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: October 15, 1999
(Date of earliest event reported)
Commission File No. 333-62547
ASSET BACKED FUNDING CORPORATION
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Delaware 75-2533468
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(State of Incorporation) (I.R.S. Employer Identification No.)
100 North Tryon Street
Charlotte, North Carolina 28255
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Address of principal executive offices (Zip Code)
(704) 386-2400
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Registrant's Telephone Number, including area code
NATIONSBANC ASSET SECURITIES, INC.
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(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
ITEM 5. OTHER EVENTS
------------
On October 12, 1999, Asset Backed Funding Corporation (the
"Corporation"), sold United PanAm Mortgage Loan Asset Backed Certificates,
Series 1999-2, Class A-1 and Class A-2 (the "Offered Certificates"), having an
aggregate original principal balance of $233,144,000.00. The Offered
Certificates were issued pursuant to the Pooling and Servicing Agreement, dated
as of October 1, 1999 (the "Agreement"), among the Corporation, Pan American
Bank, FSB, as seller and master servicer (the "Master Servicer"), Fairbanks
Capital Corp., as special servicer, and Bankers Trust Company of California,
N.A., as trustee (the "Trustee"), a copy of which is filed as an exhibit hereto.
United PanAm Mortgage Loan Asset Backed Certificates, Series 1999-2, Class X and
Class R (the "Private Certificates" and, together with the Offered Certificates,
the "Certificates"), were also issued pursuant to the Agreement but were not
publicly offered.
Credit support for the Offered Certificates is provided by a
financial guaranty insurance policy (the "Certificate Insurance Policy") issued
by Financial Security Assurance Inc. ("FSA") in favor of the Trustee for the
benefit of the Certificateholders of the Offered Certificates.
As of the date of initial issuance, the Offered Certificates
evidenced beneficial ownership interests in a trust (the "Trust"), consisting
primarily of (i) two groups of mortgage loans, each divided into two subgroups
consisting of fixed-rate and adjustable-rate mortgage loans, secured by
mortgages creating first liens on one- to four-family properties, (ii) funds on
deposit in the pre-funding accounts and capitalized interest accounts, (iii) the
Certificate Insurance Policy, (iv) a primary mortgage guaranty insurance policy
issued by Mortgage Guaranty Insurance Corporation and (v) certain other
property. The remaining undivided interests in the Trust are evidenced by the
Private Certificates.
Interest on the Offered Certificates will be distributed on each
Distribution Date (as defined in the Agreement). Monthly distributions in
reduction of the principal balance of the Offered Certificates will be allocated
to the Offered Certificates in accordance with the priorities set forth in the
Agreement.
An election will be made to treat certain assets of the Trust as one
or more real estate mortgage investment conduits for federal income tax purposes
(each, a "REMIC"). The Class A-1, Class A-2, and the payment components of the
Class X Certificate will constitute "regular interests" in one of the REMICs and
the Class R Certificate will represent the sole class of "residual interests" in
each of the REMICs.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
(EX-4) Pooling and ServicingAgreement, dated as
of October 1, 1999, among Asset Backed
Funding Corporation, Pan American Bank,
FSB, Fairbanks Capital Corp., and Bankers
Trust Company of California, N.A., as
trustee
(EX-99.1) Financial Guaranty Insurance Policy
issued by Financial Security
Assurance Inc.
<PAGE>
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.
ASSET BACKED FUNDING CORPORATION
October 15, 1999
By: /s/ BOB PERRET
---------------------
Name: Bob Perret
Title: Senior Vice President
<PAGE>
INDEX TO EXHIBITS
-----------------
Paper (P) or
Exhibit No. Description Electronic (E)
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(EX-4) Pooling and Servicing Agreement, dated as E
of October 1, 1999, among Asset Backed
Funding Corporation, Pan American Bank,
FSB, Fairbanks Capital Corp., and Bankers
Trust Company of California, N.A., as
trustee
(EX-99.1) Financial Guaranty Insurance Policy E
issued by Financial Security Assurance Inc.
EXECUTION COPY
================================================================================
ASSET BACKED FUNDING CORPORATION,
Depositor
PAN AMERICAN BANK, FSB,
Seller and Master Servicer
FAIRBANKS CAPITAL CORP.,
Special Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
---------------------------------
United PanAm Mortgage Loan Trust 1999-2
Asset Backed Certificates, Series 1999-2
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms...............................................
Section 1.02 Accounting..................................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans................................
Section 2.02 Acceptance by Trustee.......................................
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller.....................................................
Section 2.04 Representations and Warranties of the Seller with Respect
to the Mortgage Loans......................................
Section 2.05 Representations, Warranties and Covenants of the Master
Servicer...................................................
Section 2.06 Representations and Warranties of the Depositor.............
Section 2.07 Issuance of Certificates....................................
Section 2.08 Representations and Warranties of the Seller................
Section 2.09 Covenants of the Seller.....................................
Section 2.10 Additional Transfers........................................
Section 2.11 Mandatory Prepayment........................................
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01 Master Servicer to Act as Servicer..........................
Section 3.02 Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers..............................................
Section 3.03 Successor Sub-Servicers.....................................
Section 3.04 Liability of the Master Servicer............................
Section 3.05 No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders..............................
Section 3.06 Assumption or Termination of Sub-Servicing Agreements by
Trustee....................................................
Section 3.07 Collection of Certain Mortgage Loan Payments................
Section 3.08 Sub-Servicing Accounts......................................
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.........................................
Section 3.10 Collection Account and Distribution Account.................
Section 3.11 Withdrawals from the Collection Account and Distribution
Account....................................................
Section 3.12 Investment of Funds in the Collection Account and the
Distribution Account.......................................
Section 3.13 Claims Upon the PMI Policy..................................
Section 3.14 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage......................................
Section 3.15 Enforcement of Due-On-Sale Clauses; Assumption Agreements...
Section 3.16 Realization Upon Defaulted Mortgage Loans...................
Section 3.17 Trustee to Cooperate; Release of Mortgage Files.............
Section 3.18 Servicing Compensation......................................
Section 3.19 Reports to the Trustee; Collection Account Statements.......
Section 3.20 Statement as to Compliance..................................
Section 3.21 Independent Public Accountants' Servicing Report............
Section 3.22 Access to Certain Documentation; Filing of Reports by
Trustee....................................................
Section 3.23 Title, Management and Disposition of REO Property...........
Section 3.24 Obligations of the Master Servicer in Respect of
Prepayment Interest Shortfalls.............................
Section 3.25 Certain Rights Related to Foreclosure and the Special
Servicer...................................................
Section 3.26 Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments.................................
Section 3.27 Solicitations...............................................
Section 3.28 Special Servicer............................................
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Distributions...............................................
Section 4.02 REMIC I and REMIC II Distributions..........................
Section 4.03 Statements..................................................
Section 4.04 Remittance Reports; Advances................................
Section 4.05 Pre-Funding Accounts and Capitalized Interest Accounts......
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates............................................
Section 5.02 Registration of Transfer and Exchange of Certificates.......
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates...........
Section 5.04 Persons Deemed Owners.......................................
Section 5.05 Appointment of Paying Agent.................................
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Master Servicer and the
Depositor..................................................
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Master Servicer or the
Depositor..................................................
Section 6.03 Limitation on Liability of the Master Servicer and Others...
Section 6.04 Servicer Not to Resign......................................
Section 6.05 Delegation of Duties........................................
Section 6.06 Reserved....................................................
Section 6.07 Inspection..................................................
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination..............................
Section 7.02 Trustee to Act; Appointment of Successor....................
Section 7.03 Waiver of Defaults..........................................
Section 7.04 Notification to Certificateholders..........................
Section 7.05 Survivability of Servicer Liabilities.......................
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee...........................................
Section 8.02 Certain Matters Affecting the Trustee.......................
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.......
Section 8.04 Trustee May Own Certificates................................
Section 8.05 Trustee's Fees and Expenses.................................
Section 8.06 Eligibility Requirements for Trustee........................
Section 8.07 Resignation or Removal of Trustee...........................
Section 8.08 Successor Trustee...........................................
Section 8.09 Merger or Consolidation of Trustee..........................
Section 8.10 Appointment of Co-Trustee or Separate Trustee...............
Section 8.11 Limitation of Liability.....................................
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates...............................................
Section 8.13 Suits for Enforcement.......................................
Section 8.14 Waiver of Bond Requirement..................................
Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement...
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC Administration........................................
Section 9.02 Prohibited Transactions and Activities......................
Section 9.03 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status...............................................
Section 9.04 REO Property................................................
ARTICLE X
TERMINATION
Section 10.01 Termination.................................................
Section 10.02 Additional Termination Requirements.........................
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01 Rights of the Certificate Insurer To Exercise Rights of
Class A Certificateholders.................................
Section 11.02 Trustee To Act Solely with Consent of the Certificate
Insurer....................................................
Section 11.03 Trust Fund and Accounts Held for Benefit of the
Certificate Insurer........................................
Section 11.04 Claims Upon the Certificate Insurance Policy; Certificate
Insurance Policy Payments Account..........................
Section 11.05 Effect of Payments by the Certificate Insurer;
Subrogation................................................
Section 11.06 Notices to the Certificate Insurer..........................
Section 11.07 Third-Party Beneficiary.....................................
Section 11.08 Trustee to Hold the Certificate Insurance Policy............
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Amendment...................................................
Section 12.02 Recordation of Agreement; Counterparts......................
Section 12.03 Limitation on Rights of Certificateholders..................
Section 12.04 Governing Law; Jurisdiction.................................
Section 12.05 Notices.....................................................
Section 12.06 Severability of Provisions..................................
Section 12.07 Article and Section References..............................
Section 12.08 Notice to the Rating Agencies and the Certificate Insurer...
Section 12.09 Further Assurances..........................................
Section 12.10 Benefits of Agreement.......................................
Section 12.11 Acts of Certificateholders..................................
EXHIBITS:
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit B [Reserved]
Exhibit C Form of Class X Certificate
Exhibit D Form of Class R Certificates
Exhibit E Mortgage Loan Schedule
Exhibit F Request for Release
Exhibit G-1 Form of Trustee's Initial Certification
Exhibit G-2 Form of Trustee's Final Certification
Exhibit G-3 Form of Receipt of Mortgage Note
Exhibit H List of PMI Mortgage Loans
Exhibit I Form of Lost Note Affidavit
Exhibit J Form of ERISA Representation
Exhibit K Form of Investment Letter
Exhibit L Form of Class R Certificate Transfer Affidavit
Exhibit M Form of Transferor Certificate
Exhibit N Form of Liquidation Report
Exhibit O Form of Additional Transfer Agreement
Exhibit P Prepayment Premium Schedule
<PAGE>
-6-
393540.6
This Pooling and Servicing Agreement is dated as of October 1, 1999
(the "Agreement"), among ASSET BACKED FUNDING CORPORATION, as depositor (the
"Depositor"), PAN AMERICAN BANK, FSB, as seller (in such capacity, the "Seller")
and master servicer (in such capacity, the "Master Servicer"), FAIRBANKS CAPITAL
CORP., as special servicer (in such capacity, the "Special Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of four classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class X Certificate and (iv) the Class R Certificates.
As provided herein, the Trustee will make an election to treat the
assets of the Trust Fund other than the Pre-Funding Accounts, Capitalized
Interest Accounts and the rights of Class A Certificateholders to receive
payments in respect of their related Interest Carryover, as three separate
REMICs (as defined herein) for federal income tax purposes. For federal income
tax purposes the Class A Certificates and Class X Certificates represent
beneficial interests in the "regular interests" in REMIC III and the Class R-III
Component represents the sole class of "residual interest" in REMIC III for
purposes of the REMIC Provisions. The Class R-I Component represents the sole
class of "residual interest" in REMIC I and the Class R-II Component represents
the sole class of "residual interest" in REMIC II for purposes of the REMIC
Provisions. There are also six classes of uncertificated REMIC I Regular
Interests issued under this Agreement (the Class LT1, Class LT2, Class LT3,
Class LT4, Class LT5 and Class LT6 Interests), each of which will constitute
regular interests in REMIC I. There are also eight classes of uncertificated
REMIC II Regular Interests issued under this Agreement (the Class MT1, Class
MT2, Class MT3, Class MT4, Class MT5, Class MT6, Class MTN2 and Class MTN5
Interests), each of which will constitute regular interests in REMIC II. The
REMIC I Regular Interests will be held as assets of REMIC II and the REMIC II
Regular Interests will be held as assets of REMIC III. In addition to
representing beneficial interests in the corresponding REMIC III Regular
Interests, the Class A Certificates represent the right to receive payments in
respect of their related Interest Carryovers from amounts otherwise
distributable to the Class X Certificateholders. The Class X Certificates also
represent beneficial interests in the corresponding Class X Regular Interest,
subject to the obligation to make payments to the Class A Certificates in
respect of their related Interest Carryovers.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates comprising the interests in the Trust Fund created
hereunder:
Original Class
Certificate Initial
Principal Pass-Through Assumed Final
Class Balance Rate Maturity Dates
----- ------- ---- --------------
Class A-1......... $174,020,000 (1) October 25, 2029
Class A-2......... $59,124,000 (1) September 25, 2029
Class X........... (2) (3) October 25, 2029
Class R........... N/A N/A N/A
(1) Calculated pursuant to the definition of Pass-Through Rate.
(2) The Class X Certificates have no Original Class Certificate Principal
Balance.
(3) On any Distribution Date, the Class X Certificates will be entitled to the
amount of excess interest, if any, on the Mortgage Loans for the current or
prior Accrual Periods, after the Target Overcollateralization Amount is reached,
up to the Class X Distributable Amount.
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Certificates shall be made on the
basis of the actual number of days elapsed on the basis of a 360-day year and
all other calculations of interest with respect to the Mortgage Loans described
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months.
Many of the defined terms listed below may apply to both Loan Groups /
Certificate Groups and are sometimes used in this Agreement to refer to a
particular Loan Group / Certificate Group by the adjectival use of the words
"Group I" and "Group II".
"1933 Act": The Securities Act of 1933, as amended.
"Account": Any of the Capitalized Interest Accounts, Collection
Account, Distribution Account, Certificate Insurance Policy Payments Account and
Pre-Funding Accounts.
"Accrual Period": With respect to the Class A Certificates and (A) the
first Distribution Date, the period commencing on the Closing Date and ending on
November 25, 1999, or (B) any subsequent Distribution Date, the period
commencing on the preceding Distribution Date and ending on the day preceding
the current Distribution Date.
"Addition Notice": A notice (which may be verbal or written) provided
to the Certificate Insurer, Rating Agencies and the Trustee pursuant to Section
2.10 (b)(i) hereof.
"Additional Cut-off Date Deposit": With respect to any Additional
Transfer Date and any Additional Mortgage Loan transferred to the Trust that
does not have a Monthly Payment during the Due Period of such transfer, an
amount equal to the product of (a) the Loan Balance of such Additional Mortgage
Loan on the related Cut-off Date and (b) one-twelfth of the Net Mortgage Rate on
such Additional Mortgage Loan, and (c) the number of Due Periods from, but
excluding, the Due Period of such transfer to, and including, the Due Period in
which such Mortgage Loan has its first Monthly Payment due.
"Additional Mortgage Loans": The Mortgage Loans sold to the Trust for
inclusion in Loan Group I or Loan Group II pursuant to Section 2.10 of this
Agreement and the Additional Transfer Agreement, which shall be listed on the
mortgage loan schedule attached to the Additional Transfer Agreement.
"Additional Transfer Date": The date specified in each Additional
Transfer Agreement, provided that in no event shall there be more than two such
Additional Transfer Dates.
"Additional Transfer Agreement": Each Additional Transfer Agreement
executed by the Trustee (solely in its capacity as Trustee and not in its
individual capacity) and the Seller substantially in the form of Exhibit O
hereto, by which Additional Mortgage Loans are sold and assigned to the Trust.
"Adjustable Rate Mortgage Loan": Each of the Group I Adjustable Rate
Mortgage Loans and the Group II Adjustable Rate Mortgage Loans.
"Adjusted Insurer Fee Rate": The rate at which the premium (including
any premium supplement) payable to the Certificate Insurer is calculated,
multiplied by a fraction the numerator of which is the Certificate Principal
Balance of the Certificate Group relating to such Mortgage Loan and the
denominator of which is the related Loan Group Balance.
"Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each adjustment date, on which the related Mortgage Rate changes pursuant to the
related Mortgage Note. The first Adjustment Date following the Cut-off Date as
to each Adjustable Rate Mortgage Loan is set forth in the Mortgage Loan
Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made
by the Master Servicer in respect of any Distribution Date pursuant to Section
4.04.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Annual Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
all Realized Losses for the twelve months ending on the last day of the
preceding month and the denominator of which is the aggregate Principal Balance
of the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.
"Applicable Regulations": As to any Mortgage Loan, all federal, state
and local laws, statutes, rules and regulations applicable thereto.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.
"Available Funds": The sum of the Group I Available Funds and the
Group II Available Funds.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment
of the unamortized principal balance of such Mortgage Loan in a single payment
at the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which the Certificate Insurer or banking or savings institutions in the State of
Delaware, the State of New York, the State of California or in the city in which
the Corporate Trust Office of the Trustee is located are authorized or obligated
by law or executive order to be closed.
"Capitalized Interest Account": Either of the accounts designated as
such and established and maintained by the Trustee pursuant to Section 4.05
hereof.
"Capitalized Interest Requirement": With respect to the Distribution
Date in November and December 1999 for a Loan Group, (A) the product of (a) a
fraction, the numerator of which is the related Pre-Funding Amount on the
Closing Date less the Principal Balance of any Additional Mortgage Loan
transferred to the Trust during the related Due Period or a prior Due Period
that has a Monthly Payment due during such Due Period and the denominator of
which is the sum of the related Pre-Funding Amount on the Closing Date and the
Principal Balance for the related Loan Group on the Closing Date and (b) the
Monthly Interest Distributable Amount for the related Class of Certificates for
the related Accrual Period plus the related Loan Group's allocable portion of
the Servicing Fee, the Trustee Fee and the premiums due to the Certificate
Insurer, minus (B) any related Pre-Funding Earnings for such Due Period.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Group": Either the Group I Certificates or the Group II
Certificates.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register and the Certificate
Insurer to the extent of Cumulative Insurance Payments, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class R
Certificate for any purpose hereof.
"Certificate Insurance Policy": The Certificate Guaranty Insurance
Policy (No. 50864-N) with respect to the Class A Certificates and all
endorsements thereto dated the Closing Date, issued by the Certificate Insurer
for the benefit of the Holders of each Class of Class A Certificates.
"Certificate Insurance Policy Payments Account": The account
established pursuant to Section 11.04 hereof.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policy in accordance with its terms;
(b) the Certificate Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the Bankruptcy Code or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general assignment
for the benefit of its creditors, or (C) has an order for relief entered against
it under the Bankruptcy Code or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which
is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian, trustee,
agent or receiver for the Certificate Insurer or for all or any material portion
of its property or (B) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Certificate Insurer (or the taking of
possession of all or any material portion of the property of the Certificate
Insurer).
"Certificate Margin": On each Distribution Date and each Class of
Class A Certificates (A) on or prior to the Optional Termination Date, 0.37% per
annum with respect to the Class A-1 Certificates and 0.45% with respect to the
Class A-2 Certificates and (B) after the Optional Termination Date, 0.74% with
respect to the Class A-1 Certificates and 0.90% with respect to the Class A-2
Certificates.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates and any Distribution Date, the Certificate Principal Balance
thereof on the Closing Date (the "Original Certificate Principal Balance")
reduced by the sum of all amounts actually distributed in respect of principal
of such Class on all prior Distribution Dates.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.
"Class A-1 Certificate": A Certificate designated as an United PanAm
Mortgage Loan Asset-Backed Certificate, Series 1999-2, Class A-1 Certificate,
and evidencing (i) a beneficial interest in a "regular interest" in REMIC III
for purposes of the REMIC Provisions and (ii) the right to receive payments in
respect of Class A-1 Interest Carryovers from amounts otherwise distributable to
the Class X Certificates.
"Class A-1 Certificateholder": A Holder of a Class A-1 Certificate.
"Class A-1 Regular Interest": The regular interest in REMIC III
represented by the Class A-1 Certificates.
"Class A-2 Certificate": A Certificate designated as an United PanAm
Mortgage Loan Asset-Backed Certificate, Series 1999-2, Class A-2 Certificate,
and evidencing (i) a beneficial interest in a "regular interest" in REMIC III
for purposes of the REMIC Provisions and (ii) the right to receive payments in
respect of Class A-2 Interest Carryovers from amounts otherwise distributable to
the Class X Certificates.
"Class A-2 Certificateholder": A Holder of a Class A-2 Certificate.
"Class A-2 Regular Interest": The regular interest in REMIC III
represented by the Class A-2 Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates or Class
A-2 Certificates.
"Class A Certificateholder": Any Holder of a Class A Certificate.
"Class LT1 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 98% of
the Group I Loan Balance and bears interest at the Group I Weighted Average Net
Loan Rate.
"Class LT2 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 1% of the
amount by which (i) the Group I Loan Balance exceeds (ii) the Group I
Overcollateralized Amount and bears interest at the Group I Weighted Average Net
Loan Rate.
"Class LT3 Accrual Amount": As defined in Section 4.02(a)(iii).
"Class LT3 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 1% of the
sum of (i) the Group I Loan Balance (ii) the Group I Overcollateralized Amount
and bears interest at the Group I Weighted Average Net Loan Rate.
"Class LT4 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 98% of
the Group II Loan Balance and bears interest at the Group II Weighted Average
Net Loan Rate.
"Class LT5 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 1% of the
amount by which (i) the Group II Loan Balance exceeds (ii) the Group II
Overcollateralized Amount and bears interest at the Group II Weighted Average
Net Loan Rate.
"Class LT6 Accrual Amount": As defined in Section 4.02(a)(iv).
"Class LT6 Interest": A regular interest in REMIC I that is held as an
asset of REMIC II that has a principal balance as of any date equal to 1% of the
sum of (i) the Group II Loan Balance and (ii) the Group II Overcollateralized
Amount and bears interest at the Group II Weighted Average Net Loan Rate.
"Class MT1 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a principal balance as of any date equal to the
principal balance of the Class LT1 Interest and bears interest at the Group I
Weighted Average Net Loan Rate.
"Class MT2 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a principal balance as of any date equal to the
principal balance of the Class LT2 Interest and bears interest at the
Pass-Through Rate for the Class A-1 Certificates.
"Class MT3 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a principal balance as of any date equal to the
principal balance of the Class LT3 Interest and bears interest at the Group I
Weighted Average Net Loan Rate.
"Class MT4 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a principal balance as of any date equal to the
principal balance of the Class LT4 Interest and bears interest at the Group II
Weighted Average Net Loan Rate.
"Class MT5 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a principal balance as of any date equal to the
principal balance of the Class LT5 Interest and bears interest at the
Pass-Through Rate for the Class A-2 Certificates.
"Class MT6 Interest": A regular interest in REMIC II that is held as
an asset of the REMIC III that has a principal balance as of any date equal to
the principal balance of the Class LT6 Interest and bears interest at the Group
II Weighted Average Net Loan Rate.
