of interest due on
each such Class, and the amount of the shortfall will be carried
forward with accrued interest at the related Class A Pass-Through
Rate;
(iii) Third, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class M-1F Certificates, the Class
M-1F Current Interest;
(iv) Fourth, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class M-2F Certificates, the Class
M-2F Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class B-1F Certificates, the Class
B-1F Current Interest;
(vi) Sixth, to the extent of the Group I Interest Amount Available then
remaining, to the Owners of the Class C-FIO Certificates, the Class
C-FIO Current Interest; and
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(vii) Seventh, the Group I Monthly Excess Interest Amount shall be applied
or distributed as provided in subsection (h) of this Section 7.03.
(d) With respect to the Upper-Tier Group II Distribution Account on each
Payment Date, the Trustee shall make the following disbursements from the Group
II Interest Remittance Amount transferred thereto pursuant to subsection
(b)(ii), in the following order of priority, and each such disbursement shall be
treated as having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee and reasonable
expenses, if any, incurred by the Trustee relating to Group II;
(ii) Second, to the Owners of the Class A-7 Certificates, the Class A-7
Current Interest plus the Class A-7 Interest Carry Forward Amount;
(iii) Third, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class M-1A Certificates, the Class
M-1A Current Interest;
(iv) Fourth, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class M-2A Certificates, the Class
M-2A Current Interest;
(v) Fifth, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class B-1A Certificates, the Class
B-1A Current Interest;
(vi) Sixth, to the extent of the Group II Interest Amount Available then
remaining, to the Owners of the Class C-AIO Certificates, the Class
C-AIO Current Interest; and
(vii) Seventh, the Group II Monthly Excess Interest Amount shall be
applied or distributed as provided in subsection (i) of this Section
7.03.
(e) Reserved.
(f) With respect to the Upper-Tier Group I Distribution Account on each
Payment Date, the Trustee shall make the following disbursements from amounts
relating to principal transferred thereto, in the following order of priority
and each such disbursement shall be treated as having occurred only after all
preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group I Stepdown Date or (b)
with respect to which a Group I Trigger Event is in effect, Owners
of the Class A Certificates related to Group I will be entitled to
receive payment of 100% of the Group I Principal Distribution Amount
as follows: (I) to the Owners of the Class A-6 Certificates, the
Class A-6 Lockout Distribution Amount and (II) to the Owners of the
Class A Certificates related to Group I, as follows: first, to the
Owners of the Class A-1 Certificates, until the Class A-1
Certificate Principal Balance is reduced to zero; second, to the
Owners of the Class A-2 Certificates, until the Class A-2
Certificate Principal Balance is reduced to zero; third, to the
Owners of the Class A-3 Certificates, until the Class A-3
Certificate Principal Balance is reduced to zero; fourth, to the
Owners of the Class A-4 Certificates, until the Class A-4
Certificate Principal Balance is reduced to zero; fifth, to the
Owners of the Class A-5 Certificates, until the Class A- 5
Certificate Principal Balance is reduced to zero; and, sixth, to the
Owners of the Class A-6 Certificates, until the
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Class A-6 Certificate Principal Balance is reduced to zero;
provided, however, that on any Payment Date on which the sum of the
Certificate Principal Balance of the Subordinate Certificates
related to Group I and the Group I Overcollateralization Amount is
zero, any amounts of principal payable to the Owners of the Class A
Certificates related to Group I on such Payment Date shall be
distributed pro rata and not sequentially.
(ii) Notwithstanding the provisions of Section 7.03(f)(i), if the
Certificate Principal Balance of the Class A Certificates related to
Group I is reduced to zero and it is prior to the Group I Stepdown
Date or during the continuation of a Group I Trigger Event, the
Owners of the Subordinate Certificates relating to Group I will be
entitled to receive payment of 100% of the Group I Principal
Distribution Amount as follows:
(a) to the Class M-1F Certificates until the Class M-1F
Certificate Termination Date;
(b) to the Class M-2F Certificates until the Class M-2F
Certificate Termination Date; and
(c) to the Class B-1F Certificates, until the Class B-1F
Certificate Termination Date.
(iii) On each Payment Date (a) on or after the Group I Stepdown Date and
(b) as long as a Group I Trigger Event is not in effect, the Owners
of the Group I Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts set forth below
and to the extent of the Group I Principal Distribution Amount as
follows:
(A) First, the lesser of (x) the Group I Principal Distribution
Amount and (y) the Group I Class A Principal Distribution
Amount shall be distributed (I) to the Owners of the Class A-6
Certificates, in an amount equal to the Class A-6 Lockout
Distribution Amount and (II) the remainder paid to the Owners
of the Class A Certificates related to Group I as follows:
first, to the Owners of the Class A-1 Certificates, until the
Class A-1 Certificate Principal Balance is reduced to zero;
second, to the Owners of the Class A-2 Certificates, until the
Class A-2 Certificate Principal Balance is reduced to zero;
third, to the Owners of the Class A-3 Certificates, until the
Class A-3 Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates, until the
Class A-4 Certificate Principal Balance is reduced to zero;
fifth, to the Owners of the Class A-5 Certificates, until the
Class A-5 Certificate Principal Balance is reduced to zero;
and, sixth, to the Owners of the Class A- 6 Certificates,
until the Class A-6 Certificate Principal Balance is reduced
to zero; provided, however, that on any Payment Date on which
the sum of the Certificate Principal Balance of the
Subordinate Certificates related to Group I and the Group I
Overcollateralization Amount is zero, any amounts of principal
payable to the Owners of the Class A Certificates related to
Group I on such Payment Date shall be distributed pro rata and
not sequentially;
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(B) Second, the lesser of (x) the excess of (i) the Group I
Principal Distribution Amount over (ii) the amount distributed
to the Owners of the Class A Certificates related to Group I
in clause (A) above and (y) the Class M-1F Principal
Distribution Amount shall be distributed to the Owners of the
Class M-1F Certificates, until the Class M-1F Certificate
Principal Balance has been reduced to zero;
(C) Third, the lesser of (x) the excess of (i) the Group I
Principal Distribution Amount over (ii) the sum of the amount
distributed to the Owners of the Class A Certificates related
to Group I in clause (A) above and the amount distributed to
the Owners of the Class M-1F Certificates in clause (B) above
and (y) the Class M-2F Principal Distribution Amount shall be
distributed to the Owners of the Class M-2F Certificates,
until the Class M-2F Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i) the Group I
Principal Distribution Amount over (ii) the sum of the amount
distributed to the Owners of the Class A Certificates related
to Group I pursuant to clause (A) above, the amount
distributed to the Owners of the Class M-1F Certificates
pursuant to clause (B) above and the amount distributed to the
Owners of the Class M-2F Certificates pursuant to clause (C)
above and (y) the Class B-1F Principal Distribution Amount
shall be delivered to the Owners of the Class B-1F
Certificates, until the Class B-1F Certificate Principal
Balance has been reduced to zero; and,
(E) Fifth, any portion of the Group I Principal Remittance Amount
remaining after making all of the distributions in clauses
(A), (B), (C) and (D) above shall be distributed as provided
in subsection (h) of this Section 7.03.
(g) With respect to the Upper-Tier Group II Distribution Account on each
Payment Date, the Trustee shall make the following disbursements from amounts
relating to principal transferred thereto, in the following order of priority
and each such disbursement shall be treated as having occurred only after all
preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group II Stepdown Date or (b)
with respect to which a Group II Trigger Event is in effect, Owners
of the Class A-7 Certificates will be entitled to receive payment of
100% of the Group II Principal Distribution Amount, until the Class
A-7 Certificate Principal Balance has been reduced to zero.
(ii) Notwithstanding the provisions of Section 7.03(3)(i) if the Class
A-7 Certificate Principal Balance is reduced to zero and it is prior
to the Group II Stepdown Date or during the continuation of a Group
II Trigger Event, the Owners of the Subordinate Certificates
relating to Group II will be entitled to receive payment of 100% of
the Group II Principal Distribution Amount as follows:
(a) to the Class M-1A Certificates until the Class M-1A
Certificate Termination Date;
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(b) to the Class M-2A Certificates until the Class M-2A
Certificate Termination Date; and
(c) to the Class B-1A Certificate; until the Class B-1A
Certificate Termination Date.
(iii) On each Payment Date (a) on or after the Group II Stepdown Date and
(b) as long as a Group II Trigger Event is not in effect, the Owners
of the Group II Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts set forth below
and to the extent of the Group II Principal Distribution Amount as
follows:
(A) First, the lesser of (x) the Group II Principal Distribution
Amount and (y) the Group II Class A Principal Distribution
Amount shall be distributed to the Owners of the Class A-7
Certificates, until the Class A-7 Certificate Principal
Balance has been reduced to zero;
(B) Second, the lesser of (x) the excess of (i) the Group II
Principal Distribution Amount over (ii) the amount distributed
to the Owners of the Class A-7 Certificates in clause (A)
above and (y) the Class M-1A Principal Distribution Amount
shall be distributed to the Owners of the Class M-1A
Certificates, until the Class M-1A Certificate Principal
Balance has been reduced to zero;
(C) Third, the lesser of (x) the excess of (i) the Group II
Principal Distribution Amount over (ii) the sum of the amount
distributed to the Owners of the Class A-7 Certificates in
clause (A) above and the amount distributed to the Owners of
the Class M-1A Certificates in clause (B) above and (y) the
Class M-2A Principal Distribution Amount shall be distributed
to the Owners of the Class M-2A Certificates, until the Class
M-2A Certificate Principal Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i) the Group II
Principal Distribution Amount over (ii) the sum of the amount
distributed to the Owners of the Class A-7 Certificates
pursuant to clause (A) above, the amount distributed to the
Owners of the Class M-1A Certificates pursuant to clause (B)
above and the amount distributed to the Owners of the Class
M-2A Certificates pursuant to clause (C) above and (y) the
Class B-1A Principal Distribution Amount shall be delivered to
the Owners of the Class B-1A Certificates, until the Class B-
1A Certificate Principal Balance has been reduced to zero; and
(E) Fifth, any portion of the Group II Principal Remittance Amount
remaining after making all of the distributions in clauses
(A), (B), (C) and (D) above shall be distributed as provided
in subsection (i) of this Section 7.03.
(h) On any Payment Date, the Group I Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
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(1) to fund any remaining Class A Interest Carry Forward Amount with
respect to Group I;
(2) to fund the Group I Extra Principal Distribution Amount for such
Payment Date;
(3) to fund the Class M-1F Interest Carry Forward Amount, if any;
(4) to fund the Class M-1F Realized Loss Amortization Amount for such
Payment Date;
(5) to fund the Class M-2F Interest Carry Forward Amount, if any;
(6) to fund the Class M-2F Realized Loss Amortization Amount for such
Payment Date;
(7) to fund the Class B-1F Interest Carry Forward Amount, if any;
(8) to fund the Class B-1F Realized Loss Amortization Amount for such
Payment Date;
(9) to fund the Class C-FIO Interest Carry Forward Amount, if any;
(10) to fund any amounts listed in clauses (1) through (9) of Section
7.03(i) to the extent such amounts have not been funded in full
through the application of Group II Monthly Excess Cashflow Amounts;
and,
(11) as provided in Section 7.03(j) hereof.
(i) On any Payment Date, the Group II Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund any remaining Class A-7 Interest Carry Forward Amount;
(2) to fund the Group II Extra Principal Distribution Amount for such
Payment Date;
(3) to fund the Class M-1A Interest Carry Forward Amount, if any;
(4) to fund the Class M-1A Realized Loss Amortization Amount for such
Payment Date;
(5) to fund the Class M-2A Interest Carry Forward Amount, if any;
(6) to fund the Class M-2A Realized Loss Amortization Amount for such
Payment Date;
(7) to fund the Class B-1A Interest Carry Forward Amount, if any;
(8) to fund the Class B-1A Realized Loss Amortization Amount for such
Payment Date;
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(9) to fund the Class C-AIO Interest Carry Forward Amount, if any;
(10) to fund any amounts listed in clauses (1) through (9) of Section
7.03(h) to the extent such amounts have not been funded in full
through the application of Group I Monthly Excess Cashflow Amounts;
and,
(11) as provided in Section 7.03(j) hereof.
(j) On any Payment Date, any Group I Monthly Excess Cashflow Amount
remaining after the application of Section 7.03(h)(1)(10) and any Group II
Monthly Excess Cashflow Amount remaining after the application of Section
7.03(i)(1)-(10) shall be distributed as follows:
(1) to the Servicer to the extent of any unreimbursed Delinquency
Advances or Servicing Advances, including such Delinquency Advances
and Servicing Advances deemed by the related Servicer to be
nonrecoverable;
(2) An amount equal to the lesser of (x) the amount remaining after the
distribution described in clause (1) above and (y) the Group II
Available Funds Cap Shortfall Amount for such Payment Date
distributed to the Owners of the related Class or Classes of the
Group II Certificates;
(3) to fund a distribution to Owners of the Class D Certificates, the
lesser of (x) the amount of the sum of the Group I Monthly Excess
Cashflow Amount and the Group II Monthly Excess Cashflow Amount then
remaining and (y) the sum of (i) the Class D Distribution Amount and
(ii) the Overcollateralization Release Amount; provided, however,
that if the Overcollateralization Release Amount is zero solely due
to the existence of a Subordinated Trigger Event for the related
Group, then the amount which otherwise would constitute the related
Overcollateralization Release Amount shall be distributed as a
reduction of the Certificate Principal Balance of the Subordinate
Certificates as follows: first, to the Owners of the related Class
B-1 Certificates until the related Class B-1 Certificate Termination
Date; second, to the Owners of the related Class M-2 Certificates,
until the related Class M-2 Certificate Termination Date; and third,
to the Owners of the related Class M-1 Certificates until the
related Class M-1 Certificate Termination Date;
(4) to fund a distribution to the Owners of the Class R Certificates,
the remainder.
(k) On each Payment Date, the Trustee shall allocate the Group I Applied
Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group I in the following order of priority:
(i) to the Class B-1F Certificates until the Class B-1F Certificate
Principal Balance is reduced to zero;
(ii) to the Class M-2F Certificates until the Class M-2F Certificate
Principal Balance is reduced to zero; and
(iii) to the Class M-1F Certificates until the Class M-1F
Certificate Principal Balance is reduced to zero.
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(l) On each Payment Date, the Trustee shall allocate the Group II Applied
Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group II in the following order of priority:
(i) to the Class B-1A Certificates until the Class B-1A Certificate
Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the Class M-2A Certificate
Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the Class M-1A
Certificate Principal Balance is reduced to zero.
(m) Notwithstanding the foregoing, in the event that the Certificate
Principal Balances of all of the Class A Certificates relating to a Group have
been reduced to zero, all amounts of principal that would have been distributed
to such Class A Certificates will be distributed to the related Subordinate
Certificates of such Group sequentially in the following order: Class M-1, Class
M-2 and Class B-1 Certificates, in that order. Similarly, if the Certificate
Principal Balance of the Class M-1 Certificates has been reduced to zero, all
amounts of principal that would have been distributed to such Class M-1
Certificates will be distributed to the related Class M-2 and Class B-1
Certificates, in that order. Finally, if the Certificate Principal Balance of
the Class M-2 Certificates has been reduced to zero, all amounts of principal
that would have been distributed on such Class M-2 Certificates will be
distributed to the related Class B-1 Certificates.
(n) Notwithstanding anything above, the aggregate amounts distributed on
all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clauses (f) and (g) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(o) The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class D Certificates and the Class R Certificates to
receive distributions in respect of the Class D Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class D
Certificates and the Class R Certificates, in and to such distributions, shall
be subject and subordinate to the preferential rights of the Owners of the
Offered Certificates and Class S Certificates to receive distributions thereon
and the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Owners
of the Class D Certificates and the Class R Certificates in amounts deposited in
the Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the Class D Certificates and the Class R Certificates
in accordance with the terms of this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, the Owners of the Class D
Certificates and the Class R Certificates shall not be required to refund any
amount properly distributed on the Class D Certificates and the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Depositor will deposit in the Pre-Funding
Account, on behalf of the Owners of the Offered Certificates, from the proceeds
of the sale of the Offered Certificates, the Original Pre-Funded Amount.
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(b) On any Subsequent Transfer Date, the Seller shall instruct the Trustee
to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instruction
the Depositor shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Depositor be permitted to instruct the Trustee to release from the
Pre-Funding Account to the Certificate Account with respect to Subsequent
Mortgage Loans to be transferred to a Group an amount in excess of the Original
Pre-Funded Amount with respect to such Group.