"Class MTN2 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a notional amount as of any date equal to the
principal balance of the Class LT2 Interest and bears interest at a rate equal
to (i) the Group I Weighted Average Net Loan Rate minus (ii) the Pass-Through
Rate for the Class A-1 Certificates.
"Class MTN5 Interest": A regular interest in REMIC II that is held as
an asset of REMIC III that has a notional amount as of any date equal to the
principal balance of the Class LT5 Interest and bears interest at a rate equal
to (i) the Group II Weighted Average Net Loan Rate minus (ii) the Pass-Through
Rate for the Class A-2 Certificates.
"Class R Certificate": A Certificate designated as an United PanAm
Mortgage Loan Asset-Backed Certificate, Series 1999-2, Class R Certificate,
which consists of three components, the Class R-I Component, the Class R-II
Component and the Class R-III Component, each of which represent a "residual
interest" in one of the REMICs for purposes of the REMIC Provisions. Each
component is not separately transferable.
"Class R-I Component": A component of the Class R Certificate, and
evidencing an interest designated as the "residual interest" in REMIC I for
purposes of the REMIC Provisions.
"Class R-II Component": A component of the Class R Certificate, and
evidencing an interest designated as the "residual interest" in REMIC II for
purposes of the REMIC Provisions.
"Class R-III Component": A component of the Class R Certificate, and
evidencing an interest designated as the "residual interest" in REMIC III for
purposes of the REMIC Provisions.
"Class X Certificate": A Certificate designated as a United PanAm
Mortgage Loan Asset Backed Certificate, Series 1999-3, Class X Certificate
evidencing (i) "regular interests" in REMIC III for purposes of the REMIC
Provisions and (ii) rights and obligations as described herein. The Class X
Certificate consists of the Class X Components, which are not separately
transferable.
"Class X Certificateholder": A Holder of a Class X Certificate.
"Class X Components": The Class X-1 Component, the Class X-2
Component, the Class X-3 Component, the Class X-4 Component, the Class X-5
Component, the Class X-6 Component, the Class X-UTN2 Component and the Class
X-UTN5 Component.
"Class X-1 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-1
Interest and bears interest at a rate equal to (i) the Group I Weighted Average
Net Loan Rate minus (ii) the REMIC III Group I Interest Rate.
"Class X-2 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-2
Interest and bears interest at a rate equal to (i) the Pass-Through Rate for the
Class A-1 Certificates minus (ii) the REMIC III Group I Interest Rate.
"Class X Group I IO Component Distributable Amount": With respect to
any Distribution Date, the product of (A) one-twelfth of the excess of (x) the
average of the Net Loan Rates of the Group I Mortgage Loans at the beginning of
the related Due Period (converted to a per annum rate calculated on the basis of
the actual number of days elapsed in the related Accrual Period and an assumed
360-day year), weighted on the basis of their Principal Balances as of the
beginning of such Due Period, over (y) (i) the Pass-Through Rate for the Class
A-1 Certificates for such Distribution Date multiplied by (ii) a fraction, the
numerator of which is the principal balance of the Class A-1 Certificates
immediately following the preceding Distribution Date and the denominator of
which is the Group I Loan Balance at the beginning of the related Due Period,
and (B) the Group I Loan Balance at the beginning of the related Due Period.
"Class X Group II IO Component Distributable Amount": With respect to
any Distribution Date, the product of (A) one-twelfth of the excess of (x) the
average of the Net Loan Rates of the Group II Mortgage Loans at the beginning of
the related Due Period (converted to a per annum rate calculated on the basis of
the actual number of days elapsed in the related Accrual Period and an assumed
360-day year), weighted on the basis of their Principal Balances as of the
beginning of such Due Period, over (y) (i) the Pass-Through Rate for the Class
A-2 Certificates for such Distribution Date multiplied by (ii) a fraction, the
numerator of which is the principal balance of the Class A-2 Certificates
immediately following the preceding Distribution Date and the denominator of
which is the Group II Loan Balance at the beginning of the related Due Period,
and (B) the Group II Loan Balance at the beginning of the related Due Period.
"Class X-3 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-3
Interest and bears interest at a rate equal to (i) the Group I Weighted Average
Net Loan Rate minus (ii) the REMIC III Group I Interest Rate.
"Class X-4 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-4
Interest and bears interest at a rate equal to (i) the Group II Weighted Average
Net Loan Rate minus (ii) the REMIC III Group II Interest Rate.
"Class X-5 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-5
Interest and bears interest at a rate equal to (i) the Pass-Through Rate for the
Class A-2 Certificates minus (ii) the REMIC III Group II Interest Rate.
"Class X-6 Component": A regular interest in REMIC III that has a
notional amount as of any date equal to the principal balance of the Class MT-6
Interest and bears interest at a rate equal to (i) the Group II Weighted Average
Net Loan Rate minus (ii) the REMIC III Group II Interest Rate.
"Class X-UTN2 Component": A regular interest in REMIC III that has a
notional amount as of any date identical to the notional amount of the Class
MTN2 Interest and is entitled to all interest distributed on the Class MTN2
Interest.
"Class X-UTN5 Component": A regular interest in REMIC III that has a
notional amount as of any date identical to the notional amount of the Class
MTN5 Interest and is entitled to all interest distributed on the Class MTN5
Interest.
"Class X Distributable Amount": The sum of the Class X Group I IO
Component Distributable Amount and the Class X Group II IO Component
Distributable Amount.
"Class X Regular Interest": A regular interest in REMIC III, ownership
of which is evidenced by the Class X Certificates.
"Close of Business": As used herein, with respect to any Business Day,
5:00 p.m.
"Closing Date": October 12, 1999.
"Code": The Internal Revenue Code of 1986 as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained
by the Master Servicer pursuant to Section 3.10(a), which shall be entitled "Pan
American Bank, FSB, as Master Servicer for Bankers Trust Company of California,
N.A., as Trustee, in trust for registered Holders of United PanAm Mortgage Loan
Trust 1999-2, Asset-Backed Certificates, Series 1999-2", and which must be an
Eligible Account.
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 1761 East St. Andrew Place,
Santa Ana, California 92705-4934, Attention: United PanAm Series 1999-2, or at
such other address as the Trustee may designate from time to time by notice to
the Certificateholders, the Depositor, the Certificate Insurer, the Master
Servicer and the Seller.
"Cumulative Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
amount of Realized Losses incurred from the Closing Date through the end of the
related Due Period, and the denominator of which is the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.
"Custodian": Bankers Trust Company of California, N.A., a national
banking association, as custodian of the Mortgage Files, and any successor
thereto.
"Cut-off Date": With respect to any Mortgage Loan other than a
Qualified Substitute Mortgage Loan, the later of (i) the date of origination of
such Mortgage Loan or (ii) the Close of Business on October 1, 1999. With
respect to any Qualified Substitute Mortgage Loan, the date designated as such
on the Mortgage Loan Schedule (as amended).
"Cut-off Date Aggregate Principal Balance": With respect to each Loan
Group, the aggregate of the Cut-off Date Principal Balances of the Mortgage
Loans in such Loan Group.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date (or as of the
applicable date of substitution with respect to a Qualified Substitute Mortgage
Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficiency Amount": With respect to any Distribution Date, (A) the
excess, if any, of (i) Interest Distributable Amount for the Class A
Certificates (net of any Relief Act Interest Shortfalls and Prepayment Interest
Shortfalls) over (ii) funds on deposit in the Distribution Account available to
be distributed therefor on such Distribution Date and (B) the Guaranteed
Principal Amount.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.
"Delinquency Percentage": With respect to any Distribution Date and
the related Due Period, the fraction, expressed as a percentage, the numerator
of which is the sum of the aggregate of the Principal Balances of all Mortgage
Loans that are (i) 90 or more days Delinquent, (ii) in bankruptcy and 90 or more
days Delinquent under the applicable Mortgage Note, (iii) in foreclosure, or
(iv) REO Properties as of the Close of Business on the last day of such Due
Period, and the denominator of which is the aggregate Principal Balance of the
Mortgage Loans as of the Close of Business on the last day of such Due Period.
"Delinquent": Any Mortgage Loan as to which the Monthly Payment due on
a Due Date is not made by the Close of Business on the next scheduled Due Date
for such Mortgage Loan.
"Depositor": Asset Backed Funding Corporation, a Delaware corporation,
or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the 5th
Business Day preceding such Distribution Date.
"Directing Holder": The initial Holder of the Class X Certificate and
any subsequent Holder of a Class X Certificate to whom the rights of the
Directing Holder have been transferred pursuant to Section 3.25.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Master Servicer on behalf of
the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code or
(iv) any other Person so designated by the Trustee based upon an Opinion of
Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof if all of its activities are subject
to tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Bankers Trust Company of California, N.A., as Trustee, in
trust for the registered Certificateholders of United PanAm Mortgage Loan Trust
1999-2, Asset-Backed Certificates, Series 1999-2" and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in November 1999.
"Due Date": With respect to each Mortgage Loan and any Distribution
Date, the first day of the calendar month in which such Distribution Date occurs
on which the Monthly Payment for such Mortgage Loan was due, exclusive of any
days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by Moody's and A-1 by S&P (or comparable ratings if Moody's and S&P
are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC (to the limits established by such corporation), the uninsured deposits
in which account are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders will have a claim with respect to the funds in such account
or a perfected first priority security interest against such collateral (which
shall be limited to Permitted Investments) securing such funds that is superior
to claims of any other depositors or creditors of the depository institution
with which such account is maintained, (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution, national banking association or trust company acting in its
fiduciary capacity or (iv) an account otherwise (A) acceptable to each Rating
Agency without reduction or withdrawal of their then current ratings of the
Certificates as evidenced by a letter from each Rating Agency to the Trustee and
the Certificate Insurer and (B) acceptable to the Certificate Insurer. Eligible
Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, fire and hazard insurance premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to any
Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fannie Mae": Federal National Mortgage Association or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller, the Master Servicer or the Special Servicer pursuant to or as
contemplated by Section 2.03 or 10.01), a determination made by the Master
Servicer (and with respect to which written confirmation by a Servicing Officer
shall have been received by the Trustee) that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Master Servicer,
in its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so recovered. The Master Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery Determination
made thereby.
"Fiscal Agent": As defined in the Certificate Insurance Policy.
"Fixed-Rate Mortgage Loan": Each of the Group I Fixed-Rate Mortgage
Loans and the Group II Fixed-Rate Mortgage Loans.
"Foreclosure Price": The amount reasonably expected to be received
from the sale of the related Mortgaged Property net of any expenses associated
with foreclosure proceedings.
"Freddie Mac": The Federal Home Loan Mortgage Corporation or any
successor thereto.
"General Excess Available Amount": With respect to a Certificate Group
and each Distribution Date, the amount, if any, by which the related Available
Funds for such Distribution Date exceeds the aggregate amount distributed on
such Distribution Date pursuant to paragraphs (i) through (vii) of clauses (A)
or (B), as applicable, under Section 4.01.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Group I Adjustable Rate Mortgage Loan": A Group I Mortgage Loan that
provides at any period during the life of such loan for the adjustment of the
Mortgage Rate payable in respect thereto.
"Group I Available Funds": With respect to any Distribution Date and
Loan Group I, an amount equal to the excess of (i) the sum of (a) the aggregate
of the related Monthly Payments received on or prior to the Determination Date,
(b) Liquidation Proceeds, Insurance Proceeds, Principal Prepayments, Prepayment
Premiums and other unscheduled recoveries of principal and interest in respect
of the Group I Mortgage Loans during the related Prepayment Period, (c) the
aggregate of any amounts received in respect of a related REO Property withdrawn
from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the Collection
Account by the Master Servicer in respect of related Prepayment Interest
Shortfalls for such Distribution Date, (e) the aggregate of any related Advances
made by the Master Servicer for such Distribution Date, (f) the aggregate of any
related advances made by the Trustee for such Distribution Date pursuant to
Section 7.02, (g) that portion of the Purchase Price of any repurchased Group I
Mortgage Loan, deposited to the Collection Account during the related Prepayment
Period, (h) any Substitution Adjustments related to Group II Mortgage Loans
deposited in the Collection Account during the related Prepayment Period, (i)
with respect to the first Distribution Date immediately following the
Pre-Funding Period, the amount, if any, transferred from the related Pre-Funding
Account and Capitalized Interest Account into the Distribution Account
(exclusive of any Pre-Funding Earnings), (j) on the Distribution Date on which
the Trust is to be terminated pursuant to Section 10.01, the portion of the
Termination Price in respect of Loan Group I and (k) any payments under the
Certificate Insurance Policy with respect to the Group I Certificates, over (ii)
the sum of (a) related amounts reimbursable or payable to the Master Servicer
pursuant to Section 3.11(a) with respect to Loan Group I, (b) the amount payable
to the Trustee pursuant to Section 8.05 with respect to Loan Group I, and (c)
related amounts deposited in the Collection Account or the Distribution Account,
as the case may be, in error.
"Group I Basic Principal Distribution Amount": With respect to the
Group I Certificates and any Distribution Date, the excess of (i) the related
Principal Remittance Amount for such Distribution Date over (ii) the related
Overcollateralization Release Amount, if any, for such Distribution Date.
"Group I Capitalized Interest Account": The Capitalized Interest
Account designated as such and established pursuant to Section 4.05 hereof.
"Group I Certificates": The Class A-1 Certificates.
"Group I Extra Principal Distribution Amount": With respect to the
Group I Certificates and any Distribution Date, the lesser of (x) the related
General Excess Available Amount for such Distribution Date and (y) the related
Overcollateralization Deficiency Amount for such Distribution Date.
"Group I Fixed-Rate Mortgage Loan": A Group I Mortgage Loan that
accrues interest at a fixed-rate.
"Group I Formula Rate": For any Distribution Date and the Class A-1
Certificates, LIBOR plus the related Certificate Margin.
"Group I Interest Carryover": With respect to the Class A-1
Certificates and any Distribution Date on which the Pass-Through Rate for the
Class A-1 Certificates is based upon the Group I Net Funds Cap Rate, the sum of
(A) the excess of (i) the amount of interest the Class A-1 Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated at the Pass-Through Rate without giving effect to the Group I Net
Funds Cap Rate, up to the related Maximum Cap, over (ii) the amount of interest
payable on the Class A-1 Certificates at the Group I Net Funds Cap Rate for such
Distribution Date and (B) the Group I Interest Carryovers for all previous
Distribution Dates not previously paid, together with interest thereon at a rate
equal to the related Pass-Through Rate, up to the related Maximum Cap (it being
understood that such amount is not covered by the Certificate Insurance Policy).
"Group I Loan Balance": As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group I as of such date.
"Group I Mortgage Loan": A Mortgage Loan that is identified as such on
the Mortgage Loan Schedule.
"Group I Net Funds Cap Rate": With respect to any Distribution Date
will equal the Group I Weighted Average Net Loan Rate less, beginning with the
Distribution Date in November 2000, 0.50% per annum (each adjusted on the basis
of an assumed 360-day year and the actual number of days elapsed during the
related Accrual Period.
"Group I Overcollateralized Amount": As of any Distribution Date, the
greater of (i) the amount by which (A) the Group I Loan Balance on the last day
of the immediately preceding Prepayment Period exceeds (B) the principal balance
of the Class A-1 Certificates as of such Distribution Date, after giving effect
to distributions to be made on such Distribution Date, and (ii) zero.
"Group I Pre-Funding Account": The Pre-Funding Account designated as
such and established pursuant to Section 4.05.
"Group I Pre-Funding Rate": For the Distribution Dates in November and
December 1999, the sum of the Capitalized Interest Requirement for the Group I
Mortgage Loans for such Distribution Date and the Pre-Funding Earnings for the
related Due Period for the Group I Pre-Funding Account, divided by the balance
of the Group I Pre-Funding Account immediately following the preceding
Distribution Date (or the Closing Date in the case of the first Distribution
Date).
"Group I Principal Distribution Amount": With respect to Group I
Certificates, and any Distribution Date, the sum of (i) the related Group I
Basic Principal Distribution Amount and (ii) the Group I Extra Principal
Distribution Amount for such Distribution Date.
"Group I Weighted Average Net Loan Rate": With respect to any
Distribution Date, will equal the average of the Net Loan Rates of the Group I
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and the Group I Pre-Funding Rate, weighted on the basis of the related
Principal Balances as of the first day of the related Prepayment Period, in the
case of the Group I Mortgage Loans, and on the basis of the balance of the Group
I Pre-Funding Account immediately following the preceding Distribution Date (or
the Closing Date in the case of the first Distribution Date), in the case of the
Group I Pre-Funding Account.
"Group II Adjustable Rate Mortgage Loan": A Group II Mortgage Loan
that provides at any period during the life of such loan for the adjustment of
the Mortgage Rate payable in respect thereto.
"Group II Available Funds": With respect to any Distribution Date and
Loan Group II, an amount equal to the excess of (i) the sum of (a) the aggregate
of the related Monthly Payments received on or prior to the Determination Date,
(b) Liquidation Proceeds, Insurance Proceeds, Principal Prepayments, Prepayment
Premiums and other unscheduled recoveries of principal and interest in respect
of the Group II Mortgage Loans during the related Prepayment Period, (c) the
aggregate of any amounts received in respect of a related REO Property withdrawn
from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the Collection
Account by the Master Servicer in respect of related Prepayment Interest
Shortfalls for such Distribution Date, (e) the aggregate of any related Advances
made by the Master Servicer for such Distribution Date and (f) the aggregate of
any related advances made by the Trustee for such Distribution Date pursuant to
Section 7.02, (g) that portion of the Purchase Price of any repurchased Group II
Mortgage Loan, deposited to the Collection Account during the related Prepayment
Period, (h) any Substitution Adjustments related to Group II Mortgage Loans
deposited in the Collection Account during the related Prepayment Period, (i)
with respect to the first Distribution Date immediately following the
Pre-Funding Period, the amount, if any, transferred from the related Pre-Funding
Account and Capitalized Interest Account into the Distribution Account
(exclusive of any Pre-Funding Earnings), (j) on the Distribution Date on which
the Trust is to be terminated pursuant to Section 10.01, the portion of the
Termination Price in respect Loan Group II and (k) any payments under the
Certificate Insurance Policy with respect to the Group II Certificates, over
(ii) the sum of (a) related amounts reimbursable or payable to the Master
Servicer pursuant to Section 3.11(a), with respect to Loan Group II, (b) the
amount payable to the Trustee pursuant to Section 8.05, with respect to Loan
Group II, and (c) related amounts deposited in the Collection Account or the
Distribution Account, as the case may be, in error.
"Group II Basic Principal Distribution Amount": With respect the Group
II Certificates and any Distribution Date, the excess of (i) the related
Principal Remittance Amount for such Distribution Date over (ii) the related
Overcollateralization Release Amount, if any, for such Distribution Date.
"Group II Capitalized Interest Account": The Capitalized Interest
Account designated as such and established pursuant to Section 4.05 hereof.
"Group II Certificates": The Class A-2 Certificates.
"Group II Extra Principal Distribution Amount": With respect to the
Group II Certificates and any Distribution Date, the lesser of (x) the related
General Excess Available Amount for such Distribution Date and (y) the related
Overcollateralization Deficiency Amount for such Distribution Date.
"Group II Fixed-Rate Mortgage Loan": A Group II Mortgage Loan that
accrues interest at a fixed-rate.
"Group II Formula Rate": For any Distribution Date and the Class A-2
Certificates, LIBOR plus the related Certificate Margin.
"Group II Interest Carryover": With respect to the Class A-2
Certificates and any Distribution Date on which the Pass-Through Rate for the
Class A-2 Certificates is based upon the Group II Net Funds Cap Rate, the sum of
(A) the excess of (i) the amount of interest the Class A-2 Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated at the Pass-Through Rate without giving effect to the Group II Net
Funds Cap Rate, up to the related Maximum Cap, over (ii) the amount of interest
payable on the Class A-2 Certificates at the Group II Net Funds Cap Rate for
such Distribution Date and (B) the Group II Interest Carryovers for all previous
Distribution Dates not previously paid, together with interest thereon at a rate
equal to the related Pass-Through Rate, up to the related Maximum Cap (it being
understood that such amount is not covered by the Certificate Insurance
Certificate Insurance Policy).
"Group II Loan Balance": As of any date, the aggregate of the
Principal Balances of all Mortgage Loans in Loan Group II as of such date.
"Group II Mortgage Loan": A Mortgage Loan that is identified as such
on the Mortgage Loan Schedule.
"Group II Net Funds Cap Rate": With respect to any Distribution Date
will equal the Group II Weighted Average Net Loan Rate less, beginning with the
Distribution Date in November 2000, 0.50% per annum (each adjusted on the basis
of an assumed 360-day year and the actual number of days elapsed during the
related Accrual Period).
"Group II Overcollateralized Amount": As of any Distribution Date, the
greater of (i) the amount by which (A) the Group II Loan Balance on the last day
of the immediately preceding Prepayment Period exceeds (B) the principal balance
of the Class A-2 Certificates as of such Distribution Date, after giving effect
to distributions to be made on such Distribution Date, and (ii) zero.
"Group II Pre-Funding Account": The Pre-Funding Account designated as
such and established pursuant to Section 4.05.
"Group II Pre-Funding Rate": For the Distribution Dates in November
and December 1999, the sum of the Capitalized Interest Requirement for the Group
II Mortgage Loans for such Distribution Date and the Pre-Funding Earnings for
the related Due Period for the Group II Pre-Funding Account, divided by the
balance of the Group II Pre-Funding Account immediately following the preceding
Distribution Date (or the Closing Date in the case of the first Distribution
Date).
"Group II Principal Distribution Amount": With respect to Group II
Certificates, and any Distribution Date, the sum of (i) the related Basic
Principal Distribution Amount and (ii) the Group II Extra Principal Distribution
Amount for such Distribution Date.
"Group II Weighted Average Net Loan Rate": With respect to any
Distribution Date, will equal the average of the Net Loan Rates of the Group II
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and the Group II Pre-Funding Rate, weighted on the basis of the related
Principal Balances as of the first day of the related Prepayment Period in the
case of the Group II Mortgage Loans, and on the basis of the balance of the
Group II Pre-Funding Account immediately following the preceding Distribution
Date (or the Closing Date in the case of the first Distribution Date), in the
case of the Group II Pre-Funding Account.
"Guaranteed Principal Amount": (a) for any Distribution Date (other
than a Distribution Date specified in (b)), the amount, if any, by which the
Certificate Principal Balances of the Class A-1 and the Class A-2 Certificates
exceed the Pool Balance at the end of the related Prepayment Period (after
giving effect to all distributions of principal on the related Class A
Certificates on such Distribution Date) and (b) on the Distribution Date in
October, 2029 (after giving effect to all other distributions of principal on
the Class A Certificates), an amount equal to the aggregate Certificate
Principal Balance of the Class A Certificates.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; PROVIDED, HOWEVER, that a Person shall not fail to be Independent of
the Depositor or the Master Servicer or any Affiliate thereof merely because
such Person is the beneficial owner of 1% or less of any class of securities
issued by the Depositor or the Master Servicer or any Affiliate thereof, as the
case may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as the Trust Fund
does not receive or derive any income from such Person and provided that the
relationship between such Person and the Trust Fund is at arm's length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Master Servicer) if the Trustee has received an
Opinion of Counsel to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and each
related Adjustment Date, the index as specified in the related Mortgage Note.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate, the amount designated "Initial Certificate Principal Balance" on
the face thereof.