(c) If the Pre-Funded Amount with respect to a Mortgage Loan Group has
been reduced to $100,000 or less on or before March 31, 1998, the Depositor
shall instruct the Trustee to withdraw from the Pre-Funding Account the amount
(exclusive of any related Pre-Funding Account Earnings still on deposit therein)
remaining in the Pre-Funding Account with respect to such Group of Mortgage
Loans and deposit such amount to the Certificate Account, on the April 1998
Monthly Remittance Date. If the Pre-Funded Amount in respect to a Mortgage Loan
Group has not been reduced to $100,000 or less by March 31, 1998, then the
Trustee shall withdraw on the Pre-Funding Determination Date from the
Pre-Funding Account the amount (exclusive of any related Pre-Funding Account
Earnings still on deposit therein) remaining in the Pre-Funding Account and
deposit on such date such amount to the Certificate Account, which will be
distributed to the related Owners of the Class A Certificates on the Pre-Funding
Payment Date
(d) On the Payment Dates in March and April 1998 and on the Pre-Funding
Payment Date, the Trustee shall transfer from the Pre-Funding Account to the
Capitalized Interest Account, (i) with respect to Group I, the Group I
Pre-Funding Account Earnings and (ii) with respect to Group II, the Group II
Pre-Funding Account Earnings, if any, applicable to such Payment Date (or
Pre-Funding Payment Date).
(e) On the Payment Dates in March and April 1998 and on the Pre-Funding
Payment Date, the Trustee shall transfer from the Capitalized Interest Account
to the Certificate Account, for the benefit of the Owners of the related
Certificates, the Group I or Group II Capitalized Interest Requirement for such
Payment Date (or Pre-Funding Payment Date).
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount (calculated by the Trustee on the day prior to such
Subsequent Transfer Date) from the Capitalized Interest Account to the Seller
and on the Pre-Funding Payment Date, the Trustee shall distribute to the Seller
any amounts remaining in the Capitalized Interest Account after taking into
account the transfers on such Payment Date described in clause (e) above. The
Capitalized Interest Account shall be closed at the end of the Funding Period.
All amounts, if any, remaining in the Capitalized Interest Account on such day
shall be transferred to the Seller.
(g) The Pre-Funding Account and the Capitalized Interest Account are not
an asset of either the Lower-Tier REMIC or the Upper-Tier REMIC.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the
Code, all or a portion of any Account held by the Trustee for the benefit of the
Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in the case of the
Pre-Funding Account and the Capitalized Interest Account and the related
Servicer in the case of the related Principal and Interest
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Account, in one or more Eligible Investments bearing interest or sold at a
discount. The earnings on each Principal and Interest Account are payable to the
related Servicer. Earnings on the Certificate Account are payable to the
Trustee. The bank serving as Trustee or any affiliate thereof may be the obligor
on any investment which otherwise qualifies as an Eligible Investment. No
investment in any Account shall mature later than the Business Day immediately
preceding the next Payment Date.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest the funds in such Accounts in money market
funds described in Section 7.07(k) to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor in its corporate
capacity thereon).
(c) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account immediately on receipt (other than
the Principal and Interest Accounts, which income or other gains shall be
retained by the related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss resulting from such
investments shall be charged to such Account, provided that the related Servicer
and the Trustee shall each contribute funds in an amount equal to such loss in
the case of the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FannieMae senior debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemption;
(b) Federal Housing Administration debentures; provided, that any such
investment shall be rated in one of the two highest ratings categories by each
Rating Agency;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FannieMae mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch, A-1+ or better by Standard & Poor's and P-1 by Moody's;
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(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by each of Standard
& Poor's and Fitch) which has combined capital, surplus and undivided profits of
at least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(h) Investment agreements provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2 or
better by Moody's and AA or better by each of Standard & Poor's and Fitch,
or is the lead bank of a parent bank holding company with an uninsured,
unsecured and unguaranteed senior debt obligation meeting such rating
requirements, and
2. Moneys invested thereunder may be withdrawn without any penalty,
premium or charge upon not more than one day's notice (provided such
notice may be amended or canceled at any time prior to the withdrawal
date), and
3. The agreement is not subordinated to any other obligations of
such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel (at the expense of the
party requesting the investment) that such agreement is an enforceable
obligation of such insurance company or bank;
(i) Repurchase agreements collateralized by securities described in (a),
(c), or (e) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's, A-1+ or AA, respectively or better by Standard & Poor's
and A-1+ or AA, respectively, or better by Fitch, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
b. The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the Trustee, and
such third party is (a) a Federal Reserve Bank or (b) a bank which is a
member of the FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, and the Trustee shall have received
written confirmation from such third party that it holds such securities,
free and clear of any lien, as agent for the Trustee, and
c. A perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 CFR 306.1 et seq. or 31
CFR 350.0 et seq., in such securities is created for the benefit of the
Trustee, and
d. The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less frequently than
monthly and will liquidate the collateral
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securities if any deficiency in the required collateral percentage is not
restored within two business days of such valuation, and
e. The fair market value of the collateral securities in relation to
the amount of the repurchase obligation, including principal and interest,
is equal to at least 106%.
(j) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
and
(k) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the Securities
Act and rated Aaa by Moody's, AAAm or AAAm-G by Standard & Poor's and AAA, if
rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) On or before the Business Day preceding each Payment Date, the Trustee
shall notify (subject to the terms of Section 10.03(j) hereof) the Depositor and
the Seller of the following information with respect to the next Payment Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate Account;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes of the Class A Certificates in the
aggregate, on the next Payment Date, the related Class M-1 Distribution
Amount, the related Class M-2 Distribution Amount, the related Class B-1
Distribution Amount, the Class C-IO Distribution Amount and the Class S
Distribution Amount;
(3) The application of the amounts described in clause (1) above to
the allocation and distribution of the related Class A Distribution
Amount, the related Class M-1 Distribution Amount, the related Class M-2
Distribution Amount, the related Class B-1 Distribution Amount and the
Class C-IO Distribution Amount, on such Payment Date in accordance with
Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the Offered
Certificates, the Notional Principal Amount for each Class of Class C-IO
Certificates the aggregate amount of the principal of each Class of the
Offered Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance of each Class of the Offered Certificates
(or the Notional Principal Amount for each Class of C-IO Certificates)
following any such payment;
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(5) The amount, if any, of Realized Losses relating to each Group
for the related Remittance Period and the amount of Cumulative Realized
Losses relating to each Group as of the last day of the related Remittance
Period;
(6) For the Payment Dates in March, April and May 1998, and as to
each Group and in the aggregate (A) the related Pre-Funded Amount
previously used to purchase Subsequent Mortgage Loans, (B) the related
Pre-Funded Amount distributed as part of the related Principal
Distribution Amount, (C) the related Pre-Funding Account Earnings
transferred to the Capitalized Interest Account, and (D) the amounts
transferred from the Capitalized Interest Account to the Certificate
Account and the Overfunded Interest Amount to the Seller, if any;
(7) The amount of the Class D Distribution Amount; and
(8) the amount of 60+ Day Delinquent Loans relating to each Group.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor (and shall be made available in electronic format), each Owner, the
Underwriters and their designees (designated in writing to the Trustee) and the
Rating Agencies;
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) (a) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
or other recoveries of principal included therein and (b) with respect to
each Group, any Pre-Funded Amounts distributed as a Prepayment (based on a
Certificate in the original principal amount of $1,000);
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of $1,000);
(iv) the Interest Carry-Forward Amount for each Class;
(v) the principal amount (or notional principal amount) of each
Class of Certificates which will be Outstanding and the aggregate Loan
Balance of each Group and in the aggregate, in each case after giving
effect to any payment of principal on such Payment Date;
(vi) the aggregate Loan Balance of the Mortgage Loans in each Group
and in the aggregate after giving effect to any payment of principal on
such Payment Date;
(vii) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in computing
their market discount;
(viii) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to each Group and
in the aggregate;
(ix) the weighted average Coupon Rate of the Mortgage Loans with
respect to each Group and in the aggregate;
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(x) the Servicing Fees allocable to each Mortgage Loan Group, each
Mortgage Loan Servicing Group and in the aggregate;
(xi) One-Month LIBOR on the most recent One-Month LIBOR
Determination Date;
(xii) the amount of any Group I Extra Principal Distribution Amount
or any Group II Extra Principal Distribution Amount;
(xiii) the Group I Senior Enhancement Percentage and the Group II
Senior Enhancement Percentage and whether a Group I Trigger Event or Group
II Trigger Event has occurred as shown by the percentage of 60+ Day
Delinquent Loans;
(xiv) the Group I Overcollateralization Amount, the Group II
Overcollateralization Amount and the Certificate Principal Balance of each
Class of the Offered Certificates then outstanding after giving effect to
any payment of principal on such Payment Date; and
(xv) the amount of any Group I or Group II Applied Realized Loss
Amount, Group I or Group II Realized Loss Amortization Amount and the
Unpaid Realized Loss Amount for each Class of Subordinated Certificates as
of the close of such Payment Date.
Each Servicer shall provide to the Trustee the information required by
Section 8.29 with respect to the Mortgage Loans serviced by it to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vi), (viii), (ix), (xii), (xiii), (xiv) and (xv) above shall be based solely
upon information contained in the Monthly Servicing Report provided by a
Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to the
Depositor, each Owner, the Underwriters and the Rating Agencies, together with
the information described in Section 7.09(a), the following information with
respect to each Mortgage Loan Group which information shall be in hard copy or
tape format prepared by the related Servicers (other than the information in
clause (i)) and furnished to the Trustee to the extent provided for in Section
8.29 for such purpose on the Reporting Date:
(i) the related Certificate Principal Balance of each Class of the
Offered Certificates as of such Payment Date;
(ii) the number and aggregate principal balances of Mortgage Loans
in each Group (a) 30-59 days Delinquent, (b) 60-89 days Delinquent, and
(c) 90 or more days Delinquent, as of the close of business on the last
Business Day of the prior Remittance Period.
(iii) the numbers and aggregate Loan Balances of all Mortgage Loans
in each Group as of the last Business Day of the related Remittance Period
and the percentage that each of the amounts represented by clauses (a),
(b) and (c) of paragraph (ii) above represent as a percentage of the
respective amounts in this paragraph (iii);
(iv) the status and the number and dollar amounts of all Mortgage
Loans in each Group in foreclosure proceedings as of the close of business
on the last Business Day of the related Remittance Period, separately
stating, for this purpose, all Mortgage Loans in each Group with respect
to which foreclosure proceedings were commenced during the prior
Remittance Period;
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(v) the number of Mortgagors and the Loan Balances of Mortgage Loans
in each Group of the related Mortgages involved in bankruptcy proceedings
as of the close of business on the last day of the related Remittance
Period;
(vi) the existence and status of any REO Properties in each Group,
as of the close of business on the last day of the related Remittance
Period;
(vii) the book value of any REO Property in each Group as of the
close of business on the last day of the related Remittance Period;
(viii) the amount of Cumulative Realized Losses for each Group, each
Mortgage Loan Servicing Group and in the aggregate, the current period
Realized Losses and the Annual Loss Percentage for such Group and each
Mortgage Loan Servicing Group and in the aggregate, in each case as of the
last day of the related Remittance Period; and
(ix) the aggregate Loan Balance of 60+ Day Delinquent Loans with
respect to each Group, the 90+ Delinquency Percentage and the number and
amount by principal balance of 90 Day Delinquent Loans in each Group and
each Mortgage Loan Servicing Group, in each case as of the last day of the
related Remittance Period.
(c) Each Servicer shall furnish to the Trustee, during the term of this
Agreement, such periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans serviced by it,
as may be necessary, reasonable, or appropriate with respect to the Trustee or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions as the Trustee may reasonably require; provided,
that the related Servicer shall be entitled to be reimbursed by the requesting
party, for the fees and actual expenses associated with providing such reports,
if such reports are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
The Trustee shall provide monthly bank statements to the Depositor, the
Seller, the Underwriters and each Owner, with respect to the amount on deposit
in the Certificate Account and the identity of the investments included therein,
as the Depositor or the Seller may from time to time request. Without limiting
the generality of the foregoing, the Trustee shall, at the request of the
Depositor or the Seller, transmit promptly to the Depositor and the Seller
copies of all accountings of receipts in respect of the Mortgage Loans furnished
to it by the related Servicer and shall notify the Seller if any Monthly
Remittance Amount has not been received by the Trustee when due.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting directly or through
one or more subservicers as provided in Section 8.03, each Servicer, as
servicer, shall service and administer the Mortgage Loans identified on the
Schedule of Mortgage Loans as being serviced by it as described below and with
reasonable care, and using that degree of skill and attention that such Servicer
exercises with respect to comparable mortgage loans that it services for itself
or others, and shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. In performing such
servicing functions such Servicer shall (i) take into account the mortgagor
non-conforming credit quality of the Mortgage Loans, (ii) follow the policies
and procedures that it would apply to similar loans held for its own account,
unless such policies and procedures are not generally in accordance with
standard industry practices, in which case the Servicer shall service the loans
generally in accordance with standard industry practices applicable to servicing
similar loans, (iii) comply with all applicable laws and follow collection
practices with respect to the related Mortgage Loans that are in all material
respects legal, proper and prudent, and (iv) subject to its obligation to comply
with clauses (i), (ii) and (iii) will not materially change its collection and
servicing practices that are in existence as of the Startup Day without the
consent of the Seller (such consent not to be unreasonably withheld).
(b) The duties of each Servicer shall include the collecting and posting
of all payments, responding to inquiries of Mortgagors or by federal, state or
local government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections, furnishing monthly
statements to the Trustee and the Seller with respect to remittances on the
Mortgage Loans, advising the Trustee or the Seller of the amount of Compensating
Interest and Delinquency Advances due as of any Monthly Remittance Date with
respect to the Mortgage Loans serviced by it and funding such Compensating
Interest and Delinquency Advances, to the extent set forth in this Agreement.
Each Servicer shall reasonably cooperate with the Trustee and furnish upon
reasonable request to the Trustee with reasonable promptness information in its
possession as may be necessary or appropriate to enable the Trustee to perform
its tax reporting duties hereunder.
(c) The Seller and the Depositor intend that the Upper-Tier REMIC and the
Lower-Tier REMIC shall each constitute and that the affairs of Upper-Tier REMIC
and the Lower-Tier REMIC shall each be conducted so as to qualify it as a REMIC.
In furtherance of such intention, each Servicer covenants and agrees that it
shall not knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of either the Upper-Tier
REMIC or the Lower-Tier REMIC or that would subject either the Upper-Tier REMIC
or the Lower-Tier REMIC to tax.
(d) Each Servicer may, and is hereby authorized to, perform any of its
servicing responsibilities with respect to all or certain of the Mortgage Loans
through a subservicer as it may from time to time designate in accordance with
Section 8.03 but no such designation of a subservicer shall serve to release
such Servicer from any of its obligations under this Agreement. Such subservicer
shall have all the rights and powers of the relevant Servicer with respect to
such Mortgage Loans under this Agreement.
(e) Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, each Servicer in its own name or in the name of a
subservicer is hereby authorized and empowered and this
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subsection shall constitute a power of attorney to carry out its servicing and
administrative duties hereunder, on behalf of itself, the Owners and the Trust
or any of them; to institute foreclosure proceedings or obtain a deed in lieu of
foreclosure so as to effect ownership of any Property on behalf of the Trust and
to hold title to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Trust; provided, however, that Section 8.14(a) and
(c) shall constitute a power of attorney from the Trustee to each Servicer with
respect to the matters described therein and in accordance with the terms
thereof. Subject to Sections 8.13 and 8.14, the Trustee shall furnish any
Servicer or any Subservicer with any additional powers of attorney and other
documents as such Servicer shall reasonably request to enable such Servicer or
any Subservicer to carry out its respective servicing and administrative duties
hereunder.
(f) Each Servicer shall give prompt notice to the Trustee and the Seller
of any action, of which a responsible officer of such Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert control over
the Trust or the Trust Estate.
(g) Servicing Advances incurred by any Servicer in connection with the
servicing of the Mortgage Loans (including any penalties in connection with the
payment of any taxes and assessments or other charges) on any Property shall be
recoverable by such Servicer to the extent described in Section 8.09 and in
Section 7.03(j) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a) Each
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance Policies,
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Mortgage
Loans; provided that such Servicer shall always at least follow collection
procedures that are consistent with Section 8.01(a) hereof. Consistent with the
foregoing, each Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for insufficient funds or
other fees which may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with such Servicer's general policies with
respect to comparable mortgage loans subject to such Act. No Servicer shall be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. Consistent with the terms of this Agreement, a Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor; provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in the judgment
of such Servicer, imminent and such Servicer has the consent of the Seller) such
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Coupon Rate (except for any change made pursuant to the
adjustment provisions of a Note evidencing an adjustable rate Mortgage Loan),
forgive the payment of any principal or interest or prepayment penalties (unless
the Servicer with the written consent of the Seller believes that forgiving such
prepayment penalties will result in a financial benefit to the Trust), change
the outstanding principal amount, require any future advances, provide for the
substitution or release of any material portion of the collateral or extend the
final maturity date on such Mortgage Loan; provided further that no such
indulgence shall affect the Servicer's obligation to make Delinquency Advances
pursuant to Section 8.09.