"Initial Mortgage Loans": The Mortgage Loans transferred and assigned
to the Trustee on the Closing Date pursuant to Section 2.01.
"Insurance Agreement": The insurance and indemnity agreement, dated as
of October 1, 1999, among the Certificate Insurer, the Seller, the Depositor and
the Trustee.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy (other than the Certificate Insurance Policy) covering a
Mortgage Loan, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Master Servicer would follow in
servicing mortgage loans held for its own account, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Insured Payments": Any amounts paid pursuant to the Certificate
Insurance Policy.
"Interest Carryover": Each of the Group I Interest Carryover and the
Group II Interest Carryover.
"Interest Determination Date": With respect to the Class A
Certificates and for each Accrual Period, the second LIBOR Business Day
preceding the commencement of such Accrual Period.
"Interest Distributable Amount": With respect to any Distribution Date
and each Class of Class A Certificates, the sum of (i) the related Monthly
Interest Distributable Amount for such Class for such Distribution Date and (ii)
the related Unpaid Interest Shortfall Amount for such Class for such
Distribution Date.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Due Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period other than the initial
Accrual Period, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Telerate
Screen 3750, as of 11:00 a.m. (London time) on such Interest Determination Date.
On each Interest Determination Date, LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period shall
be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual Period
shall be the higher of (i) LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
"LIBOR Business Day": Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Mortgage Loan or disposition of the
related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Master Servicer, including payments received under the PMI Policy, in
connection with (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation, (ii) the liquidation of
a defaulted Mortgage Loan by means of a trustee's sale, foreclosure sale or
otherwise, or (iii) the repurchase, substitution or sale of a Mortgage Loan or
an REO Property pursuant to or as contemplated by Section 2.03, Section 3.23 or
Section 10.01.
"Liquidation Report": A report to be provided by the Master Servicer
substantially in the form attached hereto in Exhibit N.
"Loan-to-Value Ratio": As of any date and Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the Principal Balance of
the Mortgage Loan, and the denominator of which is the Value of the related
Mortgaged Property.
"Loan Group": Either Loan Group I or Loan Group II, as the context
requires.
"Loan Group Balance": Either the Group I Loan Balance or the Group II
Loan Balance, as applicable.
"Loan Group I": At any time, the Group I Mortgage Loans in the
aggregate.
"Loan Group II": At any time, the Group II Mortgage Loans in the
aggregate.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note) and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note, in
the form of Exhibit I hereto.
"Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51% Percentage Interest in the Class R
Certificates.
"Master Servicer": Pan American Bank, FSB, a federal savings bank, or
any successor master servicer appointed as herein provided.
"Master Servicer Affiliate": A Person (i) controlling, controlled by
or under common control with the Master Servicer or which is 50% or more owned
by the Master Servicer and (ii) which is qualified to service residential
mortgage loans.
"Master Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Master Servicer Remittance Date": With respect to any Distribution
Date, the third Business Day preceding such Distribution Date.
"Maximum Cap": With respect to any Distribution Date and for each
Class of Class A Certificates, the weighted average of the Maximum Mortgage
Rates on the Adjustable Rate Mortgage Loans and the Mortgage Rates on the
Fixed-Rate Mortgage Loans in the related Loan Group.
"Maximum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
"Monthly Interest Distributable Amount": With respect to each Class of
Class A Certificates and for any Distribution Date, the amount of interest
accrued during the related Accrual Period at the related Pass-Through Rate on
the Certificate Principal Balance of such Class immediately prior to such
Distribution Date (or, in the case of the first Distribution Date, from the
Closing Date).
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.01; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01, Section 2.03(d) or Section 2.10 as from time
to time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Seller
and the Depositor, dated as of October 1, 1999, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Exhibit E.
The Mortgage Loan Schedule shall be prepared by the Seller and shall set forth
the following information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the state
and zip code;
(iv) a code indicating whether the Mortgaged Property was represented
by the borrower, at the time of origination, as being owner-occupied;
(v) the type of Residential Dwelling constituting the Mortgaged
Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the Cut-off Date
based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the Cut-off
Date;
(x) the date on which the first Monthly Payment is or was due on the
Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment due on the first Due Date
after the Cut-off Date;
(xiv) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the actual unpaid principal balance of the Mortgage Loans as of
the Cut-off Date;
(xvii) a code indicating the purpose of the Mortgage Loan in
accordance with Seller's standards (i.e., purchase financing, rate/term
refinancing, cash-out refinancing);
(xviii) the Mortgage Rate at origination;
(xix) a code indicating the documentation program (i.e., full
documentation, flex documentation, stated income documentation);
(xx) the risk grade;
(xxi) the Value of the Mortgaged Property;
(xxii) the sale price of the Mortgaged Property, if applicable;
(xxiii) the program code; and
(xxiv) a code indicating if a Loan is covered under the PMI Policy.
The Mortgage Loan Schedule, as in effect from time to time, shall set forth the
following information, as of the Cut-off Date with respect to the Mortgage Loans
in the aggregate and for each Loan Group: (1) the number of Mortgage Loans; (2)
the current Principal Balance of the Mortgage Loans; (3) the weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to
time by the Seller in accordance with the provisions of this Agreement.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Schedule 1
from time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
each Fixed-Rate Mortgage Loan shall remain constant at the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date and (ii) in the case of each Adjustable Rate Mortgage Loan (A) as
of any date of determination until the first Adjustment Date following the
Cut-off Date shall be the rate set forth in the Mortgage Loan Schedule as the
Mortgage Rate in effect immediately following the Cut-off Date and (B) as of any
date of determination thereafter shall be the rate as adjusted on the most
recent Adjustment Date, to equal the sum, rounded to the next highest or nearest
0.125% (as provided in the Mortgage Note), of the Index, determined as set forth
in the related Mortgage Note, plus the related Gross Margin subject to the
limitations set forth in the related Mortgage Note. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately preceding sentence as
of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property) the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other accrued and unpaid servicing fees received and
retained in connection with the liquidation of such Mortgage Loan or Mortgaged
Property.
"Net Loan Rate": With respect to each Mortgage Loan is a per annum
rate equal to the applicable Mortgage Rate less the sum of (a) the Servicing Fee
Rate, (b) the Trustee Fee Rate, (c) the Adjusted Insurer Fee Rate and (d) with
respect to a PMI Mortgage Loan, the rate at which the premium payable to the PMI
Insurer is calculated.
"Net Prepayment Interest Shortfall": With respect to each Loan Group
and any Distribution Date, the excess, if any, of any Prepayment Interest
Shortfalls in such Loan Group for such date over the related Compensating
Interest.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously
made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Master Servicer, will not be ultimately recoverable
from Late Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any REMIC as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Master Servicer or the Certificate Insurer may opt to terminate the Trust Fund
pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to the
Class A-1 and Class A-2 Certificates, the corresponding amounts set forth
opposite such Classes above in the Preliminary Statement and, with respect to
the Class X and Class R Certificates, zero.
"Original Pre-Funding Amount": With respect to Loan Group I,
27,234,114.75; and with respect to Loan Group II, $10,298,458.02.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date and each Certificate Group, the amount, if any, by which the
related Overcollateralization Target Amount exceeds the related
Overcollateralized Amount on such Distribution Date (after giving effect to
distributions in respect of the related Basic Principal Distribution Amount on
such Distribution Date).
"Overcollateralization Release Amount": With respect to each
Certificate Group and any Distribution Date (A) prior to the occurrence of a
Step Down Trigger, zero, and (B) if a Step Down Trigger has occurred with
respect to such Distribution Date, the lesser of (x) the related Principal
Remittance Amount for such Distribution Date and (y) the excess, if any, of (i)
the related Overcollateralized Amount for such Distribution Date, assuming that
100% of the related Principal Remittance Amount is applied as a principal
payment on the related Certificate Group on such Distribution Date over (ii) the
related Overcollateralization Target Amount for such Distribution Date.
"Overcollateralization Target Amount": With respect to each
Certificate Group and any Distribution Date, an amount equal to 4.95% of the
Cut-off Date Aggregate Principal Balance of the Group I Mortgage Loans plus the
Original Pre-Funding Amount for the Related Loan Group or 4.95% of the Cut-off
Date Aggregate Principal Balance of the Group II Mortgage Loans plus the
Original Pre-Funding Amount for the Related Loan Group, respectively, subject to
the following: (i) if the Step Up Trigger has occurred, the
Overcollateralization Target Amount with respect to each Certificate Group for
such Distribution Date will be an amount equal to the aggregate Principal
Balance of the Mortgage Loans in the Related Loan Group as of the end of the
related Prepayment Period plus the Pre-Funding Amount for the Related Loan Group
on such Distribution Date; (ii) if the Step Up Trigger has not occurred but the
Step Up Spread Squeeze Test is met, the Overcollateralization Target Amount with
respect to each Loan Group for such Distribution Date will be an amount equal to
the sum of (A) the Overcollateralization Target Amount for such Loan Group and
such Distribution Date determined as though the Step Up Spread Squeeze Test were
not met plus (B) the Spread Squeeze Overcollateralization Increase Amount; or
(iii) if neither the Step Up Trigger has occurred nor the Step Up Spread Squeeze
Test is met but the Step Down Trigger has occurred, the Overcollateralization
Target Amount with respect to each Certificate Group for such Distribution Date
will be an amount equal to the greater of (A) the greater of (1) 0.50% of the
Cut-off Date Aggregate Principal Balance of the Mortgage Loans in the related
Loan Group plus the Original Pre-Funding Amount for the Related Loan Group and
(2) the aggregate Stated Principal Balance, as of such Distribution Date, of the
three largest outstanding Mortgage Loans in the related Loan Group and (B) the
lesser of (x) 4.95% of the Cut-off Date Aggregate Principal Balance of the Group
I Mortgage Loans plus the Original Pre-Funding Amount for the Related Loan Group
or 4.95% of the Cut-off Date Aggregate Principal Balance of the Group II
Mortgage Loans plus the Original Pre-Funding Amount for the Related Loan Group,
as applicable, and (y) the Stepped Down Required Overcollateralized Percentage
of the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties in respect of the related Loan Group as of such Distribution Date.
"Overcollateralized Amount": Each of the Group I Overcollateralized
Amount and the Group II Overcollateralized Amount.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate": As to any Distribution Date and (i) with respect
to the Class A-1 Certificates, the lesser of (a) Group I Formula Rate and (b)
the Group I Net Funds Cap Rate for such Distribution Date, and (ii) with respect
to the Class A-2 Certificates, the lesser of (a) the Group II Formula Rate and
(b) the Group II Net Funds Cap Rate for such Distribution Date.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Class A Certificate, a
fraction, expressed as a percentage, the numerator of which is the Initial
Certificate Principal Balance represented by such Certificate and the
denominator of which is the Original Class Certificate Principal Balance of the
related Class. With respect to any Class X or Class R Certificate, the portion
of the Class evidenced thereby, expressed as a percentage, as stated on the face
of such Certificate; PROVIDED, HOWEVER, that the sum of all such percentages for
each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
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;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agent acting in
their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision
and examination by federal and/or state authorities, so long as, at the
time of such investment or contractual commitment providing for such
investment, such depository institution or trust company or its ultimate
parent has a short-term uninsured debt rating in one of the two highest
available rating categories of S&P and the highest available rating
category of Moody's and provided that each such investment has an original
maturity of no more than 365 days and (B) any other demand or time deposit
or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with
a depository institution or trust company (acting as principal) rated A or
higher by S&P and rated A2 or higher by Moody's, provided, however, that
collateral transferred pursuant to such repurchase obligation must be of
the type described in clause (i) above and must (A) be valued daily at
current market prices plus accrued interest or (B) pursuant to such
valuation, be equal, at all times, to 105% of the cash transferred by the
Trustee in exchange for such collateral and (C) be delivered to the Trustee
or, if the Trustee is supplying the collateral, an agent for the Trustee,
in such a manner as to accomplish perfection of a security interest in the
collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by a Rating Agency in its
highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition thereof)
that is rated by a Rating Agency in its highest short-term unsecured debt
rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or an
affiliate thereof having a rating by S&P of AAA-G, AAA-m, or AA-m, and if
rated by Moody's, rated Aaa, Aa1 or Aa2; and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies and the Certificate
Insurer in writing as a permitted investment of funds backing securities
having ratings equivalent to its highest initial rating of the Class A
Certificates;
provided, that no instrument described hereunder 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 provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization, a non-U.S. Person that is not holding its
Ownership Interest in the Class R Certificate in connection with a United States
trade or business, or a Plan or any Person using the assets of a Plan (except as
provided in clause (iii) of the second paragraph of Section 5.02(d)).
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PMI Insurer": Mortgage Guaranty Insurance Corporation, a monoline
private insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.
"Plan": As defined in Section 5.02(d).
"PMI Mortgage Loans": The list of Mortgage Loans insured by the PMI
Insurer attached hereto as Exhibit H.
"PMI Policy": The Primary Mortgage Insurance Policy (No.
04-645-3-1984) with respect to the PMI Mortgage Loans and all endorsements
thereto dated the Closing Date, issued by the PMI Insurer.
"Pool Balance": As of any date of determination, the aggregate
principal balance of the Mortgage Loans.
"Preference Claim": As defined in Section 11.04(d).
"Pre-Funding Accounts": The accounts designated as such and created
and maintained by the Trustee pursuant to Section 4.05 hereof.
"Pre-Funding Amount": With respect to any date, the amount on deposit
in the respective Pre-Funding Accounts as of such date (net of any reinvestment
earnings thereon).
"Pre-Funding Earnings": With respect to each Distribution Date and
either Loan Group, the actual investment earnings earned on amounts on deposit
in the related Pre-Funding Account during the period from the preceding
Distribution Date (or October 12, 1999, in the case of the first Distribution
Date) to the current Distribution Date.
"Pre-Funding Period": With respect to each Loan Group, the period
commencing on the Closing Date and ending on the earliest to occur of (i) the
date on which the amount on deposit in the related Pre-Funding Account
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Servicer Default occurs and (iii) December 10, 1999.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Interest Excess": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Distribution Date occurs and ending on
the Determination Date in such month, an amount equal to interest at the
applicable Mortgage Rate minus the Servicing Fee Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Distribution Date occurs and ending on the date on
which such prepayment is so applied.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment in
full during the portion of the related Prepayment Period occurring between the
day after the Determination Date in, and the last day of, the calendar month
preceding the month in which such Distribution Date occurs, an amount equal to
interest at the applicable Mortgage Rate minus the Servicing Fee Rate on the
amount of such Principal Prepayment for the number of days commencing on the
date on which the prepayment is applied and ending on the last day of the
calendar month preceding the month in which such Distribution Date occurs. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the period
commencing on the day after the preceding Determination Date (or, in the case of
the first Distribution Date, commencing on October 1, 1999) and ending on the
Determination Date related to such Distribution Date.
"Prepayment Premium": With respect to any Prepayment Period, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note.
"Prepayment Premium Schedule": As of any date, the list of Prepayment
Premiums on the Mortgage Loans included in the Trust Fund on such date, attached
hereto as Exhibit P (including the Prepayment Premium Summary attached thereto).
The Prepayment Premium Schedule shall set forth the following information with
respect to each Prepayment Premium:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Premium;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the principal balance of the related Mortgage Loan as of the
Cut-off Date.
"Principal Balance": As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan as of the final recovery of related Liquidation Proceeds and a Principal
Balance of zero thereafter. As to any REO Property and any day, the Principal
Balance of the related Mortgage Loan immediately prior to such Mortgage Loan
becoming REO Property minus the REO Principal Amortization received with respect
thereto on or prior to such day.
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount": With respect to each Loan Group and any
Distribution Date, the sum of (i) each scheduled payment of principal collected
or advanced on the related Mortgage Loans by the Master Servicer in respect of
the related Due Period, (ii) the principal portion of all partial and full
principal prepayments of such Mortgage Loans applied by the Master Servicer
during the related Prepayment Period, (iii) the principal portion of all related
Net Liquidation Proceeds and Insurance Proceeds received during such Prepayment
Period, (iv) that portion of the Purchase Price, representing principal of any
repurchased Mortgage Loan in such Loan Group, deposited to the Collection
Account during such Prepayment Period, (v) the principal portion of any related
Substitution Adjustments deposited in the Collection Account during such
Prepayment Period, (vi) with respect to the first Distribution Date immediately
following the Pre-Funding Period, the amount, if any transferred from the
related Pre-Funding Account and Capitalized Interest Account into the
Distribution Account (exclusive of any Pre-Funding Earnings), and (vii) on the
Distribution Date on which the Trust Fund is to be terminated pursuant to
Section 10.01, that portion of the Termination Price, in respect of principal,
for such Loan Group.
"Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Master Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated
October 7, 1999 relating to the public offering of the Class A Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Master Servicer to the Trustee,
an amount equal to the sum of (i) 100% of the Principal Balance thereof as of
the date of purchase (or such other price as provided in Section 10.01), (ii) in
the case of (x) a Mortgage Loan, accrued interest on such Principal Balance at
the applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Master Servicer through the
end of the calendar month immediately preceding the calendar month in which such
REO Property was acquired, plus (2) REO Imputed Interest for such REO Property
for each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 4.04,
(iii) any unreimbursed Servicing Advances and Advances and any unpaid Servicing
Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.23, and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Master Servicer or the Trustee in respect of
the breach or defect giving rise to the purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Fannie Mae.
"Qualified Additional Mortgage Loan": An Additional Mortgage Loan
that, in the sole judgment of the Certificate Insurer, meets the same credit
quality standards as the Initial Mortgage Loans.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Deleted Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) if a
Fixed-Rate Mortgage Loan have a Mortgage Rate not less than (and not more than
one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage
Loan, (iii) if an Adjustable Rate Mortgage Loan, have a Maximum Mortgage Rate
not less than the Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) if an
Adjustable Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) if an Adjustable Rate
Mortgage Loan, have a Gross Margin equal to or greater than the Gross Margin of
the Deleted Mortgage Loan, (vi) if an Adjustable Rate Mortgage Loan, have a next
Adjustment Date not more than two months later than the next Adjustment Date on
the Deleted Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(viii) be current as of the date of substitution, (ix) have a Loan-to-Value
Ratio as of the date of substitution equal to or lower than the Loan-to-Value
Ratio of the Deleted Mortgage Loan as of such date, (x) have a risk grading
determined by the Seller at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xi) have been underwritten or re-underwritten by the
Seller in accordance with the same underwriting criteria and guidelines as the
Deleted Mortgage Loan, (xii) conform to each representation and warranty set
forth in Section 2.04 hereof applicable to the Deleted Mortgage Loan, and (xiii)
be acceptable to the Certificate Insurer. In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Rates, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan,
the terms described in clause (vii) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios described
in clause (ix) hereof shall be satisfied as to each such mortgage loan and,
except to the extent otherwise provided in this sentence, the representations
and warranties described in clause (xii) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P and Moody's or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor and
acceptable to the Certificate Insurer, notice of which designation shall be
given to the Trustee and Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the
amount of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds in respect of such
Mortgage Loan.
"Receipt": As defined in the Certificate Insurance Policy.
"Record Date": With respect to (i) Certificate Group I, the last day
of the calendar month preceding the month in which the related Distribution Date
occurs and (ii) Certificate Group II, the Close of Business on the Business Day
immediately preceding the related Distribution Date; PROVIDED, HOWEVER, that
following the date on which Definitive Certificates for a Class are available
pursuant to Section 5.02, the Record Date shall be the last day of the calendar
month preceding the month in which the related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor or the Master Servicer or any affiliate
thereof, (iii) whose quotations appear on the Telerate Screen 3750 on the
relevant Interest Determination Date and (iv) which have been designated as such
by the Depositor; PROVIDED, HOWEVER, that if fewer than two of such banks
provide a LIBOR rate, then any leading banks selected by the Depositor which are
engaged in transactions in United States dollar deposits in the international
Eurocurrency market.
"Regular Certificate": Any of the Class A Certificates or the Class X
Certificate.
"Related Loan Group": With respect to the Group I Certificates, Loan
Group I and with respect to the Group II Certificates, Loan Group II.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date
and Loan Group, for any Mortgage Loan in such Loan Group to which there has been
a reduction in the amount of interest collectible thereon for the most recently
ended Due Period as a result of the application of the Relief Act, the amount by
which (i) interest collectible on such Mortgage Loan during such Due Period is
less than (ii) one month's interest on the Principal Balance of such Mortgage
Loan at the Loan Rate for such Mortgage Loan before giving effect to the
application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": The segregated asset pool of the Trust Fund comprised of
items (i)-(vii) of the definition of "Trust Fund," but excluding (i) the
Pre-Funding Accounts and the Capitalized Interest Accounts and such assets or
funds as are held in such accounts from time to time.
"REMIC I Regular Interests": The Class LT1, Class LT2, Class LT3,
Class LT4, Class LT5 and Class LT6 Interests.
"REMIC II": The segregated asset pool of the Trust Fund comprised of
the REMIC I Regular Interests and all amounts distributed thereon and held in
the Distribution Account.
"REMIC II Regular Interests": The Class MT1, Class MT2, Class MT3,
Class MT4, Class MT5, Class MT6, Class MTN2 and Class MTN5 Interests.
"REMIC III": The segregated asset pool of the Trust Fund comprised of
the REMIC II Regular Interests and all amounts distributed thereon and held in
the Distribution Account.
"REMIC III Group I Interest Rate": With respect to any Distribution
Date, a rate obtained by dividing (A) the product of (i) 2 times (ii) the
Pass-Through Rate on the Class A-1 Certificates times (iii) the principal
balance of the Class MT2 Interest by (B) the sum of (x) the principal balance of
the Class MT2 Interest and (y) the principal balance of the Class MT3 Interest,
such principal balances being determined before any reductions of principal
balance made on such Distribution Date.
"REMIC III Group II Interest Rate": With respect to any Distribution
Date, a rate obtained by dividing (A) the product of (i) 2 times (ii) the
Pass-Through Rate on the Class A-2 Certificates times (iii) the principal
balance of the Class MT5 Interest by (B) the sum of (x) the principal balance of
the Class MT5 Interest and (y) the principal balance of the Class MT6 Interest,
such principal balances being determined before any reductions of principal
balance made on such Distribution Date.
"REMIC III Regular Interests": The Class X Certificates, the Class A-1
Regular Interest and the Class A-2 Regular Interest.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of the Code, and related provisions, and temporary and final
Treasury regulations promulgated thereunder, as the foregoing may be in effect
from time to time (or proposed, if proposed to be retroactive).
"Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.04.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Mortgage Rate minus the Servicing Fee Rate on
the Principal Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan if appropriate) as of the Close of
Business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether in
the form of rental income, sale proceeds (including, without limitation, that
portion of the Termination Price paid in connection with a purchase of all of
the Mortgage Loans and REO Properties pursuant to Section 10.01 that is
allocable to such REO Property) or otherwise, net of any portion of such amounts
(i) payable pursuant to Section 3.23 in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or reimbursable
to the Master Servicer pursuant to Section 3.23 for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Master Servicer
on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit F attached hereto.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16 of 1%) of the one-month United States dollar lending rates which banks in
The City of New York selected by the Depositor are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (ii) in the event that the Trustee can determine
no such arithmetic mean, in the case of any Interest Determination Date after
the initial Interest Determination Date, the lowest one-month United States
dollar lending rate which such New York banks selected by the Depositor are
quoting on such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project, (iv) a manufactured home, or
(v) a detached one-family dwelling in a planned unit development, none of which
is a co-operative or mobile home.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, any vice president, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Cashier, any assistant cashier, any trust officer or assistant trust
officer, the Controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"Rolling Delinquency Percentage": With respect to any Distribution
Date, the average of the Delinquency Percentages as of the last day of each of
the three (or one or two, in the case of the first and second Distribution
Dates, respectively) preceding Due Periods.
"S&P": Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., and its successors, and, if such division shall for any reason no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized rating organization," as set forth on
the most current list of such organizations released by the Securities and
Exchange Commission.
"Seller": Pan American Bank, FSB, or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration,
inspection and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.09, 3.16, and 3.23.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. The
Servicing Fee may be retained by any Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished by
the Master Servicer to the Trustee and the Depositor on the Closing Date, as
such list may from time to time be amended.
"Servicing Standard": The standards set forth in Section 3.01.
"Severely Delinquent Loan": Any Specially Serviced Mortgage Loan that
has not become a Liquidated Mortgage Loan or a performing loan prior to the
150th day of delinquency (without giving effect to any grace period permitted by
the related Mortgage Note) in the payment of a Monthly Payment.
"Specially Serviced Mortgage Loan": Any Mortgage Loan which is or has
been 90 or more days delinquent, the servicing of which has been transferred to
the Special Servicer.
"Special Servicer": Fairbanks Capital Corp., in its capacity as
special servicer hereunder.
"Spread Squeeze Condition": The Spread Squeeze Condition will be met
with respect to a Distribution Date if the Spread Squeeze Percentage for such
Distribution Date is less than 2.50% for any Distribution Date from the 13th
Distribution Date to the 24th Distribution Date or 3.00% thereafter. There will
be no Spread Squeeze Condition for the first 12 Distribution Dates.
"Spread Squeeze Overcollateralization Increase Amount": For any
Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
equal to the product obtained by multiplying (i) three, (ii) the excess, if any,
of 2.50% (in the case of the 13th Distribution Date through the 24th
Distribution Date) and 3.00% (in the case of the 25th Distribution Date and any
Distribution Date thereafter) applicable Spread Squeeze Condition over the
Spread Squeeze Percentage for such Distribution Date and (iii) the Aggregate
Cut-off Date Principal Balance of the Mortgage Loans plus the Original
Pre-Funding Amount.
"Spread Squeeze Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the product
of 12 and the sum of the General Excess Available Amount for both Loan Groups
for such Distribution Date, and the denominator of which is the aggregate of the
Mortgage Loans and REO Properties as of such Distribution Date.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the outstanding principal balance of such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date, to the extent received from the Mortgagor or
advanced by the Master Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, (ii) all Principal Prepayments received after
the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the Master Servicer as recoveries of principal in accordance
with the provisions of Section 4.03, to the extent distributed pursuant to
Section 4.01 on or before such date of determination, and (iv) any Realized Loss
incurred with respect thereto as a result of a Deficient Valuation made during
or prior to the Due Period for the most recent Distribution Date coinciding with
or preceding such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such Mortgage Loan would be
distributed, zero. With respect to any REO Property: (a) as of any date of
determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Step Down Cumulative Loss Test": The Step Down Cumulative Loss Test
will be met with respect to a Distribution Date as follows: (i) for the 31st
through the 41st Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is 1.25% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 1.75% or less; (iii) for the 54th through the 65th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.50% or less; and (iv)
for any Distribution Date after the 65th Distribution Date, if the Cumulative
Loss Percentage for such Distribution Date is 3.15% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 11.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test will be
met with respect to a Distribution Date if the Annual Loss Percentage is less
than 1.00%.
"Step Down Trigger": For any Distribution Date after the 30th
Distribution Date, the Step Down Trigger will have occurred if each of the Step
Down Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step
Down Rolling Loss Test is met. In no event will the Step Down Trigger be deemed
to have occurred for the 30th Distribution Date or any preceding Distribution
Date.
"Stepped Down Required Overcollateralized Percentage": For any
Distribution Date for which the Step Down Trigger has occurred, a percentage
equal to the greater of (x) 9.90% and (y) (i) the percentage equivalent of a
fraction, the numerator of which is the Group I Overcolleralized Amount or Group
II Overcolleralized Amount, as applicable, as of the immediately preceding
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of the related Loan Group and REO Properties as of such Distribution
Date, minus (ii) the percentage equivalent of a fraction, the numerator of which
is the product of (A) the percentage calculated under clause (i) above minus
9.90% with respect to the Group I Mortgage Loans and 9.90% with respect to the
Group II Mortgage Loans, multiplied by (B) the number of consecutive
Distribution Dates through and including the Distribution Date for which the
Stepped Down Required Overcollateralized Percentage is being calculated, up to a
maximum of six, for which the Step Down Trigger has occurred, and the
denominator of which is six.
"Step Up Claims Denial Test": The Step Up Claims Denial Test will be
met if either of the following events occurs (i) MGIC is downgraded below "A" by
S&P or Moody's, or (ii) the cumulative claims denials for any 12-months
preceding a Distribution Date exceed 0.50% of the aggregate Stated Principal
Balance of the Mortgage Loans at the beginning of such 12-month period.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 1st through
the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 0.75%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.25%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 3.00%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.75%; and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 4.25%.
"Step Up Rolling Delinquency Test": The Step Up Rolling Delinquency
Test will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is more than 12.50%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test will be met
with respect to a Distribution Date, if the Annual Loss Percentage is equal to
or more than 1.50%.
"Step Up Spread Squeeze Test": The Step Up Spread Squeeze Test will be
met with respect to a Distribution Date if the Spread Squeeze Condition is met
for such Distribution Date.
"Step Up Trigger": For any Distribution Date, the Step Up Trigger will
have occurred if any one of the Step Up Cumulative Loss Test, the Step Up Claims
Denial Test, the Step Up Rolling Delinquency Test or the Step Up Rolling Loss
Test is met.
"Sub-Servicer": Any Person with which either Servicer has entered into
a Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the applicable Servicer.
"Sub-Servicing Agreement": The written contract between either
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Adjustment": As defined in Section 2.03(d) hereof.
"Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of REMIC I, REMIC II and REMIC III in their
capacity as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders of the related Group or filed with the Internal Revenue
Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Trust": United PanAm Mortgage Loan Trust 1999-2, the trust created
hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to a portion of which three REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such Mortgage Loans as from time to time
are subject to this Agreement, together with the Mortgage Files relating
thereto, and together with all collections thereon and proceeds thereof, (ii)
any REO Property, together with all collections thereon and proceeds thereof,
(iii) the Trustee's rights with respect to the Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's rights under the Mortgage Loan Purchase
Agreement (including any security interest created thereby); (v) the Certificate
Insurance Policy; (vi) the PMI Policy; and (vii) the Collection Account, the
Distribution Account (subject to the last sentence of this definition) and any
REO Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, the Pre-Funding
Accounts and the Capitalized Interest Accounts will not be assets of any of the
three REMICs, but will be beneficially owned by the Depositor for federal income
tax purposes.
"Trustee": Bankers Trust Company of California, N.A., a national
banking association, or any successor trustee appointed as herein provided.
"Trustee's Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Trustee Fee Rate,
multiplied by (ii) the aggregate Stated Principal Balance of the Mortgage Loans
and any REO Properties as of the preceding Distribution Date (or, in the case of
the initial Distribution Date, as of the Cut-off Date).
"Trustee Fee Rate": 0.01% per annum.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person or U.S. Person": A citizen or resident of the
United States, a corporation, partnership or other entity treated as a
corporation or partnership for federal income tax purposes (other than a
partnership that is not treated as a U.S. Person pursuant to any applicable
Treasury regulations) created or organized in, or under the laws of, the United
States, any state thereof or the District of Columbia, or an estate the income
of which is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have authority to control all substantial decisions of the trust.
The term "United States" shall have the meaning set forth in Section 7701 of the
Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to each Class of
Class A Certificates and (i) the first Distribution Date, zero, and (ii) any
Distribution Date after the first Distribution Date, the amount, if any, by
which (a) the sum of (1) the Monthly Interest Distributable Amount for such
Class for the immediately preceding Distribution Date and (2) the outstanding
Unpaid Interest Shortfall Amount, if any, for such Class for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on such Class in
respect of interest pursuant to clause (a) of this definition on such preceding
Distribution Date, plus interest on the amount of interest due but not paid on
the Certificates of such Class on such preceding Distribution Date, to the
extent permitted by law, at the Pass-Through Rate for such Class for the related
Accrual Period.
"Unutilized Funding Amount": The Pre-Funding Amount immediately after
the end of the Pre-Funding Period.
"Value": With respect to any Mortgage Loan, and the related Mortgaged
Property, the lesser of:
(i) the lesser of (a) the value thereof as determined by an appraisal
made for the originator of the Mortgage Loan at the time or origination of
the Mortgage Loan by an appraiser who met the minimum requirements of
Fannie Mae and Freddie Mac, and (b) the value thereof as determined by a
review appraisal conducted by the Seller in the event any such review
appraisal determines an appraised value more than 10% lower than the value
thereof, in the case of a Mortgaged Loan with a Loan-to-Value Ratio less
than or equal to 80%, or more than 5% lower than the value thereof, in the
case of a Mortgage Loan with a Loan-to-Value Ratio greater than 80%, as
determined by the appraisal referred to in clause (i)(a) above; and
(ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan;
provided, however, that (A) in the case of a refinanced Mortgage Loan (which is
a Mortgage Loan the proceeds of which were not used to purchase the related
Mortgaged Property), such value of the Mortgaged Property is based solely upon
the lesser of (i) the value determined by an appraisal made for the originator
of such refinanced Mortgaged Loan at the time of origination of such refinanced
Mortgage Loan by an appraiser who met the minimum requirements of Fannie Mae and
Freddie Mac and (ii) the value thereof as determined by a review appraisal
conducted by the Seller in the event any such review appraisal determines an
appraised value more than 10% lower than the value thereof, in the case of a
Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80%, or more than
5% lower than the value thereof, in the case of a Mortgage Loan with a
Loan-to-Value Ratio greater than 80%, as determined by the appraisal referred to
in clause (ii)(A)(i) above, and (B) in the case of a Mortgage Loan originated in
connection with a "lease option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the originator of such Mortgage Loan at the time of the
origination if the "lease option purchase price" was set 12 months or more prior
to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, on any date on which no Certificate Insurer
Default exists and is continuing and the Class A Certificates are outstanding or
any amounts are owed the Certificate Insurer under the Insurance Agreement, all
of the Voting Rights allocated to the Certificateholders shall be vested in the
Certificate Insurer. However, if a Certificate Insurer Default exists and is
continuing and no amounts are owed to the Certificate Insurer under the
Insurance Agreement, the Voting Rights allocated among Holders of such
Certificates outstanding shall be the fraction, expressed as a percentage, the
numerator of which is the aggregate Certificate Balance of all the Certificates
of such Class then outstanding and the denominator of which is the aggregate
Certificate Balance of all the Certificates then outstanding. The Voting Rights
allocated to a Class of Certificates shall be allocated among all holders of
each such Class in proportion to the outstanding Certificate Balance of such
Certificates; PROVIDED, HOWEVER, that any Certificate registered in the name of
the Master Servicer, the Depositor or the Trustee or any of their respective
affiliates shall not be included in the calculation of Voting Rights; PROVIDED
FURTHER that when none of the Class A Certificates are outstanding, 100% of the
Voting Rights shall be allocated among Holders of the Class X Certificates, and
if no Regular Certificates are outstanding, 100% of the Voting Rights shall be
allocated among Holders of the Class R Certificates in accordance with such
Holders' respective Percentage Interests in the Certificates of such Class.
Section 1.02 ACCOUNTING.
Unless otherwise specified herein, for the purpose of any definition
or calculation, whenever amounts are required to be netted, subtracted or added
or any distributions are taken into account such definition or calculation and
any related definitions or calculations shall be determined without duplication
of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 CONVEYANCE OF MORTGAGE LOANS.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders and the Certificate
Insurer all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in and to (i) each
Initial Mortgage Loan identified on the Mortgage Loan Schedule, including the
related Cut-off Date Principal Balance, all interest due thereon after the
Cut-off Date and all collections in respect of interest and principal due after
the Cut-off Date; (ii) any real property that secured each such Mortgage Loan
and that has been acquired by foreclosure or deed in lieu of foreclosure; (iii)
its interest in any insurance policies in respect of the Mortgage Loans; (iv)
all proceeds of any of the foregoing; (v) the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and (vi) all other assets included or to be
included in the Trust Fund. Such assignment includes all interest and principal
due to the Depositor or the Master Servicer after the Cut-off Date with respect
to the Initial Mortgage Loans.
In connection with such transfer and assignment, the Seller, on behalf
of the Depositor, does hereby deliver to, and deposit with the Trustee, or its
designated agent (the "Custodian"), the following documents or instruments with
respect to each Mortgage Loan (a "Mortgage File") so transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank, in which
case the Trustee shall cause the endorsement to be completed upon the
request of and at the expense of the Seller or (B) in the following form:
"Pay to the order of Bankers Trust Company of California, N.A., as Trustee
under the Pooling and Servicing Agreement, dated as of October 1, 1999,
United PanAm Mortgage Loan Trust 1999-2, Asset-Backed Certificates, Series
1999-2, without recourse", or with respect to any lost Mortgage Note, an
original Lost Note Affidavit stating that the original mortgage note was
lost, misplaced or destroyed, together with a copy of the related mortgage
note; PROVIDED, HOWEVER, that such substitutions of Lost Note Affidavits
for original Mortgage Notes may occur only with respect to Mortgage Loans,
the aggregate Cut-off Date Principal Balance of which is less than or equal
to 1.00% of the Pool Balance as of the Cut-off Date;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon or, if such
Mortgage or power of attorney has been submitted for recording but has not
been returned from the applicable public recording office, has been lost or
is not otherwise available, a copy of such Mortgage or power of attorney,
as the case may be, certified to be a true and complete copy of the
original submitted for recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either (A) in
blank or (B) to "Bankers Trust Company of California, N.A., as Trustee
under the Pooling and Servicing Agreement, dated as of October 1, 1999,
United PanAm Mortgage Loan Trust 1999-2, Asset-Backed Certificates, Series
1999-2, without recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit G-3 hereto.
The Seller shall within 20 days of receiving written instructions to
such effect from the Certificate Insurer or the Trustee following the Closing
Date submit or cause to be submitted for recording, at the Seller's expense and
at no expense to the Trust Fund, the Trustee, the PMI Insurer or the Certificate
Insurer, in the appropriate public office for real property records, each
Assignment referred to in Sections 2.01(iii) and (iv) above. In the event that
any such Assignment is lost or returned unrecorded because of a defect therein,
the Seller shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter submit each such Assignment for recordation.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date (or such other time permitted under such
provisions) been submitted for recording but either (x) has not been returned
from the applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations of
the Seller to deliver such documents shall be deemed to be satisfied upon (1)
delivery to the Trustee or the Custodian no later than the Closing Date, of a
copy of each such document certified by the Seller in the case of (x) above or
the applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Seller, delivery to the Trustee or the Custodian,
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. If the original lender's title insurance policy, or a
certified copy thereof, was not delivered pursuant to Section 2.01(v) above, the
Seller shall deliver or cause to be delivered to the Trustee or the Custodian,
the original or a copy of a written commitment or interim binder or preliminary
report of title issued by the title insurance or escrow company, with the
original or a certified copy thereof to be delivered to the Trustee or the
Custodian, promptly upon receipt thereof. The Seller shall deliver or cause to
be delivered to the Trustee or the Custodian promptly upon receipt thereof any
other documents constituting a part of a Mortgage File received with respect to
any Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 90 days to cure such defect or deliver such missing document to the
Trustee or the Custodian. If the Seller does not cure such defect or deliver
such missing document within such time period, the Seller shall either
repurchase or substitute for such Mortgage Loan in accordance with Section 2.03.
The Seller shall cause the Assignments of Mortgage which were delivered in blank
and cause to be completed and shall cause all Assignments referred to in Section
2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv) hereof to be
recorded; PROVIDED, HOWEVER, the Seller need not cause to be recorded any
Assignment which relates to a Mortgage Loan in any jurisdiction under the laws
of which, as evidenced by an Opinion of Counsel delivered by the Seller to the
Trustee, the Certificate Insurer and the Rating Agencies, the recordation of
such assignment is not necessary to protect the Trustee's interest in the
related Mortgage Loan. The Seller shall be required to deliver such Assignments
for recording within 30 days of the Closing Date. The Seller shall furnish the
Trustee, or its designated agent, with a copy of each assignment of Mortgage
submitted for recording. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Seller shall promptly have
a substitute Assignment prepared or have such defect cured, as the case may be,
and thereafter cause each such Assignment to be duly recorded. In the event that
any Mortgage Note is endorsed in blank as of the Closing Date, promptly
following the Closing Date the Seller shall cause to be completed such
endorsements "Pay to the order of Bankers Trust Company of California, N.A., as
Trustee under the Pooling and Servicing Agreement, dated as of October 1, 1999,
United PanAm Mortgage Loan Trust 1999-2, Series 1999-2, without recourse."
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
In addition, on or prior to the Closing Date, the Seller shall cause
the Certificate Insurer and the PMI Insurer to deliver the Certificate Insurance
Policy and the PMI Policy, respectively, to the Trustee.
The Master Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution; provided, however, that the Master Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within 270 days of its submission for recordation. In the event that
the Master Servicer cannot provide a copy of such document certified by the
public recording office within such 270 day period, the Master Servicer shall
deliver to the Custodian, within such 270 day period, an Officer's Certificate
of the Master Servicer which shall (A) identify the recorded document, (B) state
that the recorded document has not been delivered to the Custodian due solely to
a delay caused by the public recording office, (C) state the amount of time
generally required by the applicable recording office to record and return a
document submitted for recordation, if known, and (D) specify the date the
applicable recorded document is expected to be delivered to the Custodian, if
known, and, upon receipt of a copy of such document certified by the public
recording office, the Master Servicer shall immediately deliver such document to
the Custodian. In the event the appropriate public recording office will not
certify as to the accuracy of such document, the Master Servicer shall deliver a
copy of such document certified by an officer of the Master Servicer to be a
true and complete copy of the original to the Custodian.
Section 2.02 ACCEPTANCE BY TRUSTEE.
The Trustee acknowledges the receipt of the Certificate Insurance
Policy and the PMI Policy and, subject to the provisions of Section 2.01 and
subject to the review described below and any exceptions noted on the exception
report described in the next paragraph below, the documents referred to in
Section 2.01 above and all other assets included in the definition of "Trust
Fund" and declares that it holds and will hold such documents and the other
documents delivered to it constituting a Mortgage File, and that it holds or
will hold all such assets and such other assets included in the definition of
"Trust Fund" in trust for the exclusive use and benefit of all present and
future Certificateholders, and the Certificate Insurer.
The Trustee agrees, for the benefit of the Certificateholders and the
Certificate Insurer to review, or that it has reviewed (or to cause the
Custodian to review or that it has caused the Custodian to have reviewed) each
Mortgage File on or prior to the Closing Date (or, with respect to any document
delivered after the Startup Day, within 45 days of receipt and with respect to
any Qualified Substitute Mortgage Loan, within 45 days after the assignment
thereof). The Trustee further agrees, for the benefit of the Certificateholders
and the Certificate Insurer, to certify in substantially the form attached
hereto as Exhibit G-1, within 45 days after the Closing Date (or, with respect
to any document delivered after the Startup Day, within 45 days of receipt and
with respect to any Qualified Substitute Mortgage, within 45 days after the
assignment thereof) that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed thereto as not being
covered by such certification), (i) all documents required to be delivered to it
pursuant Section 2.01 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, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i) and (ii) of the Mortgage Loan Schedule accurately
reflects information set forth in the Mortgage File. It is herein acknowledged
that, in conducting such review, the Trustee (or the Custodian, as applicable)
is under no 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 have
actually been recorded or that they are other than what they purport to be on
their face.
Prior to the first anniversary date of this Agreement the Trustee
shall deliver (or cause the Custodian to deliver) to the Depositor, the Master
Servicer and the Certificate Insurer a final certification in the form annexed
hereto as Exhibit G-2 evidencing the completeness of the Mortgage Files, with
any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
(or the Custodian, as applicable) finds any document or documents constituting a
part of a Mortgage File to be missing or defective in any material respect, at
the conclusion of its review the Trustee shall so notify the Seller, the
Depositor, the Master Servicer and the Certificate Insurer. In addition, upon
the discovery by the Seller, Depositor or the Master Servicer (or upon receipt
by the Trustee of written notification of such breach) of a breach of any of the
representations and warranties made by the Seller in the related Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties to this Agreement and the Certificate Insurer.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans, the related
Mortgage Notes and the related documents, conveying good title thereto free and
clear of any liens and encumbrances, from the Depositor to the Trustee and that
such property not be part of the Depositor's estate or property of the Depositor
in the event of any insolvency by the Depositor. In the event that such
conveyance is deemed to be, or to be made as security for, a loan, the parties
intend that the Depositor shall be deemed to have granted and does hereby grant
to the Trustee a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans, the related
Mortgage Notes and the related documents, and that this Agreement shall
constitute a security agreement under applicable law.
Section 2.03 REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY THE
SELLER.
(a) With respect to any Mortgage Loan that has been converted to an
REO Property, all references in this Section 2.03 to "Mortgage Loan" shall be
deemed to refer to such REO Property. With respect to any Mortgage Loan that the
Seller is required to repurchase that is or becomes a Liquidated Mortgage Loan,
in lieu of repurchasing such Mortgage Loan, the Seller shall deposit an amount
equal to the amount of the Realized Loss, if any, incurred in connection with
the liquidation of such Mortgage Loan within the same time period in which the
Seller would have otherwise been required to repurchase such Mortgage Loan.