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(b) Each Servicer shall deposit into the related Principal and Interest
Account in accordance with Section 8.08(a) all Prepaid Installments received by
it, and shall apply such Prepaid Installments as directed by such Mortgagor and
as set forth in the related Note.
Section 8.03 Subservicing Agreements Between Servicer and Subservicer.
Each Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is acceptable to the
Owners of a majority of the Percentage Interests of the Class R Certificates, as
indicated in writing, and which represents and warrants that it is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement. For this purpose, subservicing shall not be
deemed to include the use of a tax service, or services for reconveyance,
insurance or brokering REO Property. Each Servicer shall give prior notice to
the Seller and the Trustee of the appointment of any Subservicer and shall
furnish to the Seller a copy of such Subservicing Agreement. For purposes of
this Agreement, the relevant Servicer shall be deemed to have received payments
on Mortgage Loans when any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Subservicing Agreement shall provide that a successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall not be relieved of
their respective obligations under this Agreement notwithstanding any
Subservicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between such Servicer and a Subservicer or otherwise,
and such Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans as such terms and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of such Servicer by such Subservicer and nothing
contained in such Subservicing Agreement shall be deemed to limit or modify this
Agreement. The Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and Trustee
or the Owners. Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be deemed to be
between the Subservicer and the related Servicer alone and the Trustee and the
Owners shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Subservicer except as set
forth in Section 8.07 hereof or in the related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of each Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a Subservicer may be assumed or terminated by the
Trustee at its option. Each Servicer shall, upon request of the Trustee, but at
the expense of such Servicer, deliver to the Trustee documents and records
relating to each Subservicing Agreement and an accounting of amounts collected
and held by such Servicer and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Subservicing Agreement to the
Trustee.
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Section 8.08 Principal and Interest Accounts; Escrow Accounts. (a) Each
Servicer shall establish in its name on behalf of the Trustee for the benefit of
the Owners of the Certificates and maintain or cause to be maintained at a
Designated Depository Institution a Principal and Interest Account to be held as
a trust account. The Principal and Interest Accounts shall be identified on the
records of the Designated Depository Institution as follows: [Name of Servicer]
on behalf of Bankers Trust Company, as Trustee under the Pooling and Servicing
Agreement relating to the AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1998-1 dated as of February 1, 1998. If the institution at any time
holding a Principal and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the related Servicer in the case of a
Principal and Interest Account shall, within 30 days, be required to name a
successor institution meeting the requirements for a Designated Depository
Institution hereunder. If such party fails to name such a successor institution,
then the Trustee shall cause such Account to be held as a trust account with a
qualifying Designated Depository Institution. The related Servicer shall notify
the Trustee, the Seller and the Depositor if there is a change in the name,
account number or institution holding a Principal and Interest Account. Subject
to Subsection (c) below, each Servicer shall deposit all receipts related to the
Mortgage Loans into the related Principal and Interest Accounts on a daily basis
(but no later than the second Business Day after receipt).
(b) All funds in the Principal and Interest Accounts may only be held (i)
uninvested, up to the limits insured by the FDIC or (ii) invested in Eligible
Investments as selected by the related Servicer. The Principal and Interest
Accounts shall be held in trust in the name of the Trustee for the benefit of
the Owners of the Certificates (other than the earnings thereon which shall be
retained by the related Servicer). Any investments of funds in the Principal and
Interest Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Monthly Remittance Date. Any investment earnings on funds
held in a Principal and Interest Account shall be for the account of the related
Servicer and may only be withdrawn from the Principal and Interest Account by
such Servicer immediately following the remittance of the Monthly Remittance
Amount (and the Monthly Excess Interest Amount included therein) by such
Servicer. Any investment losses on funds held in the Principal and Interest
Account shall be for the account of such Servicer and promptly upon the
realization of such loss shall be contributed by such Servicer to the related
Principal and Interest Account. Any references herein to amounts on deposit in
the related Principal and Interest Account shall refer to amounts net of such
investment earnings.
(c) Subject to Section 8.09, each Servicer shall deposit on a daily basis
(except as described below), and in any case not later than two Business Days
following receipt, to the related Principal and Interest Account all scheduled
principal and interest payments on the Mortgage Loans serviced by it due after
the Cut-Off Date or Subsequent Cut-Off Date, as the case may be, and all
unscheduled principal and interest collections received after the Cut-Off Date
or Subsequent Cut-Off Date, as the case may be, including any Prepayments and
Net Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts
received by such Servicer with respect to the Mortgage Loans, other recoveries
or amounts related to the Mortgage Loans received by such Servicer after the
Cut-Off Date or Subsequent Cut-Off Date, as the case may be, Compensating
Interest (which shall be deposited into the Certificate Account on or prior to
each Monthly Remittance Date) and Delinquency Advances (which shall be deposited
no later than the related Monthly Remittance Date) but net of (i) the related
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to such Servicer as permitted by Section 8.15 hereof, (ii)
principal retained by the Depositor (including Prepayments) and due on the
related Mortgage Loans on or prior to the Cut-Off Date or Subsequent Cut-Off
Date, as the case may be, (iii) interest retained by the Depositor and accruing
on the related Mortgage Loans on or prior to the Cut-Off Date or Subsequent
Cut-Off Date, as the case may be, and (iv) reimbursements for unreimbursed and
nonrecoverable Delinquency Advances and Servicing Advances pursuant to Section
8.09.
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(d) Each Servicer may each make withdrawals from the related Principal and
Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the Monthly
Remittance Amount due on each Monthly Remittance Date and to effect
the timely remittance to the Trustee on each Monthly Remittance Date
of any Compensating Interest;
(B) to reimburse itself pursuant to Section 8.09 hereof for unreimbursed
Delinquency Advances and Servicing Advances and unrecovered
Delinquency Advances and Servicing Advances determined by it to be
nonrecoverable;
(C) to withdraw investment earnings on amounts on deposit in its
Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the related
Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25; and
(F) to clear and terminate the related Principal and Interest Accounts
following the termination of the Trust Estate pursuant to Article IX
hereof.
(e) On each Monthly Remittance Date, each Servicer shall remit to the
Trustee by wire transfer in immediately available funds from the related
Principal and Interest Account for deposit to the Certificate Account, the
portion of the Monthly Remittance Amount remaining after the withdrawals
permitted by clauses (B)-(E) of Section 8.08(d) related to the Mortgage Loans
serviced by such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more custodial
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors, if any, received with respect to the Mortgage
Loans, or advances by such Servicer, for the payment of taxes, assessments,
hazard insurance premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing herein shall require
any Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums
or primary mortgage insurance policy premiums, condominium or PUD association
dues, or comparable items, to reimburse such Servicer, to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement. As part of
its servicing duties, such Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as Servicing
Advances) referred to in the preceding paragraph that are not timely paid by the
Mortgagors, including tax penalties, if any; provided, however, that such
Servicer shall be required to so advance only to the extent that such advances,
in the good faith business judgment of such Servicer, will be recoverable by
such Servicer out of Insurance Proceeds, Liquidation Proceeds or otherwise from
the related Mortgage Loan. Notwithstanding the previous sentence, a Servicer
shall be entitled to be reimbursed as provided in Section 8.09(b) hereof with
respect to any Servicing Advances deemed to be nonrecoverable.
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Section 8.09 Delinquency Advances and Servicing Advances.
(a) Each Servicer is required, not later than each Monthly Remittance
Date, to deposit into the related Principal and Interest Account an amount equal
to the sum of the interest (net of the Servicing Fee) and scheduled principal
due (except any Balloon Payment), but not collected, with respect to Delinquent
Mortgage Loans serviced by it during the related Remittance Period but only if,
in its good faith business judgment, such Servicer reasonably believes that such
amount will ultimately be recovered from the related Mortgage Loan. With respect
to each Balloon Loan, the related Servicer shall be required to advance an
amount of principal and interest on an assumed schedule based on the original
principal amortization for the related Balloon Loan (but only if, in its good
faith business judgment, such Servicer reasonably believes that such amount will
ultimately be recovered from the related Mortgage Loan). Any determination of
nonrecoverability shall be explained in a notice provided by such Servicer to
the Trustee and the Seller. Such amounts are "Delinquency Advances". Each
Servicer shall be permitted to fund its payment of Delinquency Advances from its
own funds or from funds on deposit in the related Principal and Interest Account
that are not required to be distributed on the related Payment Date. To the
extent a Servicer uses funds not required for distribution on a Payment Date to
make Delinquency Advances with respect to such Payment Date, it shall deposit
into the related Principal and Interest Account such amount prior to the next
succeeding Monthly Remittance Date. Each Servicer shall be entitled to
reimbursement for Delinquency Advances from late collections, Liquidation
Proceeds or otherwise with respect to collections on the Mortgage Loan
(including Balloon Loans) with respect to which such Delinquency Advance was
made.
Notwithstanding the foregoing, in the event that a Servicer determines
that the aggregate unreimbursed Delinquency Advances exceed the expected
Liquidation Proceeds on a Mortgage Loan, such Servicer shall not be required to
make any future Delinquency Advances with respect to that Mortgage Loan, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances from amounts in the related Principal and Interest Account. Such
Servicer shall give written notice of such determination of nonrecoverability to
the Trustee and the Seller, and the Trustee shall promptly furnish a copy of
such notice to the Owner of a majority of the Percentage Interests of the Class
R Certificates; provided, that such Servicer shall be entitled to recover any
unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds prior
to the payment of the Liquidation Proceeds to any other party to this Agreement.
(b) Each Servicer will pay all customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the escrow
expenditures required pursuant to Section 8.08(f) hereof (but is only required
to pay such costs and expenses to the extent such Servicer reasonably believes
that such amounts will ultimately be recovered from the related Mortgage Loan)
and (v) fees and expenses for opinions of counsel pursuant to Section 8.13. Each
such amount so paid will constitute a "Servicing Advance". Each Servicer may
recover Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, (y) from Liquidation Proceeds realized upon the liquidation
of the related Mortgage Loan, and (z) as provided in Section 7.03(j) hereof.
Except as provided in the previous sentence, and in Sections 7.03(j) and 8.13,
in no case may a Servicer recover Servicing Advances from principal and interest
payments on any Mortgage Loan or from any amounts relating to any other Mortgage
Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans. (a) On or
prior to each Monthly Remittance Date and with respect to Mortgage Loans
serviced by it, each Servicer shall deposit into the related Principal and
Interest Account with respect to any full Prepayment made by the Mortgagor
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during the preceding Remittance Period, an amount equal to the excess, if any,
of (x) 30 days' interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first day of the
related Remittance Period over (y) to the extent not previously advanced, the
interest paid by the Mortgagor with respect to the Mortgage Loan for the related
Remittance Period (any such amount, "Compensating Interest"), which amount shall
be included in the Monthly Remittance Amount to be made available to the Trustee
on each Monthly Remittance Date. In respect of any Payment Date, each Servicer's
obligation to deposit Compensating Interest into the Principal and Interest
Account shall not exceed the amount of the Servicing Fee payable to such
Servicer on such Payment Date in respect of all Mortgage Loans serviced by such
Servicer.
(b) Each Servicer with respect to Mortgage Loans serviced by it, may, but
is not obligated to, purchase for its own account (or, during the two year
period beginning on the Startup Day, substitute a Qualified Replacement Mortgage
for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which enforcement
proceedings have been brought by the related Servicer pursuant to Section 8.13.
Any such Mortgage Loan so purchased shall be purchased by such Servicer on a
Monthly Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the related Principal and
Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer shall cause to be
maintained with respect to each Mortgage Loan serviced by it a hazard insurance
policy with a generally acceptable carrier that provides for fire and extended
coverage, and which provides for a recovery by such Servicer on behalf of the
Trust of insurance proceeds relating to such Mortgage Loan in an amount not less
than the least of (i) the outstanding principal balance of the Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is located in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, as identified to the related Servicer by the
Originator in the related Mortgage Loan Schedule, and flood insurance has been
made available, the related Servicer will cause to be maintained with respect
thereto a flood insurance policy in a form meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides for a
recovery by such Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973.
(c) In the event that a Servicer shall obtain and maintain a blanket
policy insuring against fire, flood and hazards of extended coverage on all the
Mortgage Loans, then, to the extent such policy names such Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance and otherwise complies with
the requirements of this Section 8.11, such Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case such Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with the preceding paragraphs of this Section 8.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the related Principal and Interest Account from such Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 8.11 and
the amount paid under such blanket policy. Upon the request of the Trustee, such
Servicer shall cause to be delivered an Officer's Certificate to the Trustee to
the effect that the Servicer maintains such policy.
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(d) Each Servicer also shall maintain on related REO Property, fire and
hazard insurance with extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements which are a
part of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, liability insurance and, to
the extent required and available under the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be maintained any
insurance required by this Section 8.11, and there shall have been a loss which
would have been covered by such policy, the Servicer shall deposit in the
related Principal and Interest Account from the Servicer's own funds the amount,
if any, that would have been payable under a policy complying with the preceding
paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Property has been or is about to be conveyed by the Mortgagor, the
related Servicer shall, to the extent a responsible officer thereof has actual
knowledge of such conveyance or prospective conveyance, exercise the rights of
the Trust to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Note; provided,
however, that such Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of such Servicer, is not
enforceable under applicable law or if such Servicer reasonably believes in good
faith it is not in the best interests of the Trust. In such event, such Servicer
is authorized to enter into an assumption and modification agreement with the
Person to whom such Property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage Documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, such Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent that any such substitution of liability agreement
would not otherwise have been delivered by such Servicer in its usual procedures
for mortgage loans held in its own portfolio, such Servicer shall prior to
executing and delivering such agreement, obtain the prior written consent of the
Seller. The Trustee shall execute any agreements required to effectuate the
foregoing. The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The related
Servicer of such Mortgage Loan shall notify the Trustee that any such assumption
or substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. Each Servicer shall be responsible for
recording any such assumption or substitution agreements relating to Mortgage
Loans serviced by it at the expense of the related Servicer. In connection with
any such assumption or substitution agreement, no material term of the Mortgage
Loan, including the required monthly payment on the related Mortgage Loan shall
be changed but all terms thereof shall remain as in effect as immediately prior
to the assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required monthly
payments of principal or interest be deferred or forgiven. Any fee collected by
any Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to such
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, no Servicer shall be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of any assumption of a Mortgage
Loan by operation of law or any assumption which such Servicer may be restricted
by law from preventing, for any reason whatsoever.
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Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) Each Servicer,
with respect to Mortgage Loans serviced by it, shall foreclose upon or otherwise
comparably convert the ownership on behalf of the Trust of Properties relating
to defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments and which the related Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer of such defaulted Mortgage Loans shall exercise
such of the rights and powers vested in it hereunder, and use the same degree of
care and skill in its exercise or use as prudent mortgage lenders would exercise
or use under the circumstances in the conduct of their own affairs, including,
but not limited to, advancing funds deemed by such Servicer in its good faith
business judgment to be recoverable from the related Mortgage Loan for the
payment of taxes, amounts due with respect to senior liens and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances" within
the meaning of Section 8.09(b) hereof. Each Servicer shall sell any REO Property
managed by it within 35 months of its acquisition by the Trust, unless such
Servicer obtains for the Trustee an Opinion of Counsel (the cost of which shall
be advanced by the related Servicer as a Servicing Advance) experienced in
federal income tax matters and reasonably acceptable to the Depositor and the
Trustee, addressed to the Trustee and such Servicer, to the effect that the
holding by the Trust of such REO Property for any greater period will not result
in the imposition of taxes on "Prohibited Transactions" of the Trust as defined
in Section 860F of the Code or cause the Trust or any REMIC therein to fail to
qualify as a REMIC under the REMIC Provisions at any time that any Certificates
are outstanding, or the related Servicer produces evidence that it has properly
requested from the applicable tax authorities at least 60 days before the day on
which the three year grace period would otherwise expire, an extension of the
three year grace period, in which case such Servicer shall sell any REO Property
by the end of any extended period specified in any such opinion or extension.
Notwithstanding the generality of the foregoing provisions, each Servicer
shall manage, conserve, protect and operate each REO Property managed by it
solely for the purpose of its prompt disposition and sale in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by the
Trust of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the related Servicer shall either itself or through an agent
selected by such Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Owners and after consultation with the holder of a majority in
interest of the Class R Certificates, rent the same, or any part thereof, as
such Servicer deems to be in the best interest of the Owners for the period
prior to the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, or exercising
control over the Mortgaged Property so that the Trust would be considered a
mortgagee-in-possession, owner or operator of the Mortgaged Property under the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended (42 U.S.C. ss.9601 et seq.) or a comparable law, in the event any
responsible officer of a Servicer has actual knowledge that a Property is in any
way affected by hazardous or toxic substances or wastes and determines that it
may be reasonable to convert such Property ownership to the Trust, or the holder
of a majority in interest of the Class R Certificates otherwise requests in
writing an environmental inspection to be conducted, such Servicer shall cause
an environmental inspection or review of such Property to be conducted by a
qualified inspector and shall be reimbursed for the amount of such environmental
inspection in the manner described herein for reimbursement of Servicing
Advances in the same manner as set forth in the immediately following paragraph.