(b) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, or the Certificate Insurer, the
Trustee shall promptly notify the Seller, the Certificate Insurer, and the
Master Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document or cure such defect or breach within 90
days from the date the Seller was notified of such missing document, defect or
breach, and if the Seller does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Trustee shall
enforce the Seller's obligation under the Mortgage Loan Purchase Agreement and
cause the Seller to repurchase such Mortgage Loan from the Trust Fund at the
Purchase Price on or prior to the Determination Date following the expiration of
such 90 day period (subject to Section 2.03(e), such enforcement to be commenced
by providing written notice to Seller within 30 days of the date Seller was
obligated to cure such defect or breach); PROVIDED that, in connection with any
such breach that could not reasonably have been cured within such 90 day period,
if the Seller shall have commenced to cure such breach within such 90 day
period, the Seller shall be permitted to proceed thereafter diligently and
expeditiously to cure the same within the additional period provided under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee,
upon receipt of written certification from the Master Servicer of such deposit,
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall furnish to it and as shall be necessary to vest in
the Seller any Mortgage Loan released pursuant hereto and the Trustee shall have
no further responsibility with regard to such Mortgage File (it being understood
that the Trustee shall have no responsibility for determining the sufficiency of
such assignment for its intended purpose). In lieu of repurchasing any such
Mortgage Loan as provided above, the Seller may cause such Mortgage Loan and, if
applicable, any primary mortgage loan insurance covering such Mortgage Loan, to
be removed from the Trust Fund (in which case such Mortgage Loan shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(d).
It is understood and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such
a breach has occurred and is continuing shall constitute the sole remedy against
the Seller respecting such omission, defect or breach available to the Trustee
on behalf of the Certificateholders, the PMI Insurer and the Certificate
Insurer.
(c) [Reserved]
(d) Within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Certificateholders, or the
Certificate Insurer in any Mortgage Loan, the Master Servicer shall cure such
breach in all material respects.
(e) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Date. As to
any Deleted Mortgage Loan for which the Seller substitutes a Qualified
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee, for such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Adjustment (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and deliver
to the Master Servicer, and the Certificate Insurer, with respect to such
Qualified Substitute Mortgage Loan or Loans, a certification substantially in
the form attached hereto as Exhibit G-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trustee shall deliver
to the Master Servicer and the Certificate Insurer a certification substantially
in the form of Exhibit G-2 hereto with respect to such Qualified Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution are not part of the Trust Fund and will be retained by the Seller.
For the month of substitution, distributions to Certificateholders will reflect
the collections and recoveries in respect of such Deleted Mortgage Loan in the
Due Period preceding the month of substitution and the Depositor or the Seller,
as the case may be, shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Seller shall
give or cause to be given written notice to the Certificateholders, and the
Certificate Insurer that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee and the Certificate Insurer. Upon such substitution,
such Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and, in the case of a substitution effected by the Seller, the
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by the Seller all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement and all applicable
representations and warranties thereof set forth in Section 2.04, in each case
as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Mortgage Rate. On
the date of such substitution, the Seller will deliver or cause to be delivered
to the Master Servicer for deposit in the Collection Account an amount equal to
the Substitution Adjustment, if any, and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Seller the related
Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto. In addition, the Trustee shall assign to the
Seller any of the Trustee's rights under the PMI Policy in respect of any such
Deleted Mortgage Loan released to the Seller.
(f) Upon discovery by the Seller, the Master Servicer, the Certificate
Insurer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties and the Certificate Insurer. In connection therewith, the
Seller shall repurchase or, subject to the limitations set forth in Section
2.03(d), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt of
such notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a),
if made by the Seller. The Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE SELLER WITH RESPECT
TO THE MORTGAGE LOANS.
The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer that, as of the
Closing Date or as of such other date specifically provided herein, the
representations and warranties made by the Seller pursuant to Section 3.01 of
the Mortgage Loan Purchase Agreement are hereby being made to the Trustee and
are true and correct as of the Closing Date.
With respect to the representations and warranties incorporated in
this Section 2.04 that are made to the best of the Seller's knowledge or as to
which the Seller has no knowledge, if it is discovered by the Depositor, the
Seller, the Master Servicer, the Certificate Insurer or the Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or the
interest therein of the Certificateholders, or the Certificate Insurer then,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
Within ninety days of its discovery or its receipt of notice of any
such missing or materially defective documentation or any such breach of a
representation or warranty, the Seller shall promptly deliver such missing
document or cure such defect or breach in all material respects, or in the event
such defect or breach cannot be cured, the Seller shall repurchase the affected
Mortgage Loan or cause the removal of such Mortgage Loan from the Trust Fund and
substitute for it one or more Qualified Substitute Mortgage Loans, in either
case, in accordance with Section 2.03.
It is understood and agreed that the representations and warranties
incorporated in this Section 2.04 shall survive delivery of the Mortgage Files
to the Trustee and shall inure to the benefit of the Certificateholders and the
Certificate Insurer notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Master Servicer, the
Special Servicer, the Seller or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan or the interests therein of the Certificateholders, or the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties and the Certificate Insurer, and in no event later
than two Business Days from the date of such discovery. It is understood and
agreed that the obligations of the Seller set forth in Section 2.03(a) to cure,
substitute for or repurchase a Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement constitute the sole remedies available to the
Certificateholders, the Certificate Insurer or to the Trustee on their behalf
respecting a breach of the representations and warranties incorporated in this
Section 2.04.
Section 2.05 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificate Insurer and the
Certificateholders and to the Depositor that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing or is exempt from such
licensure, qualification or requirement of good standing in the states
where the Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Master Servicer or is a condition to the enforceability or
validity of each Mortgage Loan; the Master Servicer has the power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Master Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized;
this Agreement constitutes the valid, binding and enforceable obligation of
the Master Servicer, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally or the rights of federally insured financial
institutions; and all requisite corporate action has been taken by the
Master Servicer to make this Agreement valid and binding upon the Master
Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer and
will not result in the breach of any term or provision of the charter or
by-laws of the Master Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in
the acceleration of any obligation under, any agreement, indenture or loan
or credit agreement or other instrument to which the Master Servicer or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Master Servicer or its
property is subject;
(iii) The execution and delivery of this Agreement by the Master
Servicer and the performance and compliance with its obligations and
covenants hereunder do not require the consent or approval of any
governmental authority or, if such consent or approval is required, it has
been obtained;
(iv) This Agreement, and all documents and instruments contemplated
hereby which are executed and delivered by the Master Servicer, constitute
and will constitute valid, legal and binding obligations of the Master
Servicer, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
federally insured financial institutions, and general principles of equity;
(v) [Reserved];
(vi) The Master Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) There is no action, suit, proceeding or investigation pending
or, to its knowledge, threatened against the Master Servicer that, either
individually or in the aggregate, (A) could reasonably be expected to
prohibit or materially and adversely affect the performance by such
Servicer of its obligations under, or validity or enforceability of, this
Agreement, or (B) could reasonably be expected to result in any material
impairment of the right or ability of the Master Servicer to carry on its
business substantially as now conducted, or (C) could reasonably be
expected to result in any material liability on the part of the Master
Servicer, or (D) would draw into question the validity or enforceability of
this Agreement or of any action taken or to be taken in connection with the
obligations of the Master Servicer contemplated herein, or (E) would
otherwise be likely to impair materially the ability of the Master Servicer
to perform under the terms of this Agreement;
(viii) Neither this Agreement nor any information, certificate of an
officer, statement furnished in writing or report delivered to the Trustee
by the Master Servicer in connection with the transactions contemplated
hereby contains any untrue statement of a material fact;
(ix) The Master Servicer (a) acknowledges that its performance under
this Agreement will be adversely affected if it is unable to become "Year
2000 Compliant" prior to January 1, 2000, (b) has made an assessment of the
microchip and computer-based systems, hardware, software and other
equipment used by the Master Servicer in connection with such performance
(collectively, "Systems") and (c) confirms that it has developed and is
implementing a program to help assure that its Systems will be Year 2000
Compliant by January 1, 2000. As used herein, "Year 2000 Compliant" means
(1) the Systems process, provide and/or receive (provided data received
from third party providers is Year 2000 Compliant), so as to avoid the
occurrence of a material adverse effect thereon, date data (including
without limitation calculating, comparing, and sequencing), within, from,
into, and between centuries, including leap year calculations, and (2) none
of the performance or the functionality or the Master Servicer's
performance under this Agreement will be materially adversely affected by
dates prior to, on or after January 1, 2000; and
(x) The information set forth in the Prepayment Premium Schedule
relating to Prepayment Premiums (including the Prepayment Premium Schedule
attached thereto) is complete, true and correct in all material respects on
the date or dates when such information is furnished and each Prepayment
Premium is permissible and enforceable in accordance with its terms (except
to the extent that the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or the collectability thereof may be limited
due to acceleration in connection with a foreclosure) under applicable
state law;
(xi) The Master Servicer will not waive any Prepayment Premium unless
it is waived in accordance with the standard set forth in Section 3.07.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor, the Certificate Insurer and the Certificateholders. Upon discovery by
any of the Depositor, the Master Servicer, the Special Servicer, the Seller or
the Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders or the Certificate Insurer,
the party discovering such breach shall give prompt written notice (but in no
event later than two Business Days following such discovery) to the Master
Servicer, the Seller, the Certificate Insurer and the Trustee.
If, within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of the representation
or covenant of the Master Servicer set forth in Sections 2.05(x) or 2.05(xi)
above which materially and adversely affects the interests of the Holders of the
Certificates or the Certificate Insurer in any Prepayment Premium, the Master
Servicer shall remedy such breach as follows: (a) if the representation made by
the Master Servicer in Section 2.05(x) above is breached and a Principal
Prepayment has occurred in the applicable Prepayment Period, the Master Servicer
shall pay the amount of the scheduled Prepayment Premium, for the benefit of the
Holders of the Certificates and the Certificate Insurer, by depositing such
amount into the Collection Account, net of any amount previously collected by
the Master Servicer or paid by the Master Servicer, for the benefit of the
Holders of Certificates or the Certificate Insurer, in the respect of such
Prepayment Premium; and (b) if the covenant of the Master Servicer in Section
2.05(xi) above is breached, the Master Servicer shall remedy such breach by
paying the amount of the Prepayment Premium as to which such covenant was
breached, for the benefit of the Holders of the Certificates and the Certificate
Insurer, by depositing such amount into the Collection Account.
Section 2.06 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders and the Certificate Insurer as follows:
(i) This agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general an except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had
good and marketable title to each Mortgage Loan (insofar as such title was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all right,
title interest in the Mortgage Loans to the Trustee on behalf of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business as
presently being conducted;
(vi) 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
changes in the financial condition, earnings, affairs or business of the
Depositor or which might materially and adversely affect the properties or
assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement by the
Depositor, and the consummation of the transactions contemplated thereby,
do not and will not result in a material breach or violation of any of the
terms or provisions of, or, to the knowledge of the Depositor, 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 is subject, nor will such actions result in any violation of the
provisions of the articles of incorporation or by-laws of the Depositor or,
to the best of the Depositor's knowledge without independent investigation,
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 (except for such conflicts, breaches, violations and
defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for the
issuance of the Certificates, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as (a) may be
required under State securities or Blue Sky laws, (b) have been previously
obtained or (c) the failure of which to obtain would not have a material
adverse effect on the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, 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 this 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 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, this Agreement.
Section 2.07 ISSUANCE OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the Depositor, has executed, authenticated and delivered to or upon the order
of the Depositor, the Certificates in authorized denominations. The interests
evidenced by the Certificates, constitute the entire beneficial ownership
interest in the Trust Fund.
Section 2.08 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Trust and the Trustee
on behalf of the Certificateholders, the Certificate Insurer and the Depositor
that as of the Closing Date or as of such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing as a federal savings bank and has the power and authority to own
its assets and to transact the business in which it is currently engaged.
The Seller is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on (a) its
business, properties, assets or condition (financial or other), (b) the
performance of its obligations under this Agreement, (c) the value or
marketability of the Mortgage Loans, or (d) its ability to foreclose on the
related Mortgaged Properties to the extent such foreclosure is conducted by
the Master Servicer.
(ii) The Seller has the power and authority to make, execute, deliver
and perform this Agreement and to consummate all of the transactions
contemplated hereunder and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the Seller's legal, valid and
binding obligations enforceable in accordance with its terms, except as
enforcement of such terms may be limited by (1) bankruptcy, insolvency,
reorganization, receivership, moratorium or similar laws affecting the
enforcement of creditors' rights generally and the rights of creditors of
federally insured financial institutions and by the availability of
equitable remedies, (2) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law) or (3)
public policy considerations underlying the securities laws, to the extent
that such policy considerations limit the enforceability of the provisions
of this Agreement which purport to provide indemnification from securities
laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its
business as it is presently conducted. It is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for such
consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may be,
prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement by the
Seller will not conflict with or result in a breach of, or constitute a
default under, any provision of any existing law or regulation or any order
or decree of any court applicable to the Seller or any of its properties or
any provision of its articles of incorporation or by-laws, or constitute a
material breach of, or result in the creation or imposition of any lien,
charge or encumbrance upon any of its properties pursuant to any mortgage,
indenture, contract or other agreement to which it is a party or by which
it may be bound.
(v) No certificate of an officer, written statement or written report
delivered pursuant to the terms hereof by the Seller 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.
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller aware of any pending insolvency of the Seller.
(viii) The Seller is not in violation of, and the execution and
delivery of this Agreement by it and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court, or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the Seller's financial
condition (financial or otherwise) or operations, or materially and
adversely affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against the Seller, or
pending or, to its knowledge, threatened, before any court, administrative
agency or other tribunal; nor, to its knowledge, are there any
investigations (i) that, if determined adversely, would prohibit the Seller
from entering into this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (iii) that, if
determined adversely, would prohibit or materially and adversely affect the
Seller's ability to perform any of its respective obligations under, or the
validity or enforceability of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the Depositor
with any intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
Section 2.09 COVENANTS OF THE SELLER.
The Seller hereby covenants that except for the transfer hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any lien on any Mortgage Loan,
or any interest therein; the Seller will notify the Trustee, as assignee of the
Depositor, of the existence of any lien on any Mortgage Loan immediately upon
discovery thereof, and the Seller will defend the right, title and interest of
the Trust, as assignee of the Depositor, in, to and under the Mortgage Loans,
against all claims of third parties claiming through or under the Seller;
provided, however, that nothing in this Section 2.09 shall prevent or be deemed
to prohibit the Seller from suffering to exist upon any of the Mortgage Loans
any liens for municipal or other local taxes and other governmental charges if
such taxes or governmental charges shall not at the time be due and payable or
if the Seller shall currently be contesting the validity thereof in good faith
by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
Section 2.10 ADDITIONAL TRANSFERS.
(a) Subject to the satisfaction of the conditions set forth in Article
II hereof and paragraph (b) below and pursuant to the terms of the related
Additional Transfer Agreement, in consideration of the Trustee's delivery on
each Additional Transfer Date to or upon the order of the Seller of all or a
portion of the balance of funds in the related Pre-Funding Account, the Seller
shall on such Additional Transfer Date sell, transfer, assign, set over and
otherwise convey without recourse to the Trustee, all of the Seller's right,
title and interest in and to each related Additional Mortgage Loan listed in the
Mortgage Loan Schedule delivered by the Seller on such Additional Transfer Date
for inclusion in the related Loan Group, including (i) the related Principal
Balance, all interest payments due after the related Cut-off Date and all
collections in respect of principal received after such Cut-off Date; (ii) any
real property that secured such Additional Mortgage Loan and that has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in
any insurance policies in respect of such Additional Mortgage Loan; and (iv) all
proceeds of the foregoing to the Trustee. The transfer by the Seller to the
Trustee of the Additional Mortgage Loans set forth in the Mortgage Loan Schedule
shall be absolute and shall be intended by all parties hereto to be treated as a
sale by the Seller to the Trust. If the assignment and transfer of the
Additional Mortgage Loans and the other property specified in this Section 2.10
from the Seller to the Trust pursuant to this Agreement is held or deemed not to
be a sale or is held or deemed to be a pledge of security for a loan, the Seller
intends that the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement and that, in such event, (i) the Seller
shall be deemed to have granted and does hereby grant to the Trustee as of each
Additional Transfer Date a perfected, first priority security interest in the
entire right, title and interest of the Seller in and to the related Additional
Mortgage Loans and all other property conveyed to the Trustee pursuant to this
Section 2.10 and all proceeds thereof, and (ii) this Agreement shall constitute
a security agreement under applicable law. The amount released from the
Pre-Funding Account shall be one hundred percent (100%) of the aggregate of the
applicable Cut-off Date Principal Balances of the Additional Mortgage Loans so
transferred.
(b) The Trustee shall withdraw from the Pre-Funding Account funds in
an amount equal to one hundred percent (100%) of the aggregate of the applicable
Cut-off Date Principal Balances of the Additional Mortgage Loans so transferred
to the Trust and use such cash to purchase the Additional Mortgage Loans on
behalf of the Trust, along with the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to each Additional Transfer Date:
(i) the Seller shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with an Addition Notice, which notice shall
be given not less than two Business Days prior to such Additional Transfer
Date and shall designate the Additional Mortgage Loans to be sold to the
Trust and the aggregate Cut-off Date Principal Balance of such Mortgage
Loans;
(ii) the Seller shall have deposited in the Collection Account (A) all
principal collected after such Cut-off Date and interest payments due after
such Cut-off Date but collected on or before such Cut-off Date in respect
of each Additional Mortgage Loan and (B) the related Additional Cut-off
Date Deposit;
(iii) the Seller shall have delivered an Officer's Certificate to the
Trustee confirming that, as of each Additional Transfer Date, the Seller
was not insolvent, nor would it be made insolvent by such transfer, nor was
it aware of any pending insolvency of the Seller;
(iv) the Pre-Funding Period shall not have ended;
(v) the Seller 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 Additional Transfer
Agreement;
(vi) the Seller shall have delivered an Officer's Certificate to the
Trustee confirming that the representations and warranties of the Seller
pursuant to Section 2.04 hereof and Section 2.08 hereof are true and
correct with respect to the Seller and the Additional Mortgage Loans, as
applicable, as of the Additional Transfer Date;
(vii) the Seller shall have provided the Rating Agencies, the
Certificate Insurer and the Trustee with an Opinion of Counsel relating to
the sale of the Additional Mortgage Loans to the Trustee;
(viii) the Trust shall not purchase an Additional Mortgage Loan unless
the Seller obtains the prior written consent of the Certificate Insurer and
each Rating Agency, which consent, in the case of the Certificate Insurer
shall be subject to the provisions of subsection (e) below;
(ix) [reserved]; and
(x) in connection with the transfer and assignment of the Additional
Mortgage Loans, the Seller shall satisfy the document delivery requirements
set forth in Section 2.01 hereof.
(c) In connection with each Additional Transfer Date and on the
related Distribution Date, the Trustee shall determine (i) the amount and
correct dispositions of the Capitalized Interest Requirement and Pre-Funding
Earnings for such Distribution Date in accordance with the provisions of this
Agreement and (ii) any other necessary matters in connection with the
administration of the related Pre-Funding Account and Capitalized Interest
Account. In the event that any amounts are released by the Trustee from a
Pre-Funding Account or from a Capitalized Interest Account as a result of
calculation error, the Trustee shall not be liable therefor, and the Seller
shall immediately repay such amounts to the Trustee.
(d) The Trustee shall acknowledge receipt on each Additional Transfer
Date of the Additional Mortgage Loans delivered to it on such date and within
five Business Days after such receipt shall, as specified in Section 2.01
hereof, review the documents required to be delivered pursuant to Section 2.01
hereof (or shall cause such documents to be reviewed) and shall deliver to the
Seller, the Depositor and the Master Servicer, with respect to such Additional
Mortgage Loans, a certification substantially similar to the one prepared by the
Trustee pursuant to the second paragraph of Section 2.02 hereof. After the
delivery of each such certification, the Trustee shall provide to the Master
Servicer, the Seller and the Depositor, no less frequently than quarterly,
updated certifications, indicating the then current status of exceptions to the
Mortgage Files of the related Additional Mortgage Loans until all such
exceptions have been eliminated.
(e) With respect to any Additional Transfer Date which is at least
three weeks prior to the end of the Pre-Funding Period, the Certificate Insurer
may condition its consent to the purchase of any Additional Mortgage Loans on
retaining the option to review, for a period of two weeks from the applicable
Additional Transfer Date, the applicable Additional Mortgage Loans to determine
whether such Additional Mortgage Loans are Qualified Additional Mortgage Loans.
Upon notification by the Certificate Insurer to the Trustee and the Seller that
any such Additional Mortgage Loan delivered by the Seller does not constitute a
"Qualified Additional Mortgage Loan" within the meaning of this Agreement, the
Seller shall, subject to the limitations specified in the last sentence of this
Section 2.10(e), repurchase such Additional Mortgage Loan at the Purchase Price
or substitute one or more Mortgage Loans which are acceptable to the Certificate
Insurer for the affected Additional Mortgage Loan, in each case on or before the
last day of the Pre-Funding Period. Any such repurchase or substitution shall be
made in the same manner as set forth in Section 2.03(a). The Trustee shall
reconvey to the Seller the Additional Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty. In no
event shall the Certificate Insurer require the Seller to repurchase, or
substitute for, Additional Mortgage Loans pursuant to this Section 2.10(e) in an
aggregate amount greater than 10% of the aggregate Cut-off Date Principal
Balance of the Additional Mortgage Loans delivered on the applicable Additional
Transfer Date.
Section 2.11 MANDATORY PREPAYMENT.
Any Unutilized Pre-Funding Amount shall be distributed to Holders of
the related Certificate Group in accordance with Section 4.05 hereof on the
Distribution Date immediately following the Due Period in which the end of the
Pre-Funding Period occurs.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01 MASTER SERVICER TO ACT AS SERVICER.
The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders and the Certificate Insurer (as determined by the Master
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the Mortgage Loans and, to the extent consistent with such terms,
in the same manner in which it services and administers similar mortgage loans
for its own portfolio, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Master Servicer, any Sub-Servicer or any
Affiliate of the Master Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Master
Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Master Servicer's, the Special Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or
with respect to any particular transaction.
To the extent consistent with the foregoing, the Master Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the Mortgage Loans, the Master Servicer shall
have full power and authority, acting alone or through Sub-Servicers as provided
in Section 3.02, 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.
Without limiting the generality of the foregoing, the Master Servicer in its own
name or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Master Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Certificateholders and the Trustee, and upon notice to the
Trustee, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Master Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall execute, at the written request of the Master Servicer, and
furnish to the Master Servicer and any Sub-Servicer any special or limited
powers of attorney and other documents necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder; PROVIDED, such limited powers of attorney or
other documents shall be prepared by the Master Servicer and submitted to the
Trustee for execution. The Trustee shall not be liable for the actions of the
Master Servicer or any Sub-Servicers under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of
the preceding paragraph, the Master Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Master Servicer or by Sub-Servicers in effecting
the timely payment of taxes and assessments on a Mortgaged Property shall not,
for the purpose of calculating distributions to Certificateholders, be added to
the unpaid Principal Balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.04) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the Principal Balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury regulations promulgated thereunder) and (B) cause any REMIC
hereunder to fail to qualify as a REMIC under the Code or the imposition of any
tax on "prohibited transactions" or "contributions after the startup date" under
the REMIC Provisions.
The Master Servicer may, with the consent of the Certificate Insurer,
delegate its responsibilities under this Agreement; PROVIDED, however, that no
such delegation shall release the Master Servicer from the responsibilities or
liabilities arising under this Agreement.
Section 3.02 SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS.