Upon completion of the inspection, such Servicer shall promptly provide the
Owner of the majority of the Class R Certificates and the Trustee with a written
report of the
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environmental inspection. In the absence of such determination or a written
request from the Owner of the majority of the Class R Certificates for an
environmental inspection, neither the related Servicer nor the Trustee shall be
liable for any liability, cost or expense incurred by the Trust due to the
decision of such Servicer not to cause an environmental inspection of a
Property.
After reviewing the environmental inspection report, the Owner of the
majority of the Class R Certificates shall determine how the related Servicer
shall proceed with respect to the Property and shall notify such Servicer within
15 Business Days of receipt of the inspection report. In the event the
environmental inspection report indicates that the Property is in any way
affected by hazardous or toxic substances or wastes such Servicer shall only
foreclose or comparably convert such Property if the Owner of the majority of
the Class R Certificates directs such Servicer to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure. In the event the Owner of the
majority of the Class R Certificates requires such Servicer to foreclose or
accept a deed-in-lieu of foreclosure pursuant to this Section 8.13(a),(i) such
Servicer (or the Trustee and any other successor Servicer) shall be reimbursed
for any related environmental clean up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse such Servicer (or the Trustee and any other successor Servicer), such
Servicer (or the Trustee and any other successor Servicer) shall be entitled to
be reimbursed from amounts in the related Principal and Interest Account, and
(ii) such Class R Owner hereby indemnifies the Trust, the Trustee and such
Servicer with respect to any costs, liabilities and expenses incurred by any
such party in connection with any such hazardous or toxic substances or wastes
with respect to such foreclosure or comparable conversion. In the event the
Owner of the majority of the Class R Certificates directs such Servicer not to
proceed with foreclosure or acceptance of a deed-in-lieu of foreclosure, such
Servicer (or the Trustee and any other successor Servicer) shall be reimbursed
for all Servicing Advances made with respect to the related Property from such
Principal and Interest Account pursuant to Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each defaulted Mortgage
Loan serviced by it, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan".
Upon such a determination, the related Servicer shall prepare and submit
to the Seller and the Trustee a Liquidation Report in substantially the form of
Exhibit K hereto.
Section 8.14 Trustee to Cooperate; Release of Files. (a)(i) Upon the
payment in full of any Mortgage Loan (including the repurchase of any Mortgage
Loan or any liquidation of such Mortgage Loan through foreclosure or otherwise)
or the receipt by the related Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, such Servicer shall
deliver to the Trustee a Servicer's Trust Receipt in the form of Exhibit H
hereto. Upon receipt of such Servicer's Trust Receipt, the Trustee shall
promptly release the related File, in trust to (i) such Servicer, (ii) an escrow
agent or (iii) any employee, agent or attorney of the Trustee, in each case
pending its release by such Servicer, such escrow agent or such employee, agent
or attorney of the Trustee, as the case may be. Upon any such payment in full or
the receipt of such notification that such funds have been placed in escrow,
such Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the related Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, such Servicer may prepare and
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submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by such Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(ii) Each Servicer's Trust Receipt may be delivered to the Trustee (A) via
mail or courier, (B) via facsimile or (C) by such other means, including,
without limitation, electronic or computer readable medium, as the Servicer and
the Trustee shall mutually agree. The Trustee shall promptly release the related
File(s) within five (5) Business Days of receipt of a properly completed
Servicer's Trust Receipt pursuant to clause (A), (B) or (C) above, which shall
be authorization to the Trustee to release such Files, provided the Trustee has
determined that such Servicer's Trust Receipt has been executed, with respect to
clause (A) or (B) above, or approved, with respect to clause (C) above, by an
authorized Servicing Officer of the Servicer, and so long as the Trustee
complies with its duties and obligations under this Agreement. If the Trustee is
unable to release the Files within the time frames previously specified, the
Trustee shall immediately notify the Servicer indicating the reason for such
delay, but in no event shall such notification be later than five Business Days
after receipt of a Servicer's Trust Receipt.
On each day that the Servicer remits to the Trustee Servicer's Trust
Receipts pursuant to clauses (B) or (C) above, the Servicer shall also submit to
the Trustee a summary of the total amount of such Servicer's Trust Receipts
requested on such day by the same method as described in such clauses (B) and
(C) above.
(b) From time to time and as appropriate in the servicing of any Mortgage
Loan, including, without limitation, foreclosure or other comparable conversion
of a Mortgage Loan or collection under any applicable Insurance Policy, the
Trustee shall (except in the case of the payment or liquidation pursuant to
which the related File is released to an escrow agent or an employee, agent or
attorney of the Trustee), upon request of such Servicer and delivery to the
Trustee of a Servicer's Trust Receipt substantially in the form of Exhibit H
hereto, release the related File to such Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to such Servicer. The Trustee shall complete in the name of the Trustee
any endorsement in blank on any Note prior to releasing such Note to such
Servicer. Such receipt shall obligate such Servicer to return the File to the
Trustee when the need therefor by such Servicer no longer exists unless the
Mortgage Loan shall be liquidated in which case, upon receipt of the liquidation
information, in physical or electronic form, such Servicer's Trust Receipt shall
be released by the Trustee to such Servicer.
(c) Each Servicer shall have the right to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Originator certifies to such Servicer that the Loan-to-Value Ratio and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting guidelines for a
similar credit grade borrower; and (z) the lien priority of the related Mortgage
is not adversely affected. Upon receipt by the Trustee of an Officer's
Certificate executed on behalf of a Servicer setting forth the action proposed
to be taken in respect of a particular Mortgage Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to such Servicer the consent or partial
release so requested by such Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate delivered
by such Servicer pursuant to this paragraph.
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(d) Costs associated with preparing assignments, satisfactions and
releases described in this Section 8.14 shall not be an expense of the Trust or
the Trustee, but rather shall be borne directly by the related Servicer;
provided, however, that the Trustee shall be liable for the cost associated with
the shipping of documents from the Trustee to the related Servicer pursuant to
this Section 8.14 and for any penalty solely associated with late reconveyance
that results from the Trustee's failure to perform its duties hereunder.
Section 8.15 Servicing Compensation. As compensation for their activities
hereunder, each Servicer shall be entitled to the Servicing Fee for each
Mortgage Loan that it services. Such Servicing Fee shall be payable on a monthly
basis out of interest payments on the related Mortgage Loans and shall equal
one-twelfth of the related Servicing Fee Rate multiplied by the outstanding
principal amount of such Mortgage Loan as of the prior Monthly Remittance Date.
Subject to the related Servicing Fee Letter, additional servicing compensation
in the form of release fees, bad check charges, assumption fees, late payment
charges, any other servicing-related fees, and similar items may, to the extent
collected from Mortgagors, be retained by the related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each Servicer, at its
own expense, will deliver to the Trustee, the Seller, the Depositor and the
Rating Agencies on or before April 15 of each year, commencing in 1999, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of such Servicer during such preceding calendar year and of
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, such
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by such Servicer to remedy such
defaults.
(b) Each Servicer shall deliver to the Trustee, the Seller, the Depositor
and the Rating Agencies promptly after a responsible officer of the Servicer
obtains actual knowledge thereof but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which with the giving of notice or lapse of time, or both, such officer knows
would become an Event of Servicing Termination.
Section 8.17 Annual Independent Certified Public Accountants' Reports. (a)
On or before April 15 of each year, commencing in 1999, each Servicer shall
cause to be delivered to the Trustee and the Rating Agencies a letter or letters
of a firm of independent, nationally- recognized certified public accountants
stating that such firm has, with respect to such Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
(b) Each Servicer (other than Wendover) will deliver to the Seller as soon
as available and in any event within 45 days after the end of each of the first
three fiscal quarterly periods of each fiscal year of such Servicer, an
unaudited consolidated statement of operations and retained earnings and
consolidated statements of changes in financial position of such Servicer for
such period (and Wendover shall deliver to the Seller as soon as available and
in any event within such time periods an unaudited statement of operations and
statement of financial position (income statement and balance sheet)) and each
Servicer will deliver to the Seller as soon as available and in any event within
90 days after the end of each fiscal year of such Servicer, audited consolidated
statements of income, retained earnings and changes in financial position of
such Servicer for the preceding fiscal year.
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Section 8.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans. Each Servicer shall provide to the Trustee, the Seller, the FDIC
and the supervisory agents and examiners of each of the foregoing access to the
documentation and electronic data regarding the Mortgage Loans not in the
possession of the Trustee, such access being afforded without charge but only
upon prior written reasonable request and during normal business hours at the
offices of such Servicer designated by it.
Upon any change in the format of the computer tape by any Servicer in
respect of the Mortgage Loans, such Servicer shall deliver a copy of such
computer tape to the Trustee. In addition, each Servicer shall provide a copy of
such computer tape to the Trustee at such other times as the Trustee may
reasonably request upon reasonable notice to such Servicer and upon payment of
all reasonable expenses associated with such request by the Trustee. Nothing
contained herein shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to the Mortgage
Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller and the Trustee, which such consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.21(f) hereof for a successor Servicer.
Notice of any such assignment shall be given by such Servicer to the Trustee and
the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Trustee (acting upon
the request of the Owners of the majority of the Percentage Interests of the
Offered Certificates then Outstanding as a whole and not on a Class by Class
basis) or the Seller may immediately remove the related Servicer (including any
successor entity serving as the Servicer) upon the occurrence of any of the
following events and the expiration of the related cure period (provided, that
the occurrence of any such events with respect to one Servicer shall be cause to
remove only such Servicer):
(i) Such Servicer shall fail to deliver to the Trustee any proceeds
or required payment (including any Delinquency Advance or Compensating
Interest payment), which failure continues unremedied for two Business
Days following written notice to an Authorized Officer of such Servicer
from the Trustee or from any Owner;
(ii) Such Servicer shall (I) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in writing its inability to
pay its debts generally as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be adjudicated a bankrupt or
insolvent, (V) commence a voluntary case under the federal bankruptcy laws
of the United States of America or file a voluntary petition or answer
seeking reorganization, an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it
in any bankruptcy, reorganization or insolvency proceeding or (VI) take
corporate action for the purpose of effecting any of the foregoing;
(iii) If without the application, approval or consent of such
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of such Servicer
an order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator, custodian or similar entity with respect to such
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or
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insolvency law, and, if such proceeding is being contested by such
Servicer in good faith, the same shall (A) result in the entry of an order
for relief or any such adjudication or appointment or (B) continue
undismissed or pending and unstayed for any period of sixty (60)
consecutive days;
(iv) Such Servicer shall fail to perform any one or more of its
obligations hereunder (other than those specified in item (i) above) and
shall continue in default thereof for a period of forty-five (45) days
after the earlier of (x) notice by the Trustee of said failure or (y)
actual knowledge of a responsible officer of such Servicer;
(v) The failure of such Servicer to satisfy the Servicer Termination
Test; or
(vi) (a) In the case of Advanta, Advanta Mortgage Corp. USA
consolidated with Advanta Mortgage Holding Corp. shall fail to maintain a
net worth of at least $20 million; or (b) in the case of Ameriquest, it
shall fail to maintain a net worth of $30 million; or (c) in the case of
Wendover, (1) Wendover shall fail to maintain a net worth of at least $7
million, (2) Wendover shall no longer be owned by Electronic Data Systems,
Inc. and (3) if ARMC is acting in its capacity as Subservicer, ARMC shall
fail to maintain a net worth of at least $20 million.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the related Remittance Period. Upon the
Trustee's determination that the Servicer Termination Test is not satisfied, or
that a payment of Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been made by the
relevant Servicer, the Trustee shall so notify in writing an Authorized Officer
of such Servicer and the Seller as soon as is reasonably practical.
(b) Any party exercising any termination rights under subsection (a) above
shall give notice in writing to the relevant Servicer (and a copy to the
Trustee) of the termination of all the rights and obligations of such Servicer
under this Agreement. The Trustee shall mail a copy of any notice given by it
hereunder to the Depositor, the Seller, the Owners and Rating Agencies. On or
after the receipt by such Servicer of such written notice, all authority and
power of such Servicer under this Agreement, whether with respect to the
Certificates or the Mortgage Loans or otherwise, shall without further action
pass to and be vested in the Trustee or such successor Servicer as may be
appointed hereunder, and, without limitation, the Trustee is hereby authorized
and empowered (which authority and power are coupled with an interest and are
irrevocable) to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice or termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer or the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement including the transfer to the
successor Servicer or to the Trustee for administration by it of all cash
accounts that shall at the time be held by the predecessor Servicer for deposit
or shall thereafter be received with respect to a Mortgage Loan. All reasonable
costs and expenses incurred in connection with delivering the Files to the
successor Servicer or the Trustee shall be paid by the predecessor Servicer.
(c) If any event described in subsection (a)(vi) above occurs and is
continuing, during a 30 day period following receipt of notice, the Trustee, the
affected Servicer and the Seller shall cooperate with each other to determine if
the occurrence of such event is likely to have a material adverse effect on such
Servicer's ability to perform its obligations under this Agreement. If the
Seller, in its reasonable discretion, concludes that the event is not likely to
have a material adverse effect on such Servicer's ability to perform hereunder,
then such Servicer shall be given a period of 90 days from the date of such
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determination by Seller to cure such default. If the Seller, in its reasonable
discretion, concludes that the event is likely to have a material adverse effect
on such Servicer's ability to perform hereunder, then such Servicer shall be
given a period of 15 days from the date of such determination by Seller to cure
such default. The date of determination by Seller referenced in the preceding
two sentences of this Section 8.20(c) shall be deemed to be the date upon which
a written notice is mailed to the affected Servicer, first class postage
prepaid, at the address of the affected Servicer set forth in Section 11.20
hereof. If the event is not cured by the end of the applicable period, no
further extension of the cure period is required, and such Servicer may be
terminated as provided in this Section 8.20.
(d) The Seller and the Trustee agree to use their best efforts to inform
each other of any materially adverse information regarding each Servicer's
servicing activities that comes to the attention of such party from time to
time.
Section 8.21 Resignation of a Servicer and Appointment of Successor. (a)
Upon any Servicer's receipt of notice of termination pursuant to Section 8.20 or
such Servicer's resignation in accordance with the terms of this Section 8.21,
the predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date specified
in such termination notice or in accordance with Section 8.20(d), if applicable,
or, if no such date is specified in a notice of termination, until receipt of
such notice and, in the case of resignation, until the earlier of (x) the date
45 days from the delivery to the Seller, the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying opinion of counsel. All collections then being held
by the predecessor Servicer prior to its removal and any collections received by
such Servicer after removal or resignation shall be endorsed by it to the
Trustee and remitted directly and immediately to the Trustee or the successor
Servicer. In the event of any Servicer's resignation or termination hereunder,
the Trustee shall appoint a successor Servicer and the successor Servicer shall
accept its appointment by execution of a written assumption in form acceptable
to the Trustee and the Seller, with copies of such assumption to the Trustee and
the Rating Agencies, provided that as a condition precedent to the appointment
of a successor Servicer and the execution of the related written assumption,
such successor Servicer shall, if applicable, also execute either (i) a written
assumption or termination of any of the Subservicing Agreements or (ii)
appropriate amendments to each of any Subservicing Agreements.
(b) No Servicer shall resign from the obligations and duties hereby
imposed on it, except (i) upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of such Servicer so causing such a conflict being of a type and nature carried
on by such Servicer at the date of this Agreement or (ii) upon prior written
consent of the Seller and the Trustee and confirmation from the Rating Agencies
that the Offered Certificates are not reduced. Any such determination referred
to in clause (i) permitting the resignation of any Servicer shall be evidenced
by an Opinion of Counsel to such effect which shall be delivered to the Trustee
and the Seller.
(c) No removal or resignation of any Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed such Servicer's
responsibilities and obligations in accordance with this Section. The removal or
resignation of one Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such Servicer also shall
promptly deliver or cause to be delivered to the successor Servicer or the
Trustee all the books and records (including, without limitation, records kept
in electronic form) that such Servicer has maintained for the Mortgage Loans,
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including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in such Servicer's
possession.
(e) Any collections received by any Servicer after removal or resignation
thereof shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(f) Upon removal or resignation of any Servicer, the Trustee, with the
cooperation of the Seller, (x) shall solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor Servicer as a
result of soliciting such bids, shall serve as Servicer of the Mortgage Loans
serviced by such predecessor Servicer. The Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Servicer, (I)
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
been designated as an approved servicer by FannieMae or FHLMC for first and
second mortgage loans and having equity of not less than $5,000,000 (or such
lower level as may be acceptable to the Owners of a majority of the Class R
Certificates) and is reasonably acceptable to the Seller and the Owners of the
Class R Certificates, as indicated in writing as the successor to such Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of such Servicer hereunder and (II) give notice thereof to the
Seller, the Owners and the Rating Agencies. The compensation of any successor
Servicer (including, without limitation, the Trustee) so appointed shall be the
amount agreed by the related Servicer and the Seller. Any existing Servicer may
bid to be a successor to any other Servicer. Any reasonable out of pocket set-up
costs or expenses incurred by the Trustee as interim successor Servicer as
specified in subclause (y) of this Section 8.21(f) shall be at the expense of
the Trust and shall be payable pursuant to Section 7.03(j).