(a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
PROVIDED, HOWEVER, that any Sub-Servicer shall be acceptable to the Certificate
Insurer and provided such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating or any shadow rating on any Class
of Certificates. The Trustee is hereby authorized to acknowledge, at the request
of the Master Servicer, any Sub-Servicing Agreement that meets the requirements
applicable to Sub-Servicing Agreements set forth in this Agreement and that is
otherwise permitted under this Agreement. The Master Servicer hereby designates
Fairbanks Capital Corp. as the initial Sub-Servicer.
Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing Agreements; PROVIDED, HOWEVER,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Certificate Insurer and the Holders of Certificates entitled to
at least 66% of the Voting Rights; PROVIDED, FURTHER, that the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights shall not
be required (i) to cure any ambiguity or defect in a Sub-Servicing Agreement,
(ii) to correct, modify or supplement any provisions of a Sub-Servicing
Agreement, or (iii) to make any other provisions with respect to matters or
questions arising under a Sub-Servicing Agreement, which, in each case, shall
not be inconsistent with the provisions of this Agreement. Any variation without
the consent of the Certificate Insurer and the Holders of Certificates entitled
to at least 66% of the Voting Rights from the provisions set forth in Section
3.08 relating to insurance or priority requirements of Sub-Servicing Accounts,
or credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Master Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee, the Certificateholders and the
Certificate Insurer, shall enforce the obligations of each Sub-Servicer under
the related Sub-Servicing Agreement and of the Seller under the Mortgage Loan
Purchase Agreement, including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or to purchase a Mortgage Loan on account of missing or defective
documentation or on account of a breach of a representation, warranty or
covenant, as described in Section 2.03(a). Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Master Servicer, in
its good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, and shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement, to the extent, if any, that such
recovery exceeds all amounts due in respect of the related Mortgage Loans, or
(ii) from a specific recovery of costs, expenses or attorneys' fees against the
party against whom such enforcement is directed. Enforcement of the Mortgage
Loan Purchase Agreement against the Seller shall be effected by the Master
Servicer to the extent it is not the Seller, and otherwise by the Trustee in
accordance with the foregoing provisions of this paragraph.
Section 3.03 SUCCESSOR SUB-SERVICERS.
The Master Servicer (with the consent of the Certificate Insurer) or
the Certificate Insurer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer, the Trustee (if
the Trustee is acting as Servicer) or the Certificate Insurer without fee, in
accordance with the terms of this Agreement, in the event that the Master
Servicer (or the Trustee, if such party is then acting as Servicer) shall, for
any reason, no longer be the Master Servicer (including termination due to a
Servicer Event of Termination).
Section 3.04 LIABILITY OF THE MASTER SERVICER.
Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee, the Certificateholders and the Certificate Insurer for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer by such Sub-Servicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Section 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICERS AND THE
TRUSTEE OR CERTIFICATEHOLDERS.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee, Certificateholders or the Certificate
Insurer shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Master Servicer shall be solely liable for all
fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
Section 3.06 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY
TRUSTEE.
In the event the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of the occurrence of a Servicer Event of
Termination), the Trustee shall thereupon assume all of the rights and
obligations of the Master Servicer under each Sub-Servicing Agreement that the
Master Servicer may have entered into, unless the Trustee (with the consent of
the Certificate Insurer) or the Certificate Insurer elects to terminate any
Sub-Servicing Agreement in accordance with its terms as provided in Section
3.03. Upon such assumption, the Trustee (or the successor servicer appointed
pursuant to Section 7.02) shall be deemed, subject to Section 3.03, to have
assumed all of the departing Master Servicer's interest therein and to have
replaced the departing Master Servicer as a party to each Sub-Servicing
Agreement to the same extent as if each Sub-Servicing Agreement had been
assigned to the assuming party, except that (i) the departing Master Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) neither the Trustee nor any successor Master Servicer shall be deemed
to have assumed any liability or obligation of the Master Servicer that arose
before it ceased to be the Master Servicer.
The Master Servicer at its expense shall, upon request of Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
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 would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater than 180 days; PROVIDED, HOWEVER, that any extension pursuant to clause
(ii) above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below and provided
further, that the Master Servicer shall not waive any Prepayment Premium
provision included in a Mortgage Note unless the Master Servicer determines, in
its best reasonable judgment, that the related Mortgagor will be in imminent
default of all future payments of principal and interest under the terms of the
related Mortgage Note. In the event of any such arrangement pursuant to clause
(ii) above, the Master Servicer shall make timely advances on such Mortgage Loan
during such extension pursuant to Section 4.04 and in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangement. Notwithstanding the foregoing, in the event that any
Mortgage Loan is in default or, in the judgment of the Master Servicer, such
default is reasonably foreseeable, the Master Servicer, consistent with the
standards set forth in Section 3.01, may also waive, modify or vary any term
(other than the waiver of any Prepayment Premium) of such Mortgage Loan
(including modifications that would change the Mortgage Rate, forgive the
payment of principal or interest or extend the final maturity date of such
Mortgage Loan), accept payment from the related Mortgagor of an amount less than
the Stated Principal Balance in final satisfaction of such Mortgage Loan, or
consent to the postponement of strict compliance with any such term or otherwise
grant indulgence to any Mortgagor (any and all such waivers, modifications,
variances, forgiveness of principal or interest, postponements, or indulgences
collectively referred to herein as "forbearance"), PROVIDED, HOWEVER, that in no
event shall the Master Servicer grant any such forbearance (other than as
permitted by the second sentence of this Section) with respect to any one
Mortgage Loan more than once in any 12 month period or more than three times
over the life of such Mortgage Loan. The Master Servicer's analysis supporting
any forbearance and the conclusion that any forbearance meets the standards of
Section 3.01 (including the standard that such forbearance will maximize the
timely and complete recovery of principal and interest on the Mortgage Notes)
shall be reflected in writing in the Mortgage File and shall be provided to the
Certificate Insurer upon request. Notwithstanding the foregoing, the Master
Servicer shall not modify the terms of Mortgage Loans having an aggregate
Principal Balance in excess of 3.00% of the Cut-off Date Aggregate Principal
Balance of the Related Loan Group without the consent of the Certificate
Insurer.
Section 3.08 SUB-SERVICING ACCOUNTS.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the Collection Account not later
than two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
Section 3.09 COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS.
The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all Escrow Payments shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in the
clearing account in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof, all Escrow Payments collected on account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the receipt of
such Escrow Payments, all Escrow Payments collected on account of the Mortgage
Loans for the purpose of effecting the timely payment of any such items as
required under the terms of this Agreement. Withdrawals of amounts from a
Servicing Account may be made only to (i) effect payment of taxes, assessments,
hazard insurance premiums, and comparable items in a manner and at a time that
assures that the lien priority of the Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that avoids the loss
of the Mortgaged Property due to a tax sale or the foreclosure as a result of a
tax lien); (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any Servicing Advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article X. The Master
Servicer will be responsible for the administration of the Servicing Accounts
and will be obligated to make Servicing Advances to such accounts when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Master Servicer knows, or in the exercise of the required standard of
care of the Master Servicer hereunder should know, is necessary to avoid the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien. If any such payment has not been made and the Master Servicer
receives notice of a tax lien with respect to the Mortgage being imposed, the
Master Servicer will, within 10 business days of such notice, advance or cause
to be advanced funds necessary to discharge such lien on the Mortgaged Property.
As part of its servicing duties, the Master Servicer or Sub-Servicers shall pay
to the Mortgagors interest on funds in the Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.
Section 3.10 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee, the Certificateholders and the Certificate Insurer. On
behalf of the Trust Fund, the Master Servicer shall deposit or cause to be
deposited in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Master Servicer's receipt thereof, and shall thereafter deposit in the
Collection Account, in no event more than two Business Days after the Master
Servicer's receipt thereof, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it (other
than in respect of principal or interest on the Mortgage Loans due on or before
the Cut-off Date) or payments (other than Principal Prepayments) received by it
on or prior to the Cut-off Date but allocable to a Due Period:
(i) all payments on account of principal, including Principal
Prepayments on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and amounts
paid in connection with a purchase of Mortgage Loans and REO Properties
pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect
to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of any
blanket policy deductibles;
(vi) all Prepayment Premiums;
(vii) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 10.01; and
(viii) all amounts required to be deposited in connection with
Substitution Adjustments pursuant to Section 2.03.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
ancillary income and assumption fees, or insufficient funds charges need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer as additional compensation. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trustee, the Certificateholders
and the Certificate Insurer. On behalf of the Trust Fund, the Master Servicer
shall deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before the Close of Business New York time (i) on the
Master Servicer Remittance Date, that portion of the Available Funds (calculated
without regard to the references in the definition thereof to amounts that may
be withdrawn from the Distribution Account) for the related Distribution Date
then on deposit in the Collection Account, and (ii) on each Business Day as of
the commencement of which the balance on deposit in the Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account." If the balance on deposit in the Collection Account
exceeds $75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Master Servicer shall, on or
before the Close of Business New York time on such Business Day, withdraw from
the Collection Account any and all amounts payable or reimbursable to the Master
Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to Section 3.11
and shall pay such amounts to the Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.12. The Master Servicer shall give notice to the Trustee and the
Certificate Insurer of the location of the Collection Account maintained by it
when established and prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Depositor and the Certificate Insurer of the
location of the Distribution Account when established and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; PROVIDED,
HOWEVER, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw such amount from the Distribution Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Master Servicer, with respect to items (i) through (v) below, shall deliver to
the Trustee from time to time for deposit, and the Trustee, with respect to
items (i) through (v) below, shall so deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.04;
(ii) any amounts required to be deposited pursuant to Section 3.23(d)
or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of Mortgage
Loans and REO Properties pursuant to Section 10.01;
(iv) any Compensating Interest to be deposited pursuant to Section
3.24 in connection with any Prepayment Interest Shortfall; and
(v)any amounts paid by the PMI Insurer under the PMI Policy.
(e) [Reserved].
(f) The Master Servicer shall deposit in the Collection Account any
amounts required to be deposited pursuant to Section 3.12(b) in connection with
losses realized on Permitted Investments with respect to funds held in the
Collection Account.
Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT AND DISTRIBUTION
ACCOUNT.
(a) The Master Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.04:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.10(b) or
permitted to be so remitted pursuant to the first sentence of Section
3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master Servicer for
Advances, but only to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees) of Monthly Payments,
Liquidation Proceeds and Insurance Proceeds on Mortgage Loans with respect
to which such Advances were made in accordance with the provisions of
Section 4.03;
(iii) subject to Section 3.16(d), to pay the Master Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed Servicing
Advances with respect to each Mortgage Loan, but only to the extent of any
Late Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan, and (c) any Servicing Advances with respect
to the final liquidation of a Mortgage Loan that are Nonrecoverable
Advances, but only to the extent that Late Collections, Liquidation
Proceeds and Insurance Proceeds received with respect to such Mortgage Loan
are insufficient to reimburse the Master Servicer or any Sub-Servicer for
Servicing Advances;
(iv) to pay to the Master Servicer as servicing compensation (in
addition to the Servicing Fee) on the Master Servicer Remittance Date any
interest or investment income earned on funds deposited in the Collection
Account;
(v) to pay to the Master Servicer or the Seller, with respect to each
Mortgage Loan that has previously been purchased or replaced pursuant to
Section 2.03 or Section 3.16(c) all amounts received thereon subsequent to
the date of purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance previously made
which the Master Servicer has determined to be a Nonrecoverable Advance in
accordance with the provisions of Section 4.04;
(vii) to pay, or to reimburse the Master Servicer for Servicing
Advances in respect of, expenses incurred in connection with any Mortgage
Loan pursuant to Section 3.16(b);
(viii) to pay to the Master Servicer on a Servicer Remittance Date the
excess of aggregate Prepayment Interest Excesses for the related
Distribution Date over aggregate Prepayment Interest Shortfalls for such
Distribution Date; and
(ix) to clear and terminate the Collection Account pursuant to Section
10.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The
Master Servicer shall provide written notification to the Trustee, on or prior
to the next succeeding Servicer Remittance Date, upon making any withdrawals
from the Collection Account pursuant to subclause (vi) above; PROVIDED that an
Officer's Certificate in the form described under Section 4.04(d) shall suffice
for such written notification to the Trustee in respect hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions in accordance with Sections 4.01 and 8.05;
(ii) to pay any amounts in respect of taxes pursuant to Section
9.01(g); and
(iii) to clear and terminate the Distribution Account pursuant to
Section 10.01.
Section 3.12 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT AND THE
DISTRIBUTION ACCOUNT.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account, and the Trustee may direct any depository
institution maintaining the Distribution Account (each such account, for
purposes of this Section 3.12, an "Investment Account"), to invest the funds in
such Investment Account in one or more Permitted Investments bearing interest or
sold at a discount, and maturing, unless payable on demand, no later than the
Business Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trustee (in
its capacity as such), or in the name of a nominee of the Trustee. The Trustee
shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account and any income and gain
realized thereon) over each such investment, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder
and (2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment
in respect of funds thereafter on deposit in the Investment
Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account and any REO Account held by or on behalf of
the Master Servicer shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal in accordance with Section 3.11 or Section 3.23, as
applicable. The Master Servicer shall deposit in the Collection Account or any
REO Account, as applicable, the amount of any loss of principal incurred in
respect of any such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.
(c) All income and gain realized from the investment of funds
deposited in the Distribution Account shall be for the benefit of the Trustee.
The Trustee shall deposit in the Distribution Account the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Certificate Insurer or the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
Section 3.13 CLAIMS UPON THE PMI POLICY.
The Master Servicer shall, on behalf of the Trust, prepare and file in
a timely basis with the PMI Insurer, with a copy to the Trustee and the
Certificate Insurer, all claims which may be made under the PMI Policy with
respect to PMI Mortgage Loans. Consistent with its rights and obligations
hereunder, the Master Servicer shall take all actions required under the PMI
Policy as a condition to the payment of any such claim. Any amount received from
the PMI Insurer with respect to any such PMI Mortgage Loan shall be deposited by
the Master Servicer, not later than the Business Day following receipt thereof,
into the Distribution Account for distribution on the related Distribution Date
as part of Liquidation Proceeds for the related Loan Group.
Section 3.14 MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND OMISSIONS
AND FIDELITY COVERAGE.
(a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the Mortgaged Property in an
amount which is at least equal to the lesser of the current Principal Balance of
such Mortgage Loan and the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis, in each case in an amount not less than such amount as is necessary
to avoid the application of any coinsurance clause contained in the related
hazard insurance policy. The Master Servicer shall also cause to be maintained
fire insurance with extended coverage on each REO Property 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. The Master Servicer will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders and the
Certificate Insurer, be added to the unpaid Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid Principal Balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee, Certificateholders and
the Certificate Insurer, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet such requirements.
Section 3.15 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS.
The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; PROVIDED, HOWEVER,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any such rights if prohibited
by law from doing so. If the Master Servicer reasonably believes it is unable
under applicable law to enforce such "due-on-sale" clause, or if any of the
other conditions set forth in the proviso to the preceding sentence apply, the
Master Servicer will enter into an assumption and modification agreement from or
with the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also 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
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Master Servicer and has a credit risk rating at least equal to
that of the original Mortgagor. In connection with any assumption or
substitution, the Master Servicer shall apply such underwriting standards and
follow such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Master Servicer shall not take or enter into any assumption
and modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy or if such Mortgage Loan
is a PMI Mortgage Loan, the PMI Policy. Any fee collected by the Master Servicer
in respect of an assumption, modification or substitution of liability agreement
shall be retained by the Master Servicer as additional servicing compensation.
In connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Master Servicer shall notify the Trustee that
any such substitution, modification or assumption agreement has been completed
by forwarding to the Trustee the executed original of such substitution,
modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.
Section 3.16 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall use its best efforts, consistent with
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans (including selling
any such Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; PROVIDED, HOWEVER, that such
costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund, the Certificateholders or the Certificate Insurer
would be considered to hold title to, to be a "mortgagee-in-possession" of, or
to be an "owner" or "operator" of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Master
Servicer has also previously determined, based on its reasonable judgment and a
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(i) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith; and
(ii) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Trust Fund to take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(vii), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; PROVIDED that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.04(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (a)(vii), such right
of reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
(c) The Master Servicer or the Special Servicer, if the Master
Servicer elects not to exercise such option, may at its option purchase from
each Loan Group, any Mortgage Loan or related REO Property that is 90 days or
more delinquent, which the Master Servicer or the Special Servicer, as
applicable, determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee and the Certificate Insurer prior to purchase), at a
price equal to the Purchase Price; PROVIDED, HOWEVER, that (i) the Master
Servicer or the Special Servicer, as applicable, shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency, purchasing
the most delinquent Mortgage Loans or related REO Properties first and (ii)
after such parties (or the entities contemplated in Section 3.25 below) in the
aggregate shall have purchased 3.00% of the Mortgage Loans or related REO
Properties in each Loan Group, by Cut-off Date Aggregate Principal Balance,
pursuant to clause (i) above or Section 3.25 below, the Master Servicer or the
Special Servicer, as applicable, must also obtain the consent of the Certificate
Insurer prior to any further purchases, provided that failure of the Certificate
Insurer to respond within five Business Days following actual receipt of any
such request for consent by the Master Servicer or the Special Servicer, as
applicable, shall be deemed to constitute consent to the additional purchases
identified in such request for consent. The Purchase Price for any Mortgage Loan
or related REO Property purchased hereunder shall be deposited in the
Distribution Account, and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the Master Servicer or the Special Servicer,
as applicable, the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Master Servicer or the Special Servicer, as applicable, shall furnish and as
shall be necessary to vest in it title to any Mortgage Loan or related REO
Property released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: FIRST, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); SECOND, to
accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and THIRD, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: FIRST, to
unpaid Servicing Fees; and SECOND, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).
Section 3.17 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer shall deliver to the
Trustee two executed copies of a completed certification (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 3.10 have been or will be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee
shall, within five Business Days, release and send by overnight mail, at the
expense of the Master Servicer, the related Mortgage File to the Master
Servicer. The Trustee agrees to indemnify the Master Servicer, out of its own
funds, for any loss, liability or expense (other than special, indirect,
punitive or consequential damages which will not be paid by the Trustee)
incurred by the Master Servicer as a proximate result of the Trustee's breach of
its obligations pursuant to this Section 3.17. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account or the Distribution Account. The Trustee
will provide to the Certificate Insurer an updated listing of any Mortgage Files
released pursuant to this Section 3.17(a) on March 30, June 30, September 30 and
December 30 of each year, beginning in December 1999 and as otherwise requested
by the Certificate Insurer or the Trustee.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Master Servicer and delivery to the Trustee
of a Request for Release in the form of Exhibit F, release the related Mortgage
File to the Master Servicer, and the Trustee shall, at the direction of the
Master Servicer, execute such documents as shall be necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee when the need therefor by the Master Servicer no
longer exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered, or caused to be delivered, to the Trustee an additional
Request for Release certifying as to such liquidation or action or proceedings.
Upon the request of the Trustee or the Certificate Insurer, the Master Servicer
shall provide notice to the Trustee and the Certificate Insurer of the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Collection Account have been so deposited, or
that such Mortgage Loan has become an REO Property, any outstanding Requests for
Release with respect to such Mortgage Loan shall be released by the Trustee to
the Master Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer or the Sub-Servicer, as the
case may be, and upon the request of the Certificate Insurer, the Master
Servicer shall deliver or cause to be delivered to the Certificate Insurer
copies of, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such certification shall
include a request that such pleadings or documents be executed by the Trustee
and a statement as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.18 SERVICING COMPENSATION.
As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan, other than a Specially Serviced Mortgage Loan, payable solely
from payments of interest in respect of such Mortgage Loan, subject to Section
3.24. In addition, the Master Servicer shall be entitled to recover unpaid
Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the extent
permitted by Section 3.11(a)(iii) and out of amounts derived from the operation
and sale of an REO Property to the extent permitted by Section 3.23. The right
to receive the Servicing Fee may not be transferred in whole or in part except
in connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement; PROVIDED, HOWEVER, that the Master
Servicer may pay from the Servicing Fee any amounts due to a Sub-Servicer
pursuant to a Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption fees,
ancillary income and late payment charges, insufficient funds charges or
otherwise (subject to Section 3.24 and other than Prepayment Premiums) shall be
retained by the Master Servicer only to the extent such fees or charges are
received by the Master Servicer. The Master Servicer shall also be entitled
pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account and
pursuant to Section 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12 and Section 3.24. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a Sub-Servicer
and servicing compensation of each Sub-Servicer) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.19 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS.
Not later than twenty days after each Distribution Date, the Master
Servicer shall forward, upon request, to the Trustee, the Certificate Insurer
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.
Section 3.20 STATEMENT AS TO COMPLIANCE.
The Master Servicer and the Special Servicer each shall deliver to the
Trustee, the Certificate Insurer and the Depositor not later than 90 days
following the end of the fiscal year of the Master Servicer and of the Special
Servicer, commencing with the fiscal year that begins in 1999, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Master Servicer or Special Servicer, as applicable, during the
preceding year and of performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer or the Special Servicer, as applicable, has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. Copies of any such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer or the
Special Servicer, as applicable, to the Trustee.
Section 3.21 INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
Not later than 90 days following the end of each fiscal year of the
Master Servicer and the Special Servicer, commencing with the fiscal year that
begins in 1999, the Master Servicer and the Special Servicer, each at its own
expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish to the Master Servicer or the Special Servicer, as
applicable, a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer or the
Special Servicer, as applicable, which includes an assertion that the Master
Servicer or the Special Servicer, as applicable, has complied with certain
minimum residential mortgage loan servicing standards, identified in the Uniform
Single Attestation Program for Mortgage Bankers established by the Mortgage
Bankers Association of America, with respect to the servicing of residential
mortgage loans during the most recently completed fiscal year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by Sub-Servicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Master Servicer or the Special Servicer, as applicable, shall
furnish a copy of such report to the Trustee, the Certificate Insurer and each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the expense of the Master Servicer or the
Special Servicer, as applicable, provided that such statement is delivered by
the Master Servicer or the Special Servicer, as applicable, to the Trustee.
Section 3.22 ACCESS TO CERTAIN DOCUMENTATION; FILING OF REPORTS BY
TRUSTEE.
(a) The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer designated by it. In addition, access to the documentation
regarding the Mortgage Loans will be provided to any Certificateholder, the
Certificate Insurer, the Trustee and to any Person identified to the Master
Servicer as a prospective transferee of a Certificate, upon reasonable request
during normal business hours at the offices of the Master Servicer designated by
it at the expense of the Person requesting such access.
(b) The Trustee shall, on behalf of the Trust Fund, prepare, sign and
file with the Securities and Exchange Commission any and all reports, statements
and information respecting the Trust which the Depositor determines are required
to be filed with the Securities and Exchange Commission pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, each such
report, statement and information to be filed on or prior to the required filing
date for such report, statement or information. Upon the request of the Trustee,
each of the Seller, the Master Servicer and the Depositor shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.