(g) In the event that the Trustee is able to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify that the successor Servicer shall be
entitled to the servicing compensation agreed upon between the Trustee, the
successor Servicer and the Seller; provided, however, that no such fee shall
exceed the related Servicing Fee. Within thirty days after any such public
announcement, the Trustee, with the cooperation of the Seller, shall negotiate
in good faith and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid as to the price they will pay to obtain such servicing.
The Trustee upon receipt of the purchase price shall pay such purchase price to
the Servicer being so removed (except in the case of subsection (h) below, in
which case the Trustee shall pay such purchase price to the Seller), after
deducting from any sum received by the Trustee from the successor to such
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities reasonably incurred hereunder. After such
deductions, the remainder of such sum shall be paid by the Trustee to such
Servicer (other than Advanta or Wendover) at the time of such sale.
(h) The Trustee and the successor Servicer shall take such action
consistent with this Agreement as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing if such notification is not done by such predecessor Servicer as
required by subsection (j) below. Each predecessor Servicer agrees to cooperate
with the Trustee and any successor Servicer in effecting the termination of such
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume such Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have
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been or should have been deposited in the related Principal and Interest Account
by such Servicer, or which are thereafter received with respect to the Mortgage
Loans. Neither the Trustee nor any other successor Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the predecessor
Servicer to deliver, or any delay in delivery, cash, documents or records to it
or (ii) restrictions imposed by any regulatory authority having jurisdiction
over such Servicer.
(i) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall as soon as reasonably practicable pay all
Compensating Interest and, if applicable, Delinquency Advances which have
theretofore not been remitted to the extent required by this Agreement with
respect to the Mortgage Loans; provided, however, that if the Trustee is acting
as successor Servicer, the Trustee shall only be required to make such
Delinquency Advances if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related Mortgage
Loans. Any Delinquency Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall be recoverable
by it and paid to it by the successor Servicer to the extent such Delinquency
Advances, Servicing Advances and accrued and unpaid Servicing Fees would
otherwise have been recoverable had the predecessor Servicer not been
terminated.
(j) Any Servicer which is being removed or is resigning shall give notice
to the Mortgagors and to the Rating Agencies of the transfer of the servicing to
the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.26 and
shall be entitled to such fees as may be agreed upon between the Seller and such
successor Servicer (such amount not to exceed the Aggregate Servicing Fee Rate),
and all of the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement; provided, that if the Trustee shall be the
successor Servicer, the Trustee shall be entitled to the same fees as the
Servicer was entitled to at the time of succession. The appointment of a
successor Servicer (including the Trustee) shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer (including the Trustee) be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement.
(l) The Trustee and the Seller shall each give notice to the Rating
Agencies and the Owners or the Seller of the occurrence of any event specified
in Section 8.20 of which a Responsible Officer of the Trustee has actual
knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination. Subject to
the rights of the Trustee, the Owners and the Seller pursuant to Section 8.20 to
terminate all of the rights and obligations of any Servicer under this Agreement
or the Owners of a majority of the Percentage Interests of the Class R
Certificates may, on behalf of all Owners of Certificates, waive any default by
such Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement By the
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and
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rights of any Servicer hereunder by the Trustee pursuant to Section 8.21, it is
understood and agreed that such Servicer's rights and obligations under any
Subservicing Agreement then in force between such Servicer and a Subservicer
shall be assumed simultaneously by the Trustee without act or deed on part of
the Trustee; provided, however, the Trustee in its sole discretion may terminate
any Subservicer notwithstanding the provisions of the related Subservicing
Agreement.
Each Servicer shall, upon the reasonable request of the Trustee, but at
the expense of such Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts (through
the execution of any documents or otherwise) to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party and shall
cooperate with the Trustee in any other manner reasonably requested by the
Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor Servicer.
Following the termination of any Servicer hereunder and pending the appointment
of any other Person as successor Servicer, the Trustee is hereby empowered to
perform the duties of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any termination of
such Servicer pursuant to Section 8.21, such Servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee shall upon
termination or resignation of any Servicer, and pending the appointment of any
other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14
hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency Advances and to pay
Compensating Interest (and to be reimbursed therefor as provided herein).
Section 8.25 Liability of the Servicers. None of the Servicers nor any of
their directors, officers, employees or agents shall be under any liability on
any Certificate or otherwise to the Seller, the Trustee or any Owner for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or for errors in judgment except as required
hereunder; provided, however, that this provision shall not protect any
Servicer, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Each of the Servicers and any director, officer, employee or agent of each of
the Servicers may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. None of the Servicers shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that each Servicer may in its discretion undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties hereto and interests of the Trustee and the
Owners hereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom
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shall be expenses, costs and liabilities of the Trust, and such Servicer shall
be entitled to be reimbursed therefor out of the Principal and Interest Account.
The Servicers and any director, officer, employee or agent of each of the
Servicers shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of negligent action, negligent failure to act, willful misconduct in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time (but unless there is
a valid reason to do so, not more than once every six months) upon prior written
and reasonable notice, the Trustee, the Seller or any agents or thereof may
inspect any Servicer's servicing operations and discuss the servicing operations
of such Servicer with a responsible officer designated by the related Servicer.
The reasonable costs and expenses incurred by such Servicer or its agents or
representatives in connection with any such examinations or discussions shall be
paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that meet the requirements of FannieMae or FHLMC on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and omissions insurance
shall be in the form of Mortgage Banker's Blanket bond and shall protect and
insure such Servicer against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such persons. Such fidelity
bond shall also protect and insure such Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by
FannieMae in the FannieMae Servicing Guide or by FHLMC in the FHLMC Sellers' and
Servicers' Guide. Upon the written request of the Owners of a majority of the
Percentage Interests of the Class R Certificates to the Trustee and request by
the Trustee to the Servicer, a Servicer shall cause to be delivered to the
Trustee, who shall deliver to the Owners of the Class R Certificates an
Officer's Certificate as to the maintenance of the fidelity bond and insurance
policy that such fidelity bond and insurance policy are in full force and
effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to Business
of Servicer. Any corporation into which any Servicer may be merged or converted
or with which it may be consolidated, or corporation resulting from any merger,
conversion or consolidation to which such Servicer shall be a party or any
corporation succeeding to all or substantially all of the business of such
Servicer shall be the successor of such Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any responsible officer of
the Servicer's actual knowledge thereof, such Servicer shall give prompt notice
to the Trustee, the Seller, and the Rating Agencies of the occurrence of any of
the following events:
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(a) Any default or any fact or event which such officer knows results, or
which with notice or the passage of time, or both, would result in the
occurrence of a default by such Servicer under any Operative Document or would
constitute a material breach of a representation, warranty or covenant under any
Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against such Servicer of
which it has knowledge, in any federal, state or local court or before any
governmental body or agency or before any arbitration board or any such
proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such Servicer's
ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings of which it has knowledge or has
received service of process by or against such Servicer under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of such Servicer's business that such Servicer is to
cease and desist, or to undertake any practice, program, procedure or policy
employed by such Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely affect the conduct
of such Servicer's business or its ability to perform under the Operative
Documents or materially and adversely affect the financial affairs of such
Servicer.
Section 8.29 Monthly Servicing Report and Servicing Certificate. (a) Each
Servicer with respect to the Mortgage Loans serviced by it shall deliver not
later than the Reporting Date, a Monthly Servicing Report (which shall be in an
electronic format reasonably agreeable to both the Servicer and the Trustee and,
with respect to certain delinquency information, may be delivered by hard copy),
to the Trustee and, upon request, to the Seller. The Monthly Servicing Report
shall state as to the related Remittance Period for the Mortgage Loans serviced
by such Servicer:
(i) (a) scheduled interest due (net of the Servicing Fee); (b)
Compensating Interest paid; (c) scheduled principal due; (d) Prepayments;
(e) Loan Balance of Mortgage Loans repurchased; (f) Substitution Amounts;
and (g) Net Liquidation Proceeds (related to principal);
(ii) The Servicing Fee withheld by the related Servicer;
(iii) The principal and interest payments remitted by such Servicer
to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the Mortgage
Loans that were not made by the related Mortgagors as of the last day of
the related Remittance Period;
(v) The number and aggregate Loan Balances (computed in accordance
with the terms of the Mortgage Loans) and the percentage of the total
number of Mortgage Loans and of the Loan Balance which they represent of
Delinquent Mortgage Loans, if any, (i) 30 to 59 days, (iii) 60 to 89 days
and (iii) 90 days or more, respectively, as of the last day of the related
Remittance Period;
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(vi) The number and aggregate Loan Balances of Mortgage Loans, if
any, in foreclosure and the number and Book Value of any REO Properties as
of the last day of the related Remittance Period;
(vii) The Loan Balances (immediately prior to being classified as
Liquidated Mortgage Loans) of Liquidated Mortgage Loans as of the last day
of the related Remittance Period;
(viii) Liquidation Proceeds received during the related Remittance
Period;
(ix) The amount of any Liquidation Expenses being deducted from
Liquidation Proceeds or otherwise being charged to the Principal and
Interest Account(s) with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related Remittance
Period which are not being deducted from Liquidation Proceeds or otherwise
being charged to the Principal and Interest Account with respect to such
Monthly Remittance Date;
(xi) Net Liquidation Proceeds as of the last day of the related
Remittance Period;
(xii) The scheduled principal balance of each Mortgage Loan as of
the first day of the related Remittance Period and the date through which
interest has been paid as of the last day of the related Remittance
Period;
(xiii) The number and aggregate Loan Balances and Loan Purchase
Prices of Mortgage Loans required to be repurchased by each Originator as
of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by such Servicer
during the related Remittance Period and any unreimbursed Delinquency
Advances as of such Monthly Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage Loans;
(xvi) Any additional information reasonably requested by the
Trustee;
(xvii) The number and aggregate Loan Balances of Mortgage Loans, if
any, currently in bankruptcy proceedings as of the last day of the related
Remittance Period and any Preference Amounts to the extent the related
Servicer has knowledge thereof; and
(xviii) The amount of unreimbursed Servicing Advances.
In addition to the reports and certificates described in this Section 8.29 to be
provided by such Servicer, information as the Trustee and such Servicer may
agree upon shall be provided by such Servicer to the Trustee or such other party
as may be requested by the Trustee by electronic transmission or hard copy.
(b) The Trustee shall, no later than the related Payment Date, provide to
the Underwriters, the Depositor, the Seller and the Rating Agencies a written
report setting forth the information required under Section 7.09(b) hereof,
based solely on information contained in the Monthly Servicing Report.
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(c) Each Servicer with respect to the Mortgage Loans in Group II agrees
that, in addition to the reports and certificates described in Section 8.29(a)
hereof, it shall upon the reasonable request of the Seller, prepare reports
detailing the Mortgage Loans serviced by it by index and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to the Trustee on
the Startup Day in hard copy and on electronic tape in a form acceptable to the
Trustee (the "Tape") detailing the information required to be set forth on the
Schedules of Mortgage Loans as of the close of business on the Cut-Off Date.
(e) Within two Business Days of receipt thereof, the Trustee shall review
the Monthly Servicing Reports against the information, as updated by the Trustee
on the basis of the current and all previous Monthly Servicing Reports received
by the Trustee. Within one Business Day following a determination by the Trustee
that inconsistencies between the Monthly Servicing Report and such information
are not reconcilable, the Trustee shall notify the related Servicer and the
Seller of any such material inconsistencies and related Servicer shall rectify
them.
Section 8.30 Indemnification by the Servicer. Each Servicer agrees to
indemnify and hold the Trustee, the Seller and the Depositor and their
employees, officers, directors and agents harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Seller, the Depositor and the
Trustee and their employees, officers, directors and agents may sustain in any
way caused by or arising directly out of the negligent failure of such Servicer,
or any Subservicer appointed by it, to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement and which, in the
case of the Seller or the Depositor, materially and adversely affects such
party. Each Servicer shall immediately notify the Trustee, the Seller, the
Depositor and the Rating Agencies if a claim is made by a third party with
respect to this Agreement, and the relevant Servicer may assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Seller, the Trustee and the Depositor and their employees, officers, directors
and agents. The Trustee shall reimburse such Servicer from amounts in the
related Principal and Interest Account for all amounts advanced by it pursuant
to the preceding sentence except when the claim relates directly to the failure
of such Servicer to service and administer the Mortgage Loans in compliance with
the terms of this Agreement.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall perform its servicing
functions with respect to the Mortgage Loans in the best interests of and for
the benefit of the Owners subject to the terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on such Servicer's behalf, to personally, by telephone or mail,
solicit the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan. Notwithstanding the
foregoing, it is understood and agreed that promotions undertaken by a Servicer
or any Affiliate thereof which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this paragraph, nor is a Servicer prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an agent
of a Mortgagor; provided further, that the Servicer may solicit any Mortgagor
(i) for whom the Servicer has received a request for verification of mortgage
from an originator of mortgage loan products similar to the
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Mortgage Loans that indicates that such Mortgagor intends to refinance his or
her Mortgage Loan and (ii) otherwise in accordance with the Seller's policy, if
such policy is delivered to the related Servicer in writing. It is understood
and agreed that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to the list of
Mortgagors and data relating to their Mortgages shall be retained by Seller.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates of all amounts
held by the Trustee and required to be paid to such Owners pursuant to this
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate and (c) at any time when a Qualified
Liquidation of both Mortgage Loan Groups included within the REMIC Estate is
effected as described below. To effect a termination of this Agreement pursuant
to clause (c), the Owners of all Certificates then Outstanding shall (i)
unanimously direct the Trustee on behalf of the Upper-Tier REMIC and the
Lower-Tier REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the death
of the last survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of Saint James's, living on the
date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Auction Termination; Servicer Termination.
(a) Within 90 days of the Group I Auction Sale Bid Date and within 90 days
of the Group II Auction Sale Bid Date, the Trustee will notify the investment
banking or whole-loan trading firm selected by the Owners of the majority of the
Class R Certificates (such investment bank or trading firm, the "Advisor") who
will solicit on behalf of the Trustee competitive bids for the purchase of the
Mortgage Loans then remaining in such Mortgage Loan Group for fair market value
(such bidders may include the Owners of the Class R Certificates). Such
solicitation shall be conducted substantially in the manner described in Exhibit
M hereto. In the event that satisfactory bids are received as described below,
the proceeds of the sale of such assets shall be deposited into the Certificate
Account. The Trustee will ask the Advisor to solicit, on behalf of the Trustee,
good-faith bids from no fewer than two prospective purchasers that are
considered at the time to be competitive participants in the home equity market.
The Advisor will consult with any securities brokerage houses as then making a
market in the Offered Certificates to obtain a determination as to whether the
fair market value of such assets has been offered.
If the highest good-faith bid received by the Advisor from a qualified
bidder is, in the judgment of the Advisor, not less than the fair market value
of the Mortgage Loans in such Mortgage Loan Group and if such bid would equal or
exceed the amount set forth in the following sentence, the Trustee, following
consultation with and written direction from the Advisor, will sell and assign
the Mortgage Loans in such Mortgage Loan Group without representation, warranty
or recourse to such highest bidder and will redeem the Offered Certificates
related to such Mortgage Loan Group. For the Trustee to consummate
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the sale, the bid must be at least equal to the Termination Price set forth in
Section 9.02(b) hereof. In addition, the bid must be in an amount sufficient to
pay the fees and expenses of the Trustee owing hereunder. If such conditions are
not met, the Trustee will, following consultation with the Advisor, decline to
consummate such sale. In addition, the Trustee will decline to consummate such
sale unless it receives from the Advisor an opinion of counsel addressed to it
that such sale will not give rise either to any "prohibited transaction" tax
under Section 860F(a)(1) of the Code or to any tax on contribution to either the
Upper-Tier REMIC or the Lower-Tier REMIC after the Startup Day under Section
860G(d)(1) of the Code. In the event such sale is not consummated in accordance
with the foregoing, the Trustee will not be under any obligation to solicit any
further bids or otherwise to negotiate any further sale of the Mortgage Loans in
such Mortgage Loan Group. In such event, however, if requested by the Owners of
the Class R Certificates the Trustee may solicit bids from time to time in the
future for the purchase of the Mortgage Loans in such Mortgage Loan Group upon
the same terms described above. The Trustee may consult with the Advisor and the
advice of the Advisor shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder.
(b) On any Monthly Remittance Date on or after the Group I Servicer
Clean-Up Call Date and on any Monthly Remittance Date on or after the Group II
Servicer Clean-Up Call Date, the Servicers servicing Mortgage Loans relating to
such Mortgage Loan Group simultaneously may determine to purchase and may cause
the purchase from the Trust of all (but not fewer than all) Mortgage Loans
serviced by the related Servicer with respect to such Mortgage Loan Group and
all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in such
Mortgage Loan Group, at a price (such price the "Termination Price") equal to
100% of the aggregate Loan Balances of the related Mortgage Loans (including any
REO Property) as of the day of purchase minus amounts remitted from the
Principal and Interest Account to the Certificate Account representing
collections of principal on the related Mortgage Loans during the current
Remittance Period, plus one month's interest on such amount computed at the
Termination Date Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the related
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
If on any such Monthly Remittance Date a Servicer does not elect to
purchase the Mortgage Loans it is servicing and one or more of the other
Servicers have so elected, the Servicer(s) having so elected may give the other
Servicer(s) notice (not less than ten days prior to the next succeeding Monthly
Remittance Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans with respect to such Mortgage Loan Group on such
Monthly Remittance Date at the Termination Price. If the other Servicer(s) do
not agree in writing to purchase the Mortgage Loans they are servicing prior to
the fifth day preceding such Monthly Remittance Date, the electing Servicer(s)
may purchase all Mortgage Loans in such Mortgage Loan Group on such Monthly
Remittance Date.
(c) In the event that an auction sale has not occurred with respect to
both Mortgage Loan Groups and the Servicers fail to exercise their respective
options to purchase all of the Mortgage Loans in both Mortgage Loan Groups, the
Owners of the Class R Certificates are required to purchase all of the Mortgage
Loans in both Mortgage Loan Groups on the Monthly Remittance Date in January
2028.
(d) In connection with any such purchase, such Owners of the Class R
Certificates or Servicers, as applicable, shall unanimously direct the Trustee
to adopt and the Trustee shall adopt, as to the Upper-Tier REMIC and Lower-Tier
REMIC, a plan of complete liquidation for all of the Mortgage Loan Groups as
contemplated by Section 860F(a)(4) of the Code and shall provide to the Trustee
an
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Opinion of Counsel experienced in federal income tax matters acceptable to the
Trustee to the effect that such purchase and liquidation constitutes, as to
either the Upper-Tier REMIC or the Lower-Tier REMIC, a Qualified Liquidation. In
addition, such Owners of the Class R Certificates or such Servicer shall provide
to the Trustee an Opinion of Counsel acceptable to the Trustee to the effect
that such purchase and liquidation does not constitute a preference payment
pursuant to the United States Bankruptcy Code.
(e) Promptly following any purchase or sale described in this Section
9.02, the Trustee will release the Files to the Owners of the Class R
Certificates or otherwise upon their order or to the related Servicer, if
applicable, in accordance with Section 8.14 hereof. Upon such release, the
servicing of the Mortgage Loans shall remain with the related Servicer, subject
to the servicing provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC Estate
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination the Owners of a majority in
Percentage Interests represented by the Offered Certificates then Outstanding
may direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code.
The Trustee shall notify the Servicers and the Owners of the Class R
Certificates of such election to liquidate or such determination to purchase, as
the case may be (the "Termination Notice"). The Owners of a majority of the
Class R Certificates may, within 60 days from the date of receipt of the
Termination Notice (the "Purchase Option Period"), at their option, purchase
from the Trust all (but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Mortgage Loan then remaining in the Trust Estate at a purchase
price equal to the Termination Price. If the Owners of a majority of the Class R
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period the
Trustee shall sell the Mortgage Loans and reimburse the Servicer for
unreimbursed (including nonrecoverable) Delinquency Advances, Servicing Advances
and Servicing Fees and distribute the remaining proceeds of the liquidation of
the Trust Estate, each in accordance with the plan of complete liquidation, such
that, if so directed, the liquidation of the Trust Estate, the distribution of
the proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 60th day, or such later day as the Owners of the
Offered Certificates shall permit or direct in writing, after the expiration of
the Purchase Option Period. In connection with such purchase, the Servicer shall
remit to the Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed to
have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the Class
R Certificates then Outstanding may, at their option and upon delivery to the
Trustee of an Opinion of Counsel experienced in federal income tax matters
acceptable to the Trustee selected by such Owners of the Class R Certificates
which opinion shall be reasonably satisfactory in form and substance to the
Trustee and the Seller to the effect that the effect of the Final Determination
is to increase substantially the probability that the gross income of the Trust
will be subject to federal taxation, purchase from the Trust all (but not fewer
than all) Mortgage Loans and REO Properties at a purchase price equal to the
Termination Price.
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(c) In connection with any purchase pursuant to this Section 9.03, the
Trustee shall adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an Opinion of Counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and unreimbursed
Delinquency Advances and Servicing Advances and Servicing Fees theretofore
funded by a Servicer from the Servicer's own funds shall be paid by the Trustee
to the Servicer from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B)
shall serve as the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicers hereunder, the
Trustee is hereby empowered to perform the duties of the Servicers it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicers, the Servicers and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicers, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest (and to be reimbursed therefor as provided
herein).
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or Classes relating to the time,
method and place of
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conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under
this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. None of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicers under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicers in
accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) Neither the Servicers, the Seller nor the Trustee knowingly shall take
any action (other than any action expressly required by this Agreement) that
would cause the Class A-7 Certificates or the Class M-1A Certificates to fail to
qualify as "mortgage related securities" within the meaning of the Securities
Exchange Act of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date amounts available for distribution in
accordance with the terms hereof (provided, however, that any such failure
which is due to circumstances beyond the control of the Trustee shall not
be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the Trustee by the Seller
or by the
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Owners of at least 25% of the aggregate Percentage Interests in the Trust
Estate represented by the Offered Certificates then Outstanding, or, if
there are no Offered Certificates then Outstanding, by such Percentage
Interests represented by the Class R Certificates, a written notice
specifying such failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing; or
(6) the Trustee shall fail to meet the eligibility requirements set
forth in Section 10.08 herein.
The Depositor shall give to the Rating Agencies notice of the occurrence
of any such event of which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is continuing, then
and in every such case the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding or
if there are no Offered Certificates then Outstanding by a majority of the Class
R Certificates, may, whether or not the Trustee resigns pursuant to Section
10.09(b), immediately, concurrently with the giving of notice to the Trustee,
and without delaying the 30 days required for notice therein, appoint a
successor Trustee pursuant to the terms of Section 10.09.
(c) The Servicers shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may request and rely upon and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the Servicers
or the Owners of any Class of Certificates mentioned herein shall, at the
request of the Trustee, be in writing;
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(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of such
counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within the
discretion or the rights or powers conferred upon it under this Agreement other
than as to validity and sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer is required to
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate (either in writing or orally with
prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the Certificates,
except any such recitals and representations relating to the Trustee, shall be
taken as the statements of the Depositor and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Agreement, of the Certificates, or any
Mortgage Loan or document related thereto other than as to validity and
sufficiency of its authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller or the Servicer in
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respect of the Mortgage Loans or deposited into or withdrawn from the Principal
and Interest Account or the Certificate Account by the Depositor, the related
Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
or to prepare or file any tax returns (except as provided in Section 11.16) or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust with the same rights it would
have if it were not Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(i) and (d)(i) and Section
7.05 hereof. The Trustee shall have no lien on the Trust Estate for the payment
of such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America and having a deposit rating of at least A- by Standard & Poor's, A2 by
Moody's and, if rated by Fitch, having a rating of at least A- from Fitch (or
such lower rating as may be acceptable to Fitch). If such Trustee publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall, upon the request of the Seller resign immediately in the manner and with
the effect hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
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(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Owners at their addresses appearing on the Register; provided, that the Trustee
may not resign solely for the failure to receive the Trustee Fee. A copy of such
notice shall be sent by the resigning Trustee to the Rating Agencies. Upon
receiving notice of resignation, the Depositor shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed on
behalf of the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor trustee or trustees. If no successor trustee shall have been appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor, the Depositor may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Offered Certificates or, if there are no Offered Certificates then
Outstanding, by a majority of the Class R Certificates, may at any time remove
the Trustee and appoint a successor trustee by delivering to the Trustee to be
removed, to the successor trustee so appointed, to the Depositor and to the
Servicer, copies of the record of the act taken by the Owners, as provided for
in Section 11.03.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Seller duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Seller shall promptly appoint a successor trustee. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor trustee shall be appointed by act of the Seller or the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding, the successor trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor trustee and supersede the
successor trustee appointed by the Depositor. If no successor trustee shall have
been so appointed by the Depositor or the Owners and shall have accepted
appointment in the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the Rating
Agencies and the Servicers and to the Owners as their names and addresses appear
in the Register. Each notice shall include the name of the successor Trustee and
the address of its corporate trust office.
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Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge and
deliver to the Depositor on behalf of the Trust and to its predecessor Trustee
an instrument accepting such appointment hereunder and stating its eligibility
to serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Depositor or the successor Trustee, such predecessor Trustee
shall, upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor trustee all of the rights, powers and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor trustee, the
Depositor on behalf of the Trust shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor trustee all such
rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register. The
Depositor shall send a copy of such notice to the Rating Agencies. If the
Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the
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Internal Revenue Service's Form 1066 and Schedule Q and the form required under
Section 6050J and 6050K of the Code, if applicable to REMICs. The Trustee shall,
upon request of the Tax Matters Person, collect any forms or reports from the
Owners determined by the Tax Matters Person to be required under applicable
federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Seller, the Servicers or any Owner for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors, officers, employees
or agents or any such Person against any liability which would otherwise be
imposed by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. In addition, the Depositor and the Seller
covenant and agree to indemnify the Trustee and its employees, officers,
directors and agents in its capacity as Trustee and not as successor Servicer
(unless resulting from failure of the related predecessor Servicer to perform in
accordance with this Agreement), from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of the Trustee's duties hereunder other than those resulting from
the negligence or bad faith of the Trustee, and the Depositor shall pay all
amounts not otherwise paid pursuant to Sections 2.05 and 7.05 hereof. The
Trustee and any director, officer, employee or agent of the Trustee may rely and
shall be protected in acting or refraining from acting in good faith on any
certificate, notice or other document of any kind prima facie properly executed
and submitted by the Authorized Officer of any Person respecting any matters
arising hereunder. The provisions of this Section 10.13 shall survive the
termination of this Agreement, the resignation or removal of the Trustee
hereunder and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Depositor
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or any
part of the Trust Estate or separate Trustee or separate Trustees of any part of
the Trust Estate, and to vest in such Person or Persons, in such capacity and
for the benefit of the Owners, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 10.14, such
powers, duties, obligations, rights and trusts as the Depositor and the Trustee
may consider necessary or desirable. If the Depositor shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
the Trustee alone shall have the power to make such appointment. No co-Trustee
or separate Trustee hereunder shall be required to meet the terms of eligibility
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as a successor trustee under Section 10.08 and no notice to Owner of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicers and the Trustee acting jointly may at any time
accept the resignation of or remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more custodians to hold all or a portion of
the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement approved by the Seller. Subject to this Article X, the Trustee agrees
to comply with the terms of each Custodial Agreement and to enforce the terms
and provisions thereof against the custodian for the benefit of the Owners of
the Certificates.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the Owners
to the Trustee to take any action under any provision of this Agreement, the
Depositor, the Seller or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion of
an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the Seller
or the Servicers, stating that the information with respect to such factual
matters is in the possession of the Depositor, the Seller or such Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the
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written opinion of other counsel, in which event such Opinion of Counsel shall
be accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners or other documents provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with the Trustee by any Owner, the
Depositor, the Seller and the Servicers shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest
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date, and not earlier than the earliest date, prescribed for the giving of such
notice or the mailing of such report. In any case where a notice or report to
Owners is mailed in the manner provided above, neither the failure to mail such
notice or report nor any defect in any notice or report so mailed to any
particular Owner shall affect the sufficiency of such notice or report with
respect to other Owners, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. Notwithstanding the foregoing, if a Servicer has been removed or
resigned or the Trust is terminated, notice of any such events shall be made by
overnight courier, registered mail or telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and
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effect as if made or mailed on the nominal date of any such Monthly Remittance
Date, such Payment Date, or such other date for the payment of any distribution
to any Owner or the mailing of such notice, as the case may be, and no interest
shall accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many states
and outside the United States and the desire to establish with certainty that
this Agreement will be governed by and construed and interpreted in accordance
with the law of a state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein, this Agreement and
each Certificate shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
therein, without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Nothing contained in this Agreement shall limit or affect the right of
the Depositor, the Seller or the Servicers or other third-party beneficiary
hereunder, as the case may be, to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Mortgage Loans against
any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the terms
of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee
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acting on behalf of the Trust and the Owner receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Owner, apply the excess to the payment of principal of such Certificate, if
any, remaining unpaid. In addition, all sums paid or agreed to be paid to the
Trustee for the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicers may at any
time and from time to time, and without notice to or the consent of the Owners,
amend this Agreement, subject to the provisions of Section 11.16 and 11.17 and
the consent of the Trustee to such amendment shall not be unreasonably withheld,
for the purpose of (i) curing any ambiguity, typographical error, or mistake,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or to add provisions hereto which are not
inconsistent with the provisions hereof; or (ii) upon receipt of an Opinion of
Counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust, any REMIC therein or upon the
transferor of a Class R Certificate as a result of the ownership of any Class R
Certificate by a Disqualified Organization, removing the restriction on transfer
set forth in Section 5.08(b) hereof; or (iii) complying with the requirements of
the Code and the regulations proposed or promulgated thereunder including any
amendments necessary to maintain REMIC status for either the Upper-Tier REMIC or
the Lower-Tier REMIC or (iv) for any other purpose, provided that in the case of
this clause (iv) such amendment will not adversely affect in any material
respect any Owners. Any such amendment shall be deemed not to adversely affect
in any material respect any Owner if there is delivered to the Trustee written
notification from each Rating Agency that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to any Class of the
Certificates. This Agreement may also be amended by the Trustee, the Depositor,
the Seller and the Servicers at any time and from time to time, with the prior
written approval of a majority of the Percentage Interest represented by each
affected Class of Certificates then Outstanding, for the purpose of adding any
provisions or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Owners hereunder.
Notwithstanding anything to the contrary herein, no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Owner without the consent of the Owner of such
Certificate, (b) reduce the aforesaid percentages of Percentage Interests which
are required to consent to any such amendments, without the consent of the
Owners of all Certificates of the Class or Classes affected then Outstanding,
(c) adversely affect the qualification of either the Upper-Tier REMIC or the
Lower-Tier REMIC or subject either the Upper-Tier REMIC or the Lower-Tier REMIC
to tax, as evidenced by an Opinion of Counsel satisfactory to the Trustee at the
expense of the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Owner in
the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any amendments to
this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may, subject
to the eligibility requirements for the Trustee set forth in Section 10.08
hereof, appoint one or more other Paying Agents or successor Paying Agents.
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Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee;
and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners
entitled thereto until such sums shall be paid to such Owners or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Servicers and the Owners by mailing notice
thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the Upper-Tier
REMIC shall constitute, and that the affairs of the Lower-Tier REMIC and the
Upper-Tier REMIC shall be conducted so as to qualify each as a REMIC in
accordance with the REMIC Provisions. In furtherance of such intention, Bankers
Trust Company or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust and as Tax Matters Person for the Trust and
that in such capacity it shall: (i) prepare or cause to be prepared and filed,
in a timely manner, annual tax returns and any other tax return required to be
filed by the Upper-Tier REMIC and the Upper-Tier REMIC established hereunder
using a calendar year as the taxable year for the Lower-Tier REMIC and the
Upper-Tier REMIC established hereunder; (ii) in the related first such tax
return, make (or cause to be made) an election satisfying the requirements of
the REMIC Provisions, on behalf of the Lower-Tier REMIC and the Upper-Tier REMIC
for it to be treated as a REMIC; (iii) prepare and forward, or cause to be
prepared and forwarded, to the Owners all information, reports or tax returns
required with respect to the Lower-Tier REMIC and the Upper-Tier REMIC as, when
and in the form required to be provided to the Owners, and to the Internal
Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the Lower-Tier REMIC and the Upper-Tier REMIC, except as
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provided under this Agreement; (v) represent the Trust, the Lower-Tier REMIC or
the Upper-Tier REMIC in any administrative or judicial proceedings relating to
an examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust, the Lower-Tier
REMIC or the Upper-Tier REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust, the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust, the Lower-Tier REMIC or the Upper-Tier
REMIC therein in relation to any tax matter involving the Trust or any REMIC
therein; (vi) comply with all statutory or regulatory requirements with regard
to its conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and the
Treasury Regulations thereunder; (vii) make available information necessary for
the computation of any tax imposed (A) on transferor of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any interest
in which is held by a Disqualified Organization; and (viii) acquire and hold the
Tax Matters Person Residual Interest. The obligations of Bankers Trust Company
or such other designated Tax Matters Person pursuant to this Section 11.16 shall
survive the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each Servicer covenant and
agree for the benefit of the Owners (i) to take no action which would result in
the termination of "REMIC" status for the Lower-Tier REMIC or the Upper-Tier
REMIC, (ii) not to engage in any "prohibited transaction", as such term is
defined in Section 860F(a)(2) of the Code, and (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and the Seller in addition covenants to cause each Servicer not to take
or engage in any such action, to the extent the Seller is aware of any such
proposed action by the Servicer.