Section 3.23 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Master Servicer, on behalf
of REMIC I, shall either sell any REO Property by the end of the third full
taxable year after the taxable year in which the REMIC acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or request from
the Internal Revenue Service, no later than 60 days before the day on which the
grace period would otherwise expire, an extension of such period, unless the
Master Servicer shall have delivered to the Trustee an Opinion of Counsel,
addressed to the Trustee, the Certificate Insurer and the Depositor, to the
effect that the holding by REMIC I of such REO Property subsequent to the close
of the third taxable year after its acquisition will not result in the
imposition on any REMIC of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause any REMIC to fail to qualify as a
REMIC under Federal law at any time that any Certificates are outstanding. The
Master Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders 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 any REMIC 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.
(b) The Master Servicer shall separately account for all funds
collected and received in connection with the operation of any REO Property and
shall establish and maintain, or cause to be established and maintained, with
respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders and the Certificate Insurer (the "REO
Account"), which shall be an Eligible Account. The Master Servicer shall be
permitted to allow the Collection Account to serve as the REO Account, subject
to separate ledgers for each REO Property. The Master Servicer shall be entitled
to retain or withdraw any interest income paid on funds deposited in the REO
Account.
(c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, neither the Master Servicer nor the
Trustee shall:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) authorize any Person to Directly Operate any REO Property on any
date more than 90 days after its date of acquisition by the Trust Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee and the Certificate Insurer, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by REMIC I, in which case the Master Servicer may take such actions
as are specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues (net
of such costs and expenses) to the Master Servicer as soon as practicable,
but in no event later than thirty days following the receipt thereof by
such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Master Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders and the
Certificate Insurer with respect to the operation and management of any
such REO Property; and
(iv) the Master Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and obligations
in connection with the operation and management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; PROVIDED, HOWEVER, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c),
the Master Servicer may from time to time make withdrawals from the REO Account
for any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing
Fees in respect of the related Mortgage Loan; and (ii) to reimburse itself or
any Sub-Servicer for unreimbursed Servicing Advances and Advances made in
respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its Servicing Standard.
(f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).
(g) The Master Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.24 OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF
PREPAYMENT INTEREST SHORTFALLS.
Not later than the Close of Business on each Master Servicer
Remittance Date, the Master Servicer shall remit to the Collection Account an
amount ("Compensating Interest") equal to the lesser of (A) (1) the aggregate of
the Prepayment Interest Shortfalls for the related Distribution Date minus (2)
the aggregate of the Prepayment Interest Excesses for the related Distribution
Date and (B) its Servicing Fee received in the related Due Period. The Master
Servicer shall not have the right to reimbursement for any amounts remitted to
the Trustee in respect of Compensating Interest. Such amounts so remitted shall
be included in the Available Funds relating to the Loan Group experiencing the
Principal Prepayments and distributed therewith on the next Distribution Date.
If on any Master Servicer Remittance Date the amount deposited into the
Collection Account is the amount calculated in (B), such amount shall be
allocated between the Available Funds of each Loan Group pro rata based on the
aggregate Prepayment Interest Shortfall experienced by both Loan Groups during
the related Due Period. The Master Servicer shall not be obligated to pay
Compensating Interest with respect to Relief Act Interest Shortfalls.
Section 3.25 CERTAIN RIGHTS RELATED TO FORECLOSURE AND THE SPECIAL
SERVICER.
(a) The Directing Holder shall have the right to purchase defaulted
Mortgage Loans from the Trust Fund as and to the extent provided herein. At any
time, the Directing Holder may request that the Special Servicer take a
particular action permitted under this Agreement with respect to a particular
Specially Serviced Mortgage Loan, including without limitation foreclosure,
waivers or modifications. Any such request shall be in writing, a copy of which
shall be delivered to the Master Servicer. Within two Business Days of receipt
of such a request, the Special Servicer shall notify the Directing Holder
whether the Special Servicer intends to comply with such request. If the Special
Servicer does not comply with such request (or fails to notify the Directing
Holder of its decision within the two Business Day period), then the Directing
Holder may, at its sole option and upon written notice to the Special Servicer
and the Master Servicer, purchase the related Mortgage Loan from the Trust Fund
at the Purchase Price. In addition, the Directing Holder may purchase any
Severely Delinquent Loan upon written notice to the Master Servicer and the
Special Servicer within three days of the day on which such Mortgage Loan
becomes a Severely Delinquent Loan. After Mortgage Loans or related REO
Properties in a Loan Group have been purchased, together with Mortgage Loans and
related REO Properties purchased pursuant (i) to the two immediately preceding
sentences, (ii) to subsection (b) below and (iii) to Section 3.16(c), in an
amount equal to 3.00% by Cut-off Date Aggregate Principal Balance, the Directing
Holder must obtain the consent of the Certificate Insurer prior to any further
purchases of Mortgage Loans in such Loan Group, provided that failure of the
Certificate Insurer to respond within five Business Days following actual
receipt of any such request for consent by the Directing Holder shall be deemed
to constitute consent to the additional purchases identified in such request for
consent.
(b) In addition to the purchase option provided under subsection (a)
above, the Special Servicer and the Directing Holder shall have the right to
purchase Severely Delinquent Loans from the Trust Fund as set forth herein. The
Special Servicer shall have the right to purchase any Severely Delinquent Loan
at the Purchase Price (as defined in this Agreement). The Special Servicer shall
send a written notice (the "Initial Notice") to the Directing Holder advising
the Directing Holder that the Special Servicer intends to purchase a Severely
Delinquent Loan. The Directing Holder shall have the option to (i) direct the
Special Servicer not to purchase any such Severely Delinquent Loan but to
proceed with a particular default resolution strategy or other strategy
consistent with the servicing standards set forth in this Agreement, (ii) direct
the Special Servicer to proceed with the purchase of such loan on the terms
proposed by the Special Servicer, or (iii) indicate that the Directing Holder
intends to purchase such Severely Delinquent Loan, in which case the Directing
Holder shall have the sole right and option to purchase the Severely Delinquent
Loan at the Purchase Price; provided, however, that if the Directing Holder
fails or refuses to deliver a written notice of its election to the Special
Servicer within two Business Days after the Special Servicer has sent to the
Directing Holder the Initial Notice, then the Directing Holder shall have deemed
to have consented to the Special Servicer purchasing the Severely Delinquent
Loan for its own account. Such right of such Directing Holder shall be
transferable to and exercisable by subsequent Holders of the Class X Certificate
only upon satisfaction of the conditions set forth in this Section 3.25. The
aggregate of any such purchases by the Directing Holder of a Mortgage Loan
pursuant to this Section 3.25(b) shall be subject to the restriction described
in subsection (a) above.
(c) All rights of the Directing Holder under this Agreement shall
terminate immediately upon any transfer of the Class X Certificate to any other
Person, unless (i) the Special Servicer consents in writing to the transfer of
such rights and (ii) the Trustee is provided with a letter from each Rating
Agency to the effect that the transfer of the rights of the Directing Holder to
such transferee will not result in the qualification, withdrawal or downgrade of
the ratings then assigned to any Class of Certificates.
(d) The Directing Holder may, with the consent of the Certificate
Insurer, by written notice to the Special Servicer, terminate the rights and
obligations of the Special Servicer under this Agreement, without cause, as and
with the effect set forth in the first paragraph following clause (iv) of
Section 8.01 and appoint a successor Special Servicer, provided that (i) such
successor is reasonably acceptable to the Master Servicer and the Certificate
Insurer and (ii) a letter is provided to the Trustee from each Rating Agency to
the effect that such termination and appointment will not result in the
qualification, reduction or withdrawal of the ratings then applicable to the
Certificates.
Section 3.26 OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF MORTGAGE
RATES AND MONTHLY PAYMENTS.
In the event that a shortfall in any collection on or liability with
respect to the Mortgage Loans in the aggregate results from or is attributable
to adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the terms
of the related Mortgage Note and this Agreement, the Master Servicer, upon
discovery or receipt of notice thereof, immediately shall deliver to the Trustee
for deposit in the Distribution Account from its own funds the amount of any
such shortfall and shall indemnify and hold harmless the Trust Fund, the
Trustee, the Certificate Insurer, the Depositor and any successor servicer in
respect of any such liability. Such indemnities shall survive the termination or
discharge of this Agreement. Notwithstanding the foregoing, this Section 3.26
shall not limit the ability of the Master Servicer to seek recovery of any such
amounts from the related Mortgagor under the terms of the related Mortgage Note,
as permitted by law.
Section 3.27 SOLICITATIONS.
From and after the Closing Date, the Master 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 the Master Servicer's behalf, to personally, by telephone
or mail, solicit the Mortgagor under any Mortgage Loan for the purpose of
refinancing such Mortgage Loan; PROVIDED, that the Master Servicer may solicit
any Mortgagor for whom the Master Servicer has received a request for
verification of mortgage, a request for demand for payoff, a mortgagor initiated
written or verbal communication indicating a desire to prepay the related
Mortgage Loan, or the mortgagor initiates a title search; provided further, it
is understood and agreed that promotions undertaken by the Master Servicer or
any of its Affiliates which (i) concern optional insurance products or other
additional products or (ii) are directed to the general public at large,
including, without limitation, mass mailings based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section, nor is the Master Servicer
prohibited from responding to unsolicited requests or inquiries made by a
Mortgagor or an agent of a Mortgagor.
Section 3.28 SPECIAL SERVICER.
With respect to any Mortgage Loan that becomes a Specially Serviced
Mortgage Loan, all servicing responsibilities shall be transferred from the
Master Servicer or any Sub-Servicer to the Special Servicer. The Special
Servicer shall, consistent with the servicing standard set forth herein, perform
the day-to-day servicing functions with respect to such Mortgage Loan. In
connection therewith, the Special Servicer shall be entitled as compensation to
retain the Servicing Fee with respect to each Mortgage Loan that is a Specially
Serviced Mortgage Loan for any calendar month or part thereof that such Mortgage
Loan was a Specially Serviced Mortgage Loan. The Special Servicer shall perform
the duties and obligations set forth in Section 3.16 with respect to the
realization of proceeds on any such Mortgage Loans.
The Special Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.
In the event that any Specially Serviced Mortgage Loans cease to be in
default (after giving effect to any grace period) for three consecutive months,
the Special Servicer shall transfer all servicing responsibilities back to the
Master Servicer or any designated Sub-Servicer and thereafter such Mortgage Loan
shall be serviced hereunder by the Master Servicer or such Sub-Servicer.
In the event that Fairbanks Capital Corp. is terminated in its
capacity as Sub-Servicer, such termination shall have the effect under this
Agreement of simultaneously terminating Fairbanks Capital Corp. in its capacity
as Special Servicer hereunder. In the event of any such termination of the
Special Servicer, the Master Servicer shall, with the consent of the Certificate
Insurer and the Rating Agencies, appoint a successor Special Servicer.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 DISTRIBUTIONS.
(a) On each Distribution Date the Trustee shall withdraw funds on
deposit in the Distribution Account and make the following disbursements and
transfers as described below and to the extent of such funds.
(A) Immediately following the deemed distributions on the REMIC I Regular
Interests and the REMIC II Regular Interests pursuant to Section 4.02, the Group
I Available Funds shall be distributed in the following order of priority:
(i) to the PMI Insurer, the amount owing to the PMI Insurer for the
premium payable in respect of the PMI Mortgage Loans in Loan Group I;
(ii) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for the premium (including any premium
supplement) payable in respect of the Class A-1 Certificates;
(iii) to the Holders of the Class A-1 Certificates, the related Interest
Distributable Amount;
(iv) to the Holders of the Class A-1 Certificates, an amount equal to the
Group I Basic Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero;
(v) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Certificate Insurance Policy in respect of the Class A Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
(including any unpaid premiums in respect of the Class A Certificates);
(vi) to the Holders of the Class A-2 Certificates, an amount equal to the
excess, if any, of (x) the related Interest Distributable Amount for such
Distribution Date over (y) the amount actually distributed to the Holders of the
Class A-2 Certificates on such Distribution Date pursuant to subclause (B)(iii)
below;
(vii) to the Holders of the Class A-2 Certificates, an amount equal to the
excess, if any, of (x) the Certificate Principal Balance of the Class A-2
Certificates (after giving effect to all distributions thereon on such
Distribution Date from the Group II Available Funds) over (y) the Group II Loan
Balance on the last day of the immediately preceding Prepayment Period;
(viii) to Holders of the Class A-1 Certificates, an amount equal to the
Group I Extra Principal Distribution Amount;
(ix) to the Holders of the Class A-2 Certificates, an amount equal to any
remaining Overcollateralization Deficiency Amount for the Class A-2 Certificates
for such Distribution Date after distributions pursuant to clause (B) (viii) on
such Distribution Date;
(x) to the Master Servicer, certain amounts in respect of indemnification
that may be required to be paid by the Trust pursuant to the terms of this
Agreement;
(xi) to the Holders of the Class A-1 Certificates, an amount equal to the
Group I Interest Carryover, if any;
(xii) to the Holders of the Class A-2 Certificates, an amount equal to the
Group II Interest Carryover, if any, after giving effect to the amount
distributable on such Distribution Date pursuant to clause (B) (xi) below; and
(xiii) to the Holder of the Class X Certificate, the Class X Group I IO
Component Distributable Amount for such Distribution Date and the Class X Group
I IO Component Distributable Amount for any prior Distribution Date to the
extent not previously paid.
(B) Immediately following the deemed distributions on the REMIC I Regular
Interests and the REMIC II Regular Interests pursuant to Section 4.02, Group II
Available Funds shall be distributed in the following order of priority:
(i) to the PMI Insurer, the amount owing to the PMI Loan Insurer for the
premium payable in respect of the PMI Mortgage Loans in Loan Group II;
(ii) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for the premium (including any premium
supplement) payable in respect of the Class A-2 Certificates;
(iii) to the Holders of the Class A-2 Certificates, the related Interest
Distributable Amount;
(iv) to the Holders of the Class A-2 Certificates, an amount equal to the
Group II Basic Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero;
(v) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Certificate Insurance Policy in respect of the Class A Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
(including any unpaid premiums in respect of the Class A Certificates);
(vi) to the Holders of the Class A-1 Certificates, an amount equal to the
excess, if any, of (x) the related Interest Distributable Amount for such
Distribution Date over (y) the amount actually distributed to the Holders of the
Class A-1 Certificates on such Distribution Date pursuant to subclause (A)(iii)
above;
(vii) to the Holders of the Class A-1 Certificates, an amount equal to the
excess, if any, of (x) the Certificate Principal Balance of the Class A-1
Certificates (after giving effect to all distributions thereon on such
Distribution Date from the Group I Available Funds) over (y) the Group I Loan
Balance on the last day of the immediately preceding Prepayment Period;
(viii) to the Holders of the Class A-2 Certificates, an amount equal to
the applicable Extra Principal Distribution Amount;
(ix) to the Holders of the Class A-1 Certificates, an amount equal to any
remaining Overcollateralization Deficiency Amount for the Class A-1 Certificates
for such Distribution Date after distributions pursuant to clause A (viii) on
such Distribution Date;
(x) to the Master Servicer, certain amounts in respect of indemnification
that may be required to be paid by the Trust pursuant to this Agreement;
(xi) to the Holders of the Class A-2 Certificates, an amount equal to the
Group II Interest Carryover, if any; and
(xii) to the Holders of the Class A-1 Certificates, an amount equal to the
Group I Interest Carryover, if any, after giving effect to the amount
distributable on such Distribution Date pursuant to clause (A)(xi) above; and
(xiii) to the Holder of the Class X Certificate, the Class X Group II IO
Component Distributable Amount for such Distribution Date and the Class X Group
II IO Component Distributable Amount for any prior Distribution Date to the
extent not previously paid.
(C) On each Distribution Date, any amounts remaining in the Distribution
Account with respect to REMIC III after giving effect to the distributions
specified in clauses (A) and (B) above will be distributed to the holders of the
Class R Certificates in respect of the Class R-III Component.
(D) Amounts distributable pursuant to clauses (A)(xi), (A)(xii), (B)(xi) and
(B)(xii) shall be deemed to have been distributed to the Class X Certificates in
reduction of the Class X Distributable Amount, and then to the Class A-1 or
Class A-2 Certificates, as applicable, outside REMIC III.
(E) Amounts distributable pursuant to clauses (A)(i), (A)(ii), (A)(v),
(A)(x), (B)(i), (B)(ii), (B)(v) and (B)(x) shall be expenses of REMIC I and
distributed from REMIC I.
(b) METHOD OF DISTRIBUTION. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Certificateholders of the Regular
Certificates, by check or money order mailed to such Certificateholder at the
address appearing in the Certificate Register, or by wire transfer to the
Depository, in the case of Certificates held by the Depository, or to the
account specified in writing by any other Certificateholder not less than seven
Business Days preceding a Distribution Date, in the case of Holders of Class A
Certificates evidencing a denomination of a least $1,000,000 or a 100%
Percentage Interest in the Class X or Class R Certificates. Distributions among
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Certificates held by such Certificateholders.
(c) DISTRIBUTIONS ON BOOK-ENTRY CERTIFICATES. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Depositor, the Master Servicer, the
Special Servicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
(d) DISTRIBUTION OF INSURED PAYMENTS. With respect to any Distribution
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the Certificate Insurance Policy for the purposes
specified in the Certificate Insurance Policy. The Certificate Insurer shall be
deemed to be the assignee of the Holders of the Class A-1 Certificates and the
Holders of the Class A-2 Certificates to the extent of any amount of Insured
Payments disbursed by the Trustee from proceeds of the Certificate Insurance
Policy and to such extent, shall be the subrogee of each such Holder of the
Class A-1 Certificates and each such Holder of the Class A-2 Certificates;
PROVIDED, HOWEVER, that any such right of subrogation inuring to the Certificate
Insurer hereunder or otherwise shall be and is subordinated to the rights under
this Agreement of the Holders of the Class A-1 Certificates and the Holders of
the Class A-2 Certificates and in accordance with Section 11.04.
Section 4.02 REMIC I AND REMIC II DISTRIBUTIONS
(a) REMIC I.
(i) On each Distribution Date, the Group I Available Funds shall be
deemed distributed to the Class LT1, Class LT2 and Class LT3 Interests as
follows: (A) Interest shall be deemed distributed (subject to Section
4.02(a)(iii) with respect to the Class LT3 Interest) on each of the Class
LT1, Class LT2 and Class LT3 Interests at the Group I Weighted Average Net
Loan Rate (adjusted to an actual/360 basis), (B) the Class LT3 Accrual
Amount shall be deemed distributed to reduce the principal balance of the
Class LT2 Interest, (C) the Group I Basic Principal Distribution Amount
shall be distributed pro rata among the Class LT1, Class LT2 and Class LT3
Interests, based on their principal balances, such that their principal
balances remain in the ratio of 98% of the Group I Loan Balance, 1% of the
excess of the Group I Loan Balance over the Group I Overcollateralized
Amount and 1% of the sum of the Group I Loan Balance and the Group I
Overcollateralized Amount, respectively.
(ii) On each Distribution Date, the Group II Available Funds shall be
deemed distributed to the Class LT4, Class LT5 and Class LT6 Interests as
follows: (A) Interest shall be deemed distributed (subject to Section
4.02(a)(iv) with respect to the Class LT6 Interest) on each of the Class
LT4, Class LT5 and Class LT6 Interests at the Group II Weighted Average Net
Loan Rate (adjusted to an actual/360 basis), (B) the Class LT6 Accrual
Amount shall be deemed distributed to reduce the principal balance of the
Class LT5 Interest, (C) the Group II Basic Principal Distribution Amount
shall be distributed pro rata among the Class LT4, Class LT5 and Class LT6
Interests, based on their unpaid principal balances, such that their
principal balances remain in the ratio of 98% of the Group II Loan Balance,
1% of the excess of the Group II Loan Balance over the Group II
Overcollateralized Amount and 1% of the sum of the Group II Loan Balance
and the Group II Overcollateralized Amount, respectively.
(iii) Interest will accrue on each of the Class LT1, Class LT2 and
Class LT3 Interests at the Group 1 Weighted Average Net Loan Rate. Interest
will not be paid currently to the Class LT3 Interest to the extent of 1% of
any increase in the Group I Overcollateralized Amount (such amount, the
"Class LT3 Accrual Amount"). The Class LT3 Accrual Amount will be added to
the principal balance of the Class LT3 Interest and will be used to reduce
the principal balance of the Class LT2 Interest.
(iv) Interest will accrue on each of the Class LT4, Class LT5 and
Class LT6 Interests at the Group 2 Weighted Average Net Loan Rate. Interest
will not be paid currently to the Class LT6 Interest to the extent of 1% of
any increase in the Group II Overcollateralized Amount (such amount, the
"Class LT6 Accrual Amount"). The Class LT6 Accrual Amount will be added to
the principal balance of the Class LT6 Interest and will be used to reduce
the principal balance of the Class LT5 Interest.
(v) On each Distribution Date, Realized Losses and Insurance Proceeds
with respect to the Group I Mortgage Loans will be allocated to the Class
LT1, Class LT2 and Class LT3 Interests in the same manner as distributions
of principal, as described above.
(vi) Realized Losses and Insurance Proceeds with respect to the Group
II Mortgage Loans will be allocated to the Class LT4, Class LT5 and Class
LT6 Interests in the same manner as distributions of principal, as
described above.
(vii) On each Distribution Date, any amounts remaining in the
Distribution Account with respect to REMIC I after giving effect to the
distributions and allocations specified in clauses (i)-(v) above will be
distributed to the holders of the Class R Certificates in respect of the
Class R-I Component.
(b) REMIC II.
(i) Interest will be deemed to accrue on, interest and principal will
be deemed to be distributed on, and Realized Losses and Insurance Proceeds
will be allocated to the Class MT1, Class MT3, Class MT4 and Class MT6
Interests in the same manner as interest and principal are deemed to accrue
and be distributed with respect to and Realized Losses and Insurance
Proceeds are allocated to the Class LT1, Class LT3, Class LT4 and Class LT6
Interests, respectively.
(ii) Principal will be deemed to be distributed on and Realized Losses
and Insurance Proceeds will be allocated to the Class MT2 and Class MT5
Interests in the same manner as principal is deemed to be distributed with
respect to and Realized Losses and Insurance Proceeds are allocated to the
Class LT2 and Class LT5 Interests, respectively. Interest will be deemed to
accrue and be distributed on the Class MT2 Interest at the Pass-Through
Rate for the Class A-1 Certificates. Interest will be deemed to accrue and
be distributed on the Class MT5 Interest at the Pass-Through Rate for the
Class A-2 Certificates.
(iii) Interest will be deemed to accrue and be distributed on the
Class MTN2 Interest at a rate equal to (x) the Group I Weighted Average Net
Loan Rate minus (y) the Pass-Through Rate for the Class A-1 Certificates.
Interest will be deemed to accrue and be distributed on the Class MTN5
Interest at a rate equal to (x) the Group II Weighted Average Net Loan Rate
minus (y) the Pass-Through Rate for the Class A-2 Certificates.
(iv) On each Distribution Date, any amounts remaining in the
Distribution account with respect to REMIC II after giving effect to the
distributions and allocations specified in clauses (i)-(iii) above will be
distributed to the holders of the Class R Certificates in respect of the
Class R-II Component.