(c) Each of the Lower-Tier REMIC and the Upper-Tier REMIC shall, for
federal income tax purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or the
Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to Trustee and the Seller to the effect
that such transaction does not result in a tax imposed on the Trust or cause a
termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC;
provided, however, that such transaction is otherwise permitted under this
Agreement.
(g) The Trustee, each of the Servicers and Tax Matters Person each agree
to indemnify the Trust for any tax imposed on the Trust, the Lower-Tier or the
Upper-Tier REMIC as a result of their own negligence.
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Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such transaction does not result in a tax imposed on the Trust, the
Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC status
for the Lower-Tier REMIC or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate (except as specifically provided in this Agreement), (ii) accept
any contribution of assets after the Startup Day in violation of the REMIC
Provisions or (iii) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained amounts to the Owners
of Offered Certificates to the extent they are fully reimbursed and then to the
Owners of the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC or the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC or the
Upper-Tier REMIC shall be Bankers Trust Company as long as it owns a Class R
Certificate. If Bankers Trust Company does not own a Class R Certificate, the
Tax Matters Person may be any other entity that owns a Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an affidavit
in the form of Exhibit I. The Seller shall notify the Trustee in writing of the
name and address of another person who accepts a designation as Tax Matters
Person hereunder.
Section 11.19 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Bankers Trust Company
c/o Bankers Trust of California N.A.
3 Park Plaza
16th Floor
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Irvine, California 92614
Attn: AMRESCO 1998-1
Tel: (714) 253-7575
Fax: (714) 253-7577
The Depositor: AMRESCO Residential Securities Corporation
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
One Lakeshore Centre
3281 Guasti Road, Suite 800
Ontario, California 91761
Attn: Janice Cott
Tel: (909) 605-7600
Fax: (909) 605-7619
The Servicers: Advanta Mortgage Corp. USA
16875 West Bernardo Drive
San Diego, California 92127
Attn: Senior Vice President - Loan Servicing
Tel: (619) 674-1800
Fax: (619) 674-3666
Ameriquest Mortgage Company
1100 Town and Country Road
6th Floor
Orange, California 92868
Attn: Servicing Manager
Tel: (714) 564-0600
Fax: (714) 973-4535
Wendover Financial Services Corporation
725 North Regional Road
P.O. Box 26903
Greensboro, North Carolina 27419-6903
Attn: W. Harold Lanier, Compliance Officer
Tel: (336) 668-7000
Fax: (336) 668-4797
with a copy to:
AMRESCO Residential Mortgage Corporation
16800 Aston Street
Irvine, California 92714
143
<PAGE>
Attn: President
Tel: (714) 440-1000
Fax: (714) 440-1535
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: The Mortgage Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Attn: Hedi Katz
Tel: (212) 908-0500
Fax: (212) 376-6857
S&P: Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Attn: Leslie Albergo
Tel: (212) 208-8000
Fax: (212) 412-0224
Underwriters: Credit Suisse First Boston
55 E. 52nd St.
New York, New York 10055-0186
Attn: Nita Cherry
Tel: (212) 909-2333
Fax: (212) 479-5502
Deutsche Morgan Grenfell
31 West 52nd Street - 23rd Floor
New York, New York 10019
Attn: Vijay Radhakishum
Tel: (212) 469-8925
Fax: (212) 469-7571
Morgan Stanley Dean Witter
1585 Broadway
New York, New York 10036
Attn: Valerie Kay
Tel: (212) 761-4000
Fax: (212) 761-0782
144
<PAGE>
Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292
Attn: Brendan Keane
Tel: (212) 778-1000
Fax: (212) 778-7401
Owners: As set forth in the Register.
END OF ARTICLE XI
145
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, each Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By: /s/ Janice M. Cott
---------------------------------------
Title: Vice President
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller
By: /s/ Janice M. Cott
---------------------------------------
Title: Vice President
ADVANTA MORTGAGE CORP. USA
as Servicer
By: /s/ William P. Garland
---------------------------------------
Title: Senior Vice President
AMERIQUEST MORTGAGE COMPANY
as Servicer
By: /s/ Jule J. Keen
---------------------------------------
Title: Executive Vice President
WENDOVER FINANCIAL SERVICES CORPORATION
as Servicer
By: /s/ Kenneth L. Austin
---------------------------------------
Title: Executive Vice President
BANKERS TRUST COMPANY,
as Trustee
By: /s/ Michelle Roos
---------------------------------------
Title: Vice President
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 12th day of February, 1998, before me personally came Janice M.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Costa Mesa, California, that she is a Vice President of AMRESCO
Residential Securities Corporation, a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Robin Renee Workman
-------------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 12th day of February, 1998, before me personally came Janice M.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Costa Mesa, California, that she is a Vice President of AMRESCO
Residential Capital Markets, Inc., a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Robin Renee Workman
-------------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
On the 11th day of February, 1998, before me personally came William P.
Garland, to me known, who, being by me duly sworn, did depose and say that he
resides at 16825 W. Bernardo Dr., San Diego, CA 92127, that he is a Senior Vice
President of Advanta Mortgage Corp. USA, a Delaware corporation; and that he
signed his name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Susan C. Kelhi
-------------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 11th day of February, 1998, before me personally came Jule J. Keen,
to me known, who, being by me duly sworn, did depose and say that (s)he is a(n)
Executive Vice President of Ameriquest Mortgage Company, a Delaware corporation;
and that he signed his/her name thereto by order of the Board of Directors of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Lisa A. Casella
-------------------------------------------
Notary Public
<PAGE>
STATE OF NORTH CAROLINA )
) ss:
COUNTY OF GUILFORD )
On the 16th day of February, 1998, before me personally came Kenneth L.
Austin, Jr., to me known, who, being by me duly sworn, did depose and say that
he resides at 3458 New Salem Rd., Climax, NC 27233, that he is a Executive Vice
President of Wendover Financial Services Corporation, a North Carolina
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Janet S. Graffeo
-------------------------------------------
Notary Public
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 12th of February 1998, before me personally came Michelle Roos, to
me known, who, being by me duly sworn, did depose and say that he resides at
_________________________________ that (s)he is Vice President of Bankers Trust
Company, a New York banking corporation; and that (s)he signed his/her name
thereto by order of the Board of Directors of said national banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Robin Renee Workman
-------------------------------------------
Notary Public
<PAGE>
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
[BY ORIGINATOR]
<PAGE>
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
<PAGE>
SCHEDULE II
SCHEDULE OF CLASS S MORTGAGE LOANS
Number of Fixed Aggregate Fixed % of Aggregate
Rate Group Rate Group Fixed Rate Group
Geographic Area Mortgage Loans Loan Balance Loan Balance
--------------- -------------- ------------ ------------
Alaska 18 $ 1,304,566.65 0.43%
Arizona 66 4,852,910.73 1.60
Arkansas 121 4,925,224.13 1.63
California 591 57,214,830.72 18.92
Colorado 63 5,590,850.18 1.85
Connecticut 36 2,556,303.04 0.85
Delaware 9 830,242.61 0.27
District of Columbia 22 1,779,272.81 0.59
Florida 378 22,620,079.19 7.48
Georgia 77 4,973,346.79 1.64
Hawaii 283 51,085,798.02 16.89
Idaho 35 1,940,568.52 0.64
Illinois 146 8,409,912.70 2.78
Indiana 132 4,829,246.60 1.60
Iowa 19 982,701.30 0.32
Kansas 15 875,422.99 0.29
Kentucky 20 913,466.79 0.30
Louisiana 85 3,726,295.57 1.23
Maryland 114 6,431,429.16 2.13
Massachusetts 41 4,228,610.73 1.40
Michigan 127 5,575,625.10 1.84
Minnesota 55 3,496,419.19 1.16
Mississippi 66 2,965,533.00 0.98
Missouri 110 4,750,596.46 1.57
Montana 7 547,451.86 0.18
Nebraska 22 1,062,489.32 0.35
Nevada 43 3,078,550.23 1.02
New Hampshire 2 165,740.15 0.05
New Jersey 44 4,226,629.31 1.40
New Mexico 19 1,145,982.67 0.38
New York 66 6,007,810.54 1.99
North Carolina 92 4,582,356.86 1.52
North Dakota 3 126,750.51 0.04
Ohio 203 10,838,870.31 3.58
Oklahoma 92 4,504,071.06 1.49
Oregon 76 6,833,239.60 2.26
Pennsylvania 263 13,258,969.55 4.38
Rhode Island 16 1,167,355.31 0.39
South Carolina 43 1,810,539.99 0.60
South Dakota 1 55,856.03 0.02
Tennessee 82 4,764,101.17 1.58
Texas 279 16,035,836.34 5.30
Utah 57 4,614,152.43 1.53
Virginia 44 2,751,418.87 0.91
Washington 70 5,031,511.86 1.66
West Virginia 19 848,366.68 0.28
Wisconsin 43 1,614,502.31 0.53
Wyoming 10 494,721.53 0.16
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Rate Group Rate Group Fixed Rate Group
Property Type Mortgage Loans Loan Balance Loan Balance
- - ------------- -------------- ------------ ------------
Single Family 3,652 $257,665,848.80 85.20%
2-4 Family 311 25,475,772.25 8.42
Condo 151 11,124,079.41 3.68
PUD 71 6,009,156.30 1.99
Manuf Home 32 1,815,880.51 0.60
Townhouse 8 335,790.20 0.11
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Rate Group Rate Group Fixed Rate Group
Occupancy Status Mortgage Loans Loan Balance Loan Balance
- - ---------------- -------------- ------------ ------------
Owner Occupied 3,616 $270,232,202.80 89.35%
Non Owner Occupied 609 32,194,324.67 10.65
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Range of Rate Group Rate Group Fixed Rate Group
Coupon Rates (%) Mortgage Loans Loan Balance Loan Balance
- - ---------------- -------------- ------------ ------------
6.000 to 6.499 4 $ 784,943.85 0.26%
6.500 to 6.999 23 4,222,409.64 1.40
7.000 to 7.499 18 3,750,665.60 1.24
7.500 to 7.999 73 11,878,335.33 3.93
8.000 to 8.499 73 9,350,479.96 3.09
8.500 to 8.999 236 27,282,821.68 9.02
9.000 to 9.499 182 20,219,446.94 6.69
9.500 to 9.999 471 45,403,455.46 15.01
10.000 to 10.499 297 21,486,321.30 7.10
10.500 to 10.999 660 45,902,179.87 15.18
11.000 to 11.499 436 25,868,280.91 8.55
11.500 to 11.999 607 33,811,791.07 11.18
12.000 to 12.499 312 14,719,318.84 4.87
12.500 to 12.999 293 13,979,702.54 4.62
13.000 to 13.499 182 7,902,495.75 2.61
13.500 to 13.999 132 5,562,806.60 1.84
14.000 to 14.499 55 2,264,554.49 0.75
14.500 to 14.999 90 3,911,340.31 1.29
15.000 to 15.499 32 1,721,655.15 0.57
15.500 to 15.999 44 2,244,793.68 0.74
16.000 to 16.499 3 105,887.93 0.04
16.500 to 16.599 2 52,840.57 0.02
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Months Remaining Rate Group Rate Group Fixed Rate Group
To Maturity Mortgage Loans Loan Balance Loan Balance
----------- -------------- ------------ ------------
0 to 59 1 $ 5,906.63 0.00%
60 to 119 4 152,538.26 0.05
120 to 179 1,042 51,208,232.29 16.93
180 to 239 98 5,584,150.38 1.85
240 to 299 2 150,043.47 0.05
300 to 359 2,931 234,879,766.75 77.67
360 to 360 147 10,445,889.69 3.45
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Months Elapsed Rate Group Rate Group Fixed Rate Group
Since Origination Mortgage Loans Loan Balance Loan Balance
----------------- -------------- ------------ ------------
0 191 $ 12,436,504.19 4.11%
1 to 6 3,677 269,469,211.95 89.10
7 to 12 346 19,540,995.40 6.46
13 to 18 4 353,542.72 0.12
19 to 24 6 527,443.14 0.17
25 to 30 1 98,830.07 0.03
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Range of Loan Rate Group Rate Group Fixed Rate Group
Balances Mortgage Loans Loan Balance Loan Balance
-------- -------------- ------------ ------------
0 to 9,999.99 1 $ 5,906.63 0.00%
10,000 to 19,999.99 188 3,307,391.03 1.09
20,000 to 29,999.99 650 16,542,030.30 5.47
30,000 to 39,999.99 683 24,093,176.48 7.97
40,000 to 49,999.99 573 25,895,615.74 8.56
50,000 to 59,999.99 474 26,160,740.81 8.65
60,000 to 69,999.99 260 16,916,948.80 5.59
70,000 to 79,999.99 241 18,086,277.29 5.98
80,000 to 89,999.99 192 16,333,239.03 5.40
90,000 to 99,999.99 179 17,060,030.72 5.64
100,000 to 109,999.99 125 13,169,020.93 4.35
110,000 to 119,999.99 113 12,919,266.16 4.27
120,000 to 129,999.99 70 8,759,296.62 2.90
130,000 to 139,999.99 65 8,775,688.70 2.90
140,000 to 149,999.99 56 8,145,642.30 2.69
150,000 to 159,999.99 39 6,080,835.34 2.01
160,000 to 169,999.99 33 5,428,302.40 1.79
170,000 to 179,999.99 28 4,922,767.41 1.63
180,000 to 189,999.99 24 4,462,362.99 1.48
190,000 to 199,999.99 27 5,289,264.24 1.75
200,000 to 209,999.99 22 4,525,585.91 1.50
210,000 to 219,999.99 15 3,241,181.38 1.07
220,000 to 229,999.99 14 3,158,315.65 1.04
230,000 to 239,999.99 17 4,017,011.01 1.33
240,000 to 249,999.99 17 4,147,732.76 1.37
250,000 to 259,999.99 8 2,049,546.31 0.68
260,000 to 269,999.99 9 2,388,670.29 0.79
270,000 to 279,999.99 7 1,939,759.96 0.64
280,000 to 289,999.99 8 2,271,373.50 0.75
290,000 to 299,999.99 13 3,851,722.85 1.27
300,000 to 309,999.99 3 915,320.30 0.30
310,000 to 319,999.99 8 2,526,441.78 0.84
320,000 to 329,999.99 6 1,953,000.27 0.65
330,000 to 339,999.99 8 2,679,317.99 0.89
340,000 to 349,999.99 12 4,157,853.15 1.37
350,000 to 359,999.99 5 1,772,964.27 0.59
360,000 to 369,999.99 2 733,694.38 0.24
370,000 to 379,999.99 3 1,127,372.24 0.37
380,000 to 389,999.99 2 774,447.91 0.26
390,000 to 399,999.99 7 2,767,691.37 0.92
400,000 to 409,999.99 3 1,216,243.07 0.40
410,000 to 419,999.99 2 838,145.23 0.28
440,000 to 449,999.99 2 889,900.43 0.29
460,000 to 469,999.99 2 924,836.44 0.31
470,000 to 479,999.99 1 471,658.10 0.16
480,000 to 489,999.99 1 489,293.85 0.16
490,000 to 499,999.99 1 498,491.67 0.16
510,000 to 519,999.99 1 512,473.63 0.17
530,000 to 539,999.99 1 538,287.60 0.18
540,000 to 549,999.99 1 542,173.14 0.18
620,000 to 629,999.99 1 628,664.58 0.21
690,000 to 699,999.99 1 694,886.32 0.23
820,000 to 829,999.99 1 828,666.21 0.27
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
Number of Fixed Aggregate Fixed % of Aggregate
Range of Rate Group Rate Group Fixed Rate Group
CLTVs (%) Mortgage Loans Loan Balance Loan Balance
--------- -------------- ------------ ------------
5.00 to 9.99 8 $ 159,930.09 0.05%
10.00 to 14.99 28 1,019,425.41 0.34
15.00 to 19.99 36 1,175,617.61 0.39
20.00 to 24.99 34 1,553,935.89 0.51
25.00 to 29.99 33 1,201,564.04 0.40
30.00 to 34.99 50 2,075,556.51 0.69
35.00 to 39.99 70 3,193,247.06 1.06
40.00 to 44.99 75 4,652,614.09 1.54
45.00 to 49.99 87 4,490,673.36 1.48
50.00 to 54.99 155 10,383,734.16 3.43
55.00 to 59.99 188 12,111,446.42 4.00
60.00 to 64.99 348 21,999,022.15 7.27
65.00 to 69.99 457 27,708,051.28 9.16
70.00 to 74.99 684 46,379,692.98 15.34
75.00 to 79.99 673 51,134,768.85 16.91
80.00 to 84.99 835 67,858,164.98 22.44
85.00 to 89.99 285 27,322,632.32 9.03
90.00 to 94.99 179 18,006,450.27 5.95
TOTAL 4,225 $302,426,527.47 100.00%
<PAGE>
% of Aggregate
Number of Adjustable Aggregate Adjustable Adjustable
Rate Group Rate Group Rate Group
Geographic Area Mortgage Loans Loan Balance Loan Balance
--------------- -------------- ------------ ------------
Alaska 10 $ 1,574,063.48 0.33%
Arizona 148 14,955,524.88 3.16
Arkansas 17 1,660,771.14 0.35
California 887 147,498,790.56 31.14
Colorado 144 18,009,562.53 3.80
Connecticut 45 4,294,083.57 0.91
Delaware 6 390,804.97 0.08
District of Columbia 6 546,723.03 0.12
Florida 218 18,483,287.31 3.90
Georgia 64 6,623,742.99 1.40
Hawaii 98 19,850,493.06 4.19
Idaho 33 2,644,666.44 0.56
Illinois 272 24,219,665.83 5.11
Indiana 87 4,910,655.82 1.04
Iowa 28 1,338,543.77 0.28
Kansas 30 2,240,564.65 0.47
Kentucky 24 1,694,179.08 0.36
Louisiana 46 3,200,443.55 0.68
Maine 6 615,025.00 0.13
Maryland 37 3,515,988.86 0.74
Massachusetts 52 5,878,149.71 1.24
Michigan 93 7,290,641.53 1.54
Minnesota 210 16,652,451.38 3.52
Mississippi 17 1,582,106.61 0.33
Missouri 153 9,648,067.62 2.04
Montana 5 347,507.77 0.07
Nebraska 7 350,500.90 0.07
Nevada 44 5,465,783.54 1.15
New Hampshire 18 1,457,357.69 0.31
New Jersey 78 9,686,423.43 2.04
New Mexico 21 2,042,827.29 0.43
New York 49 6,827,822.20 1.44
North Carolina 110 9,265,785.46 1.96
North Dakota 8 325,954.62 0.07
Ohio 160 10,009,383.17 2.11
Oklahoma 35 1,855,403.72 0.39
Oregon 180 19,707,302.94 4.16
Pennsylvania 185 11,830,610.51 2.50
Rhode Island 37 2,474,740.86 0.52
South Carolina 23 1,598,522.51 0.34
South Dakota 3 163,353.94 0.03
Tennessee 51 3,490,657.88 0.74
Texas 142 11,206,740.67 2.37
Utah 116 14,783,966.98 3.12
Vermont 5 440,998.15 0.09
Virginia 36 3,136,881.71 0.66
Washington 224 26,652,693.27 5.63
West Virginia 22 1,542,409.33 0.33
Wisconsin 162 9,418,534.27 1.99
Wyoming 3 267,681.54 0.06
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
% of
Aggregate
Number of Adjustable Aggregate Adjustable Adjustable
Rate Group Rate Group Rate Group
Property Types Mortgage Loans Loan Balance Loan Balance
-------------- -------------- ------------ ------------
Single Family Residence 3,868 $416,086,421.66 87.84%
Two-to-Four Family 279 27,032,602.35 5.71
Condominium 173 14,622,349.11 3.09
PUD 90 12,497,879.67 2.64
Manufactured Housing 35 2,400,515.34 0.51
Townhouse 10 1,029,073.59 0.22
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
Number of Adjustable Aggregate Adjustable % of Aggregate
Rate Group Rate Group Adjustable Rate
Occupancy Status Mortgage Loans Loan Balance Group Loan Balance
---------------- -------------- ------------ ------------------
Owner Occupied 4,036 $440,620,637.29 93.02%
Non Owner Occupied 419 33,048,204.43 6.98
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
Number of Aggregate % of Aggregate
Adjustable Adjustable Adjustable Rate
Range of Rate Group Rate Group Group Loan
Coupon Rates Mortgage Loans Loan Balance Balance
------------ -------------- ------------ -------
5.500 to 5.999 2 $ 221,671.18 0.05%
6.000 to 6.499 2 390,401.31 0.08
6.500 to 6.999 33 4,873,750.10 1.03
7.000 to 7.499 19 2,981,836.86 0.63
7.500 to 7.999 87 13,581,956.28 2.87
8.000 to 8.499 113 16,492,703.75 3.48
8.500 to 8.999 356 52,628,496.49 11.11
9.000 to 9.499 322 42,790,779.62 9.03
9.500 to 9.999 797 98,353,205.20 20.76
10.000 to 10.499 529 56,167,092.61 11.86
10.500 to 10.999 779 79,142,300.69 16.71
11.000 to 11.499 398 33,106,377.91 6.99
11.500 to 11.999 312 25,084,101.35 5.30
12.000 to 12.499 169 12,514,142.57 2.64
12.500 to 12.999 139 8,581,025.50 1.81
13.000 to 13.499 85 5,540,043.51 1.17
13.500 to 13.999 111 7,022,145.60 1.48
14.000 to 14.499 69 5,239,501.31 1.11
14.500 to 14.999 71 4,689,922.15 0.99
15.000 to 15.499 52 3,683,262.85 0.78
15.500 to 15.999 6 386,304.54 0.08
16.000 to 16.499 2 101,447.45 0.02
16.500 to 16.999 1 44,191.76 0.01
17.000 to 17.499 1 52,181.13 0.01
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
Number of Aggregate
Adjustable Adjustable % of Aggregate
Months Remaining Rate Group Rate Group Adjustable Rate Group
To Maturity Mortgage Loans Loan Balance Loan Balance
----------- -------------- ------------ ------------
120 to 179 48 $ 2,397,556.93 0.51%
180 to 239 20 1,121,542.33 0.24
300 to 359 4,187 453,209,626.46 95.68
360 to 360 200 16,940,116.00 3.58
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
% of
Aggregate
Number of Adjustable Aggregate Adjustable Adjustable
Months Elapsed Rate Group Rate Group Rate Group
Since Origination Mortgage Loans Loan Balance Loan Balance
- - ----------------- -------------- ------------ ------------
0 201 $ 16,968,116.00 3.58%
1 to 6 4,082 435,924,023.18 92.03
7 to 12 153 18,916,203.24 3.99
13 to 18 8 981,182.65 0.21
19 to 24 9 785,591.90 0.17
25 to 30 2 93,724.75 0.02
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
% of
Aggregate Aggregate
Number of Adjustable Adjustable Adjustable
Range of Loan Rate Group Rate Group Rate Group
Balances ($) Mortgage Loans Loan Balance Loan Balance
- - ------------ -------------- ------------ ------------
10,000 to 19,999.99 41 $ 740,467.99 0.16%
20,000 to 29,999.99 238 6,158,453.45 1.30
30,000 to 39,999.99 380 13,449,128.53 2.84
40,000 to 49,999.99 364 16,502,406.01 3.48
50,000 to 59,999.99 402 22,230,215.94 4.69
60,000 to 69,999.99 357 23,363,402.75 4.93
70,000 to 79,999.99 342 25,644,985.79 5.41
80,000 to 89,999.99 312 26,477,809.39 5.59
90,000 to 99,999.99 276 26,370,541.25 5.57
100,000 to 109,999.99 235 24,615,782.56 5.20
110,000 to 119,999.99 213 24,482,698.20 5.17
120,000 to 129,999.99 143 17,906,030.16 3.78
130,000 to 139,999.99 142 19,114,644.46 4.04
140,000 to 149,999.99 114 16,631,693.89 3.51
150,000 to 159,999.99 104 16,143,927.30 3.41
160,000 to 169,999.99 80 13,211,325.84 2.79
170,000 to 179,999.99 78 13,660,536.22 2.88
180,000 to 189,999.99 65 12,050,232.97 2.54
190,000 to 199,999.99 79 15,452,587.75 3.26
200,000 to 209,999.99 57 11,788,858.55 2.49
210,000 to 219,999.99 43 9,219,580.17 1.95
220,000 to 229,999.99 49 10,976,687.94 2.32
230,000 to 239,999.99 29 6,836,975.30 1.44
240,000 to 249,999.99 34 8,347,748.40 1.76
250,000 to 259,999.99 29 7,370,984.12 1.56
260,000 to 269,999.99 30 7,946,938.30 1.68
270,000 to 279,999.99 27 7,428,923.30 1.57
280,000 to 289,999.99 15 4,290,918.33 0.91
290,000 to 299,999.99 22 6,506,293.08 1.37
300,000 to 309,999.99 17 5,181,877.30 1.09
310,000 to 319,999.99 24 7,552,498.72 1.59
320,000 to 329,999.99 8 2,607,297.82 0.55
330,000 to 339,999.99 11 3,669,409.65 0.77
340,000 to 349,999.99 15 5,204,063.09 1.10
350,000 to 359,999.99 11 3,909,846.95 0.83
360,000 to 369,999.99 5 1,835,891.68 0.39
370,000 to 379,999.99 8 2,998,918.63 0.63
380,000 to 389,999.99 6 2,307,280.78 0.49
390,000 to 399,999.99 7 2,778,626.76 0.59
400,000 to 409,999.99 3 1,225,578.44 0.26
410,000 to 419,999.99 1 419,500.30 0.09
420,000 to 429,999.99 3 1,281,136.65 0.27
430,000 to 439,999.99 3 1,308,684.32 0.28
440,000 to 449,999.99 5 2,241,590.00 0.47
450,000 to 459,999.99 4 1,820,218.26 0.38
460,000 to 469,999.99 4 1,864,181.43 0.39
470,000 to 479,999.99 5 2,373,137.23 0.50
480,000 to 489,999.99 2 972,075.30 0.21
490,000 to 499,999.99 5 2,488,396.45 0.53
510,000 to 519,999.99 2 1,035,879.93 0.22
540,000 to 549,999.99 1 545,817.91 0.12
550,000 to 559,999.99 1 550,767.29 0.12
590,000 to 599,999.99 2 1,189,591.31 0.25
630,000 to 639,999.99 1 638,221.94 0.13
740,000 to 749,999.99 1 747,575.64 0.16
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
% of Aggregate
Number of Adjustable Aggregate Adjustable Adjustable
Range of Original Rate Group Rate Group Rate Group
LTVs(%) Mortgage Loans Loan Balance Loan Balance
- - ----------------- -------------- ------------ ------------
15.00 to 19.99 1 $ 30,953.22 0.01%
20.00 to 24.99 6 201,598.18 0.04
25.00 to 29.99 8 309,112.67 0.07
30.00 to 34.99 14 893,596.07 0.19
35.00 to 39.99 15 730,501.50 0.15
40.00 to 44.99 19 1,112,329.33 0.23
45.00 to 49.99 38 2,992,006.69 0.63
50.00 to 54.99 82 6,923,427.23 1.46
55.00 to 59.99 118 9,522,743.48 2.01
60.00 to 64.99 254 20,429,904.11 4.31
65.00 to 69.99 393 35,791,230.26 7.56
70.00 to 74.99 681 60,415,746.09 12.75
75.00 to 79.99 869 92,008,473.89 19.42
80.00 to 84.99 1,179 143,132,861.09 30.22
85.00 to 89.99 433 52,428,893.67 11.07
90.00 to 90.00 345 46,745,464.24 9.87
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
Number of Adjustable Aggregate Adjustable % of Aggregate
Rate Group Rate Group Adjustable Rate
Margins (%) Mortgage Loans Loan Balance Group Loan Balance
2.000 to 2.499 1 $ 127,089.18 0.03%
3.500 to 3.999 10 1,092,863.74 0.23
4.000 to 4.499 29 3,995,498.85 0.84
4.500 to 4.999 131 17,580,687.57 3.71
5.000 to 5.499 321 37,771,027.97 7.97
5.500 to 5.999 802 98,858,591.33 20.87
6.000 to 6.499 1,074 115,722,719.35 24.43
6.500 to 6.999 1,102 111,130,090.32 23.46
7.000 to 7.499 513 49,957,454.84 10.55
7.500 to 7.999 336 27,479,205.23 5.80
8.000 to 8.499 91 6,384,819.61 1.35
8.500 to 8.999 25 1,886,275.30 0.40
9.000 to 9.499 16 1,116,374.20 0.24
9.500 to 9.999 4 566,144.23 0.12
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
% of Aggregate
Number of Adjustable Aggregate Adjustable Adjustable Rate
Maximum Rate Group Rate Group Group Loan
Coupon Rates (%) Mortgage Loans Loan Balance Balance
- - ---------------- -------------- ------------ -------
7.500 to 7.999 1 $ 127,089.18 0.03%
12.000 to 12.499 3 777,422.63 0.16
12.500 to 12.999 16 2,403,058.80 0.51
13.000 to 13.499 19 2,288,061.65 0.48
13.500 to 13.999 65 10,230,101.35 2.16
14.000 to 14.499 82 13,139,830.29 2.77
14.500 to 14.999 150 21,609,896.94 4.56
15.000 to 15.499 219 30,932,920.33 6.53
15.500 to 15.999 383 50,812,117.04 10.73
16.000 to 16.499 461 56,269,970.70 11.88
16.500 to 16.999 668 76,979,930.32 16.25
17.000 to 17.499 553 56,953,647.31 12.02
17.500 to 17.999 585 56,849,994.76 12.00
18.000 to 18.499 319 26,829,025.92 5.66
18.500 to 18.999 252 19,476,705.55 4.11
19.000 to 19.499 162 11,546,364.47 2.44
19.500 to 19.999 118 7,911,649.93 1.67
20.000 to 20.499 86 6,033,696.00 1.27
20.500 to 20.999 99 6,426,633.79 1.36
21.000 to 21.499 66 4,860,938.52 1.03
21.500 to 21.999 72 4,911,706.49 1.04
22.000 to 22.499 51 3,654,404.86 0.77
22.500 to 22.999 7 479,527.01 0.10
23.000 to 23.499 3 209,124.03 0.04
23.500 to 23.999 2 128,500.16 0.03
24.000 to 24.499 2 225,754.99 0.05
24.500 to 24.999 1 54,947.41 0.01
25.000 to 25.499 2 317,005.30 0.07
25.500 to 25.999 4 549,069.13 0.12
27.000 to 27.499 1 112,253.57 0.02
27.500 to 27.999 2 253,096.99 0.05
28.500 to 28.999 1 314,396.30 0.07
TOTAL 4,455 $473,668,841.72 100.00%
<PAGE>
Number of Aggregate % of Aggregate
Adjustable Adjustable Adjustable
Date of Next Rate Group Rate Group Rate Group
Rate Adjustment Mortgage Loans Loan Balance Loan Balance
- - --------------- -------------- ------------ ------------
1998-Feb 5 $ 472,768.98 0.10%
1998-Mar 331 44,155,613.75 9.32
1998-Apr 74 8,892,191.71 1.88
1998-May 179 17,408,249.36 3.68
1998-Jun 185 17,828,907.47 3.76
1998-Jul 147 15,263,310.65 3.22
1998-Aug 170 18,335,121.97 3.87
1998-Sep 2 109,646.22 0.02
1998-Oct 2 116,292.49 0.02
1998-Nov 5 583,097.52 0.12
1998-Dec 1 96,860.80 0.02
1999-Jan 2 289,720.80 0.06
1999-Feb 5 292,154.92 0.06
1999-Mar 7 849,730.52 0.18
1999-Apr 11 1,058,248.83 0.22
1999-May 18 1,458,680.11 0.31
1999-Jun 35 4,193,712.28 0.89
1999-Jul 41 5,230,681.74 1.10
1999-Aug 183 22,263,139.96 4.70
1999-Sep 937 102,698,708.46 21.68
1999-Oct 414 47,116,462.53 9.95
1999-Nov 177 19,918,474.04 4.21
1999-Dec 442 43,131,278.98 9.11
2000-Jan 513 46,099,508.05 9.73
2000-Feb 384 33,206,858.73 7.01
2000-Mar 2 547,176.91 0.12
2000-Apr 1 28,124.16 0.01
2000-May 1 428,420.20 0.09
2000-Jun 1 31,394.93 0.01
2000-Jul 3 481,802.17 0.10
2000-Aug 6 694,489.67 0.15
2000-Sep 28 3,485,332.48 0.74
2000-Oct 17 1,868,772.99 0.39
2000-Nov 47 6,166,350.26 1.30
2000-Dec 44 5,824,389.07 1.23
2001-Jan 21 2,155,222.37 0.46
2001-Feb 14 887,945.64 0.19
TOTAL 4,455 $473,668,841.72 100.00%