Section 4.03 STATEMENTS.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and forward by
mail to each Holder of the Regular Certificates, the Master Servicer, the
Certificate Insurer and the Rating Agencies, a statement as to the distributions
made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Class A Certificates,
(ii) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Class A Certificates allocable to principal
and interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization Release
Amount, the Overcollateralization Deficiency Amount and the
Overcollateralization Target Amount as of such Distribution Date for each
Class of Class A Certificates and the General Excess Available Amount for
each related Loan Group for such Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Master Servicer during the related Due Period and such other customary
information as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests, to enable Certificateholders to
prepare their tax returns and, separately identified, the amount of
compensation paid to the Special Servicer;
(v) the aggregate amount of Advances for the related Prepayment
Period;
(vi) the Pool Principal Balance and the Loan Group Balance for each
Loan Group at the Close of Business at the end of the related Prepayment
Period;
(vii) the number, weighted average remaining term to maturity and
weighted average Mortgage Rate of the Mortgage Loans as of the related Due
Date;
(viii) separately stated for each Loan Group, the number and aggregate
unpaid principal balance of Mortgage Loans (a) 30 to 59 days past due on a
contractual basis, (b) 60 to 89 days past due on a contractual basis, (c)
90 or more days past due on a contractual basis, (d) as to which
foreclosure proceedings have been commenced and (e) in bankruptcy as of the
Close of Business on the last day of the calendar month preceding such
Distribution Date;
(ix) with respect to any Mortgage Loan as to which the related
Mortgaged Property became an REO Property during the preceding calendar
month, the loan number of such Mortgage Loan, the Principal Balance of such
Mortgage Loan as of the Close of Business on the last day of the related
Prepayment Period, and the date on which it became an REO Property;
(x) the book value of any REO Property as of the Close of Business on
the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal balance
of all REO Properties as of the Close of Business of the last day of the
preceding due period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Due Period and the cumulative amount of Realized Losses;
(xiii) the aggregate amount of extraordinary Trust Fund expenses
withdrawn from the Collection Account for such Distribution Date;
(xiv) the Class Certificate Principal Balance of each Class of Class A
Certificates, after giving effect to the distributions made on such
Distribution Date;
(xv) the Interest Distributable Amount in respect of each Class of
Class A Certificates for such Distribution Date and the respective portions
thereof, if any, remaining unpaid following the distributions made in
respect of such Certificates on such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls and
the Unpaid Interest Shortfall Amount for such Distribution Date, to the
extent not covered by payments by the Master Servicer pursuant to Section
3.26;
(xvii) the amount of premium to be paid to the Certificate Insurer and
the Trustee Fee for such Distribution Date, stated separately;
(xviii) the Group I Interest Carryover and the Group II Interest
Carryover, if any, for such Distribution Date and the amount remaining
unpaid on each Interest Carryover after reimbursements therefor on such
Distribution Date;
(xix) any Overcollateralization Deficiency Amount after giving effect
to the distribution of principal on such Distribution Date;
(xx) whether the Step Down Cumulative Loss Test, Step Down Rolling
Delinquency Test, Step Down Rolling Loss Test, Step Up Cumulative Loss
Test, Step Up Rolling Delinquency Test, Step Up Rolling Loss Test and/or
Step Up Spread Squeeze Test have been met, the cumulative realized losses
with respect to each Loan Group, as a percentage of the original Loan Group
Balance, the Delinquency Percentage and the Annual Loss Percentage;
(xxi) the Available Funds with respect to each Loan Group;
(xxii) the Pass-Through Rate for the Class A-1 and Class A-2
Certificates for such Distribution Date;
(xxiii) the Liquidation Report for such Distribution Date;
(xxiv) the aggregate Principal Balance of Mortgage Loans purchased by
the Master Servicer, Special Servicer or Seller during the related Due
Period and indicating the Section of this Agreement requiring or allowing
the purchase of each such Mortgage Loan;
(xxv) the amount of premium to be paid to the PMI Insurer;
(xxvi) the aggregate amount representing collections of Prepayment
Premiums during the related Prepayment Period included in Group I Available
Funds and Group II Available Funds, on such Distribution Date;
(xxvii) the Class X Group I IO Component Distributable Amount and the
Class X Group II IO Component Distributable Amount for such Distribution
Date and (a) the portion thereof distributed on the current Distribution
Date and the portion thereof remaining unpaid on such Distribution Date,
(b) any such amount for any prior Distribution Date distributed on the
current Distribution Date and (c) any such amount for any prior
Distribution Date remaining unpaid after giving effect to the distributions
on the current Distribution Date, separately stated; and
(xxviii) the amount on deposit in each of the Pre-Funding Accounts and
Capitalized Interest Accounts, if any, stated separately.
The Trustee shall forward such report concurrently with each
distribution to the Certificateholders, the Certificate Insurer (at 350 Park
Avenue, New York, New York 10022, Attention: Surveillance Department) and the
Rating Agencies on the related Distribution Date. The Trustee may also make such
reports available each month to each party referred to in this paragraph via the
Trustee's website. The Trustee's website can be accessed at
http://online.bankerstrust.com/invr. The Trustee's obligations pursuant to this
Section 4.03 are limited to the extent of its receipt of all necessary
information from the Master Servicer. The Trustee may fully rely upon and shall
have no liability with respect to information provided by the Master Servicer.
In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate,
if requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i) and (ii) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class
R Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
Section 4.04 REMITTANCE REPORTS; ADVANCES.
(a) No later than the second Business Day following each Determination
Date, the Master Servicer shall deliver to the Trustee by telecopy or electronic
mail (or by such other means as the Master Servicer and the Trustee may agree
from time to time) a Remittance Report with respect to the related Distribution
Date. Not later than the Close of Business New York time on the Master Servicer
Remittance Date, the Master Servicer shall deliver or cause to be delivered to
the Trustee in addition to the information provided on the Remittance Report,
such other information reasonably available to it with respect to the Mortgage
Loans as the Trustee may reasonably require to perform the calculations
necessary to make the distributions contemplated by Section 4.01 and to prepare
the statements to Certificateholders contemplated by Section 4.03. The Trustee
shall not be responsible to recompute, recalculate or verify any information
provided to it by the Master Servicer.
(b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Due Period in respect of the Mortgage Loans, which Monthly
Payments were delinquent on a contractual basis as of the Close of Business on
the related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Due Period and as to
which REO Property an REO Disposition did not occur during the related Due
Period, an amount equal to the excess, if any, of the REO Imputed Interest on
such REO Property for the most recently ended calendar month, over the net
income from such REO Property transferred to the Distribution Account pursuant
to Section 3.23 for distribution on such Distribution Date. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan.
On or before the Close of Business New York time on the Master
Servicer Remittance Date, the Master Servicer shall remit in immediately
available funds to the Trustee for deposit in the Distribution Account an amount
equal to the aggregate amount of Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.04, used by the
Master Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be made
by the Master Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Master Servicer's records and replaced by the Master Servicer
by deposit in the Collection Account on or before any future Servicer Remittance
Date to the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will promptly provide notice to the Master
Servicer by telecopy in the event that the amount remitted by the Master
Servicer to the Trustee on such date is less than the Advances required to be
made by the Master Servicer for the related Distribution Date, as set forth in
the related Remittance Report.
(c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor and the
Trustee.
Section 4.05 PRE-FUNDING ACCOUNTS AND CAPITALIZED INTEREST ACCOUNTS.
(a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained two separate accounts
denominated" Pre-Funding Accounts", which are and shall continue to be Eligible
Accounts in the name of the Trustee and shall be designated "Bankers Trust
Company of California, N.A., as Trustee of the United PanAm Mortgage Loan Trust
1999-2, Group I Pre-Funding Account" and "Bankers Trust Company of California,
N.A., as Trustee of the United PanAm Mortgage Loan Trust 1999-2, Group II
Pre-Funding Account". Each of the Pre-Funding Accounts shall be treated as an
"outside reserve fund" under applicable Treasury regulations and shall not be
part of any REMIC. Any investment earnings on the Pre-Funding Accounts shall be
treated as owned by the Seller and will be taxable to the Seller.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained two separate accounts
denominated "Capitalized Interest Accounts", which are and shall continue to be
Eligible Accounts in the name of the Trustee and shall be designated "Bankers
Trust Company of California, N.A., as Trustee of the United PanAm Mortgage Loan
Trust Series 1999-2, Group I Capitalized Interest Account" and "Bankers Trust
Company of California, N.A., as Trustee of the United PanAm Mortgage Loan Trust
Series 1999-2, Group II Capitalized Interest Account". Each of the Capitalized
Interest Accounts shall be treated as an "outside reserve fund" under applicable
Treasury regulations and shall not be part of any REMIC. Any investment earnings
on the Capitalized Interest Accounts shall be treated as owned by the Seller and
will be taxable to the Seller.
The amount on deposit in the Pre-Funding Accounts and the Capitalized
Interest Accounts shall be invested in Permitted Investments in accordance with
the provisions of Section 3.12 hereof.
(b) On the Closing Date, the Seller shall cause to be deposited in the
Group I Pre-Funding Account and the Group II Pre-Funding Account the amounts of
$27,234,114.75 and $10,298,458.02 respectively, and shall cause to be deposited
in the Group I Capitalized Interest Account and the Group II Capitalized
Interest Account the amounts of $244,110.34, and $94,002.75, respectively.
(c) On each Additional Transfer Date, upon satisfaction of the
conditions set forth in Section 2.10 hereof, the Trustee shall withdraw from the
related Pre-Funding Accounts an amount equal to 100% of the aggregate of the
Cut-off Date Principal Balances of the Additional Mortgage Loans sold to the
Trust for inclusion in Loan Group I or Loan Group II, as the case may be, on
such Additional Transfer Date and pay such amount to or upon the order of the
Seller.
(d) On the Business Day prior to the Distribution Date immediately
following the Due Period in which the Pre-Funding Period ends, the Trustee shall
(i) withdraw the Unutilized Pre-Funding Amount, if any, from each of the
Pre-Funding Accounts, (ii) promptly deposit each amount in the Distribution
Account and (iii) distribute each amount to the related Certificate Group on
such Distribution Date pursuant to Section 2.11 hereof.
The amount deposited in the Distribution Account pursuant to the
preceding paragraph shall be net of any Pre-Funding Earnings.
(e) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre-Funding
Period ends, the Trustee shall transfer from each Pre-Funding Account to the
Distribution Account the Pre-Funding Earnings, if any, applicable to such
Distribution Date and shall distribute such amount to the REMIC I Regular
Interests corresponding to the related Certificate Group on such Distribution
Date pursuant to Section 4.02 hereof.
(f) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre-Funding
Period ends, the Trustee shall transfer from each Capitalized Interest Account
to the Distribution Account the related Capitalized Interest Requirement, if
any, for such Distribution Date and shall distribute such amount to the REMIC I
Regular Interests corresponding to the related Certificate Group on such
Distribution Date pursuant to Section 4.01 hereof.
(g) All amounts, if any, remaining in the Capitalized Interest
Accounts on the Distribution Date following the Due Period in which the
Pre-Funding Period ends shall be withdrawn by the Trustee from the Capitalized
Interest Accounts and deposited in the Distribution Account on such date.
ARTICLE V
THE CERTIFICATES
Section 5.01 THE CERTIFICATES.
Each of the Class A, Class X and Class R Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Depositor concurrently with the sale and assignment to the Trustee
of the Trust Fund. Each Class of the Class A Certificates shall be initially
evidenced by one or more Certificates representing a Percentage Interest with a
minimum dollar denomination of $50,000 and integral dollar multiples of $1,000
in excess thereof, except that one Certificate of each such Class of
Certificates may be in a different denomination so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Class Certificate Principal Balance of such Class on the Closing Date. The Class
R Certificates are issuable only in minimum Percentage Interests of 25%. The
Class X Certificate is issuable only as a single certificate in a Percentage
Interest of 100%.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Class A Certificates
shall be Book-Entry Certificates. The Class X and Class R Certificates shall not
be Book-Entry Certificates.
Section 5.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class X or Class R
Certificate, upon satisfaction of the conditions set forth below, the Trustee on
behalf of the Trust shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall for all
purposes deal with the Depository as representative of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are hereby authorized to execute a Letter of Representations with the Depository
or take such other action as may be necessary or desirable to register a
Book-Entry Certificate to the Depository. In the event of any conflict between
the terms of any such Letter of Representation and this Agreement, the terms of
this Agreement shall control.
(c) If (i) (x) 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 Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Class A Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners, Definitive Certificates shall
be issued in exchange for Book-Entry Certificates. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Seller's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and authenticate the Definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Trustee, the
Certificate Registrar, the Master Servicer, any Paying Agent and the Depositor
shall recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
(d) Except with respect to the initial transfer of the Class X and
Class R Certificates by the Depositor, no transfer, sale, pledge or other
disposition of any Class X or Class R Certificate shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and laws. In the event of any such
transfer, (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee, in substantially
the form attached hereto as Exhibit K under the 1933 Act, the Trustee and the
Depositor shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor or (ii) the Trustee
shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit K) acceptable to and in form and substance reasonably satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an expense
of the Trustee or the Depositor. The Holder of a Class X or Class R Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
No transfer of a Class X or Class R Certificate shall be made unless
the Trustee shall have received either (i) a representation from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Depositor, (such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the form
of Exhibit J hereto, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code (collectively, a "Plan"), nor a Person
acting on behalf of any such Plan nor using the assets of any such Plan to
effect such transfer or (ii) (in the case of the Class X Certificates) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under PTCE 95-60 or (iii)
in the case of any such Class X or Class R Certificate presented for
registration in the name of a Plan (or comparable provisions of any subsequent
enactments), or a trustee of any such Plan or any other Person acting on behalf
of any such Plan or using such Plan's assets, an Opinion of Counsel satisfactory
to the Trustee which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust, addressed to the Trustee, to the effect that the purchase
or holding of such Class X or Class R Certificate will not result in the assets
of the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in this Agreement or to
any liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of a Class X or Class R Certificate (or the acceptance
by a Certificate Owner of the beneficial interest in any such Class X or Class R
Certificate) unless the Trustee shall have received from the transferee an
alternative representation acceptable in form and substance to the Depositor.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class X or Class R Certificate to or on behalf of a Plan without the delivery
to the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and substance
satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit L hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall, in violation of the
provisions of this Section, become a Holder of a Class R Certificate, then
the prior Holder of such Class R Certificate that is a Permitted Transferee
shall, upon discovery that the registration of transfer of such Class R
Certificate was not in fact permitted by this Section, be restored to all
rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making any
distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the Trustee received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but not
the obligation, without notice to the Holder of such Class R Certificate or
any other Person having an Ownership Interest therein, to notify the
Depositor to arrange for the sale of such Class R Certificate. The proceeds
of such sale, net of commissions (which may include commissions payable to
the Depositor or its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee to the previous Holder
of such Class R Certificate that is a Permitted Transferee, except that in
the event that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section or any
other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (v) shall be determined
in the sole discretion of the Trustee and it shall not be liable to any
Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of reasonable
compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC hereunder to fail to qualify
as a REMIC.
(e) All rights of the Directing Holder under this Agreement shall
terminate immediately upon any transfer of the Class X Certificate to any other
Person, unless (i) the Special Servicer consents in writing to the transfer of
such rights and (ii) the Trustee is provided with a letter from each Rating
Agency to the effect that the transfer of the rights of the Directing Holder to
such transferee will not result in the qualification, withdrawal or downgrade of
the ratings then assigned to any Class of Certificates.
(f) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and the Certificate Registrar) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04 PERSONS DEEMED OWNERS.
The Master Servicer, the Depositor, the Trustee, the Certificate
Registrar, any Paying Agent and any agent of the Master Servicer, the Depositor,
the Certificate Insurer, the Certificate Registrar, any Paying Agent or the
Trustee may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Trust, the Certificate Insurer,
the Trustee nor any agent of any of them shall be affected by notice to the
contrary.
Section 5.05 APPOINTMENT OF PAYING AGENT.
(a) The Paying Agent shall make distributions to Certificateholders
from the Distribution Account pursuant to Section 4.01 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Collection Account
pursuant to Section 3.11(a) and for the purpose of making the distributions
referred to above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01 LIABILITY OF THE SELLER, THE MASTER SERVICER AND THE
DEPOSITOR.
The Seller and the Master Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or the Master Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
Section 6.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER, THE MASTER SERVICER OR THE DEPOSITOR.
Any entity into which the Seller, Master Servicer or Depositor may be
merged or consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Seller, the Master Servicer or the Depositor shall be
a party, or any corporation succeeding to the business of the Seller, the Master
Servicer or the Depositor, shall be the successor of the Seller, the Master
Servicer or the Depositor, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; PROVIDED, HOWEVER, that
the successor Master Servicer shall satisfy all the requirements of Section 7.02
with respect to the qualifications of a successor Master Servicer.
Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS.
Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer or by reason
of its failure to perform its obligations and duties hereunder; PROVIDED,
FURTHER, that this provision shall not be construed to entitle the Master
Servicer to indemnity in the event that amounts advanced by the Master Servicer
to retire any senior lien exceed Liquidation Proceeds (in excess of related
liquidation expenses) realized with respect to the related Mortgage Loan. The
preceding sentence shall not limit the obligations of the Master Servicer
pursuant to Section 8.05. The Master Servicer and any director or officer or
employee or agent of the Master Servicer may rely in good faith on any document
of any kind PRIMA facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer and any director or officer
or employee or agent of the Master Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of its failure to perform its
obligations and duties hereunder. The Master Servicer may undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, unless the Depositor or the Master
Servicer acts without the consent of the Certificate Insurer prior to an
Certificate Insurer Default or without the consent of Holders of Certificates
entitled to at least 51% of the Voting Rights after an Certificate Insurer
Default, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Master Servicer shall be entitled to be reimbursed therefor only
pursuant to Sections 4.01(a)(A)(x) and 4.01(a)(B)(x). The Master Servicer's
right to indemnity or reimbursement pursuant to this Section shall be subject to
the payment priority described in Section 4.01(a) and shall survive any
resignation or termination of the Master Servicer pursuant to Section 6.04 or
7.01 with respect to any losses, expenses, costs or liabilities arising prior to
such resignation or termination (or arising from events that occurred prior to
such resignation or termination). This paragraph shall apply to the Master
Servicer solely in its capacity as Servicer hereunder and in no other
capacities.
Section 6.04 SERVICER NOT TO RESIGN.
Subject to the provisions of Section 7.01 and Section 6.02, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or 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
or its subsidiaries or Affiliates, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer or its subsidiaries or Affiliates at the date of this Agreement or (ii)
upon satisfaction of the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Trustee in writing and such proposed
successor servicer is acceptable to the Trustee and the Certificate Insurer; (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Master Servicer hereunder will not result in the
reduction or withdrawal of the then current rating of the Regular Certificates
or the ratings that are in effect without taking into account the Certificate
Insurance Policy and (c) such proposed successor servicer is acceptable to the
Certificate Insurer, as evidenced by a letter to the Trustee; PROVIDED, HOWEVER,
that no such resignation by the Master Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Trustee shall have
assumed the Master Servicer's responsibilities and obligations hereunder or the
Trustee shall have designated a successor servicer in accordance with Section
7.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any such determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee.
Section 6.05 DELEGATION OF DUTIES.
In the ordinary course of business, the Master Servicer, with the
consent of the Certificate Insurer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to conduct
such duties in accordance with standards comparable to those set forth in
Section 3.01. Such delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04. The Master Servicer
shall provide the Trustee and the Certificate Insurer with 60 days prior written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.
Section 6.06 RESERVED.
Section 6.07 INSPECTION.
Each of the Seller and the Master Servicer shall afford the
Certificate Insurer, upon reasonable notice, during normal business hours,
access to all records maintained by the Seller and the Master Servicer,
respectively, in respect of its rights and obligations hereunder and access to
officers of the Master Servicer and the Seller responsible for such obligations.
Upon request, the Master Servicer and the Seller, respectively, shall furnish to
the Certificate Insurer its most recent publicly available financial statements
and such other information relating to its capacity to perform its obligations
under this Agreement.
ARTICLE VII
DEFAULT
Section 7.01 SERVICER EVENTS OF TERMINATION.
(a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Master Servicer to make any Advance; or (B)
any other failure by the Master Servicer to deposit in the Collection
Account or Distribution Account any deposit required to be made under the
terms of this Agreement which continues unremedied for a period of one
Business Day after the date upon which written notice of such failure shall
have been given to the Master Servicer and the Certificate Insurer by the
Trustee or to the Trustee by the Certificate Insurer or by any Holder of a
Regular Certificate evidencing at least 25% of the Voting Rights; or
(ii) The failure by the Master Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Master Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Master
Servicer as set forth in this Agreement, which failure continues unremedied
for a period of 30 days, after the date (A) on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee or to the Trustee by the Certificate Insurer
or by any Holder of a Regular Certificate evidencing at least 25% of the
Voting Rights or (B) actual knowledge of such failure by a Servicing
Officer of the Master Servicer; or
(iii) The entry against the Master Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment
of debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 days; or
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property; or
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained in
force undischarged, unbonded or unstayed for a period of 60 days; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
or
(v) The occurrence of an "event of default" under the Insurance
Agreement;
(b) then, and in each and every such case, so long as a Servicer Event
of Termination shall not have been remedied within the applicable grace period,
(x) with respect solely to clause (i)(A) above, if such Advance is not made by
2:00 P.M., New York time, on the Business Day immediately following the Master
Servicer Remittance Date, the Trustee shall at the direction of the Certificate
Insurer or may with the consent of the Certificate Insurer terminate all of the
rights and obligations of the Master Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 7.02,
shall immediately make such Advance and assume, pursuant to Section 7.02, the
duties of a successor Master Servicer and (y) in the case of (i)(B), (ii),
(iii), (iv) and (v) above, the Trustee shall, at the direction of the
Certificate Insurer or the Holders of each Class of Regular Certificates
evidencing Percentage Interests aggregating not less than 51% (with the consent
of the Certificate Insurer), by notice then given in writing to the Master
Servicer (and to the Trustee if given by Holders of Certificates or the
Certificate Insurer), terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement. Any such notice to the Master
Servicer shall also be given to each Rating Agency, the Depositor and the
Seller. On or after the receipt by the Master Servicer (and by the Trustee if
such notice is given by the Holders or the Certificate Insurer) of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee or another successor Master Servicer
designated by the Certificate Insurer pursuant to and under this Section; and,
without limitation, and the Trustee (or such other successor Master Servicer) is
hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents or otherwise. The Master Servicer agrees to cooperate with the Trustee
(or the applicable successor Master Servicer) in effecting the termination of
the responsibilities and rights of the Master Servicer hereunder, including,
without limitation, the delivery to the Trustee (or such other successor Master
Servicer) of all documents and records requested by it to enable it to assume
the Master Servicer's functions under this Agreement within ten Business Days
subsequent to such notice, the transfer within one Business Day subsequent to
such notice to the Trustee (or the applicable successor Master Servicer) and the
Certificate Insurer for the administration by it of all cash amounts that shall
at the time be held by the Master Servicer and to be deposited by it in the
Collection Account, the Distribution Account, any REO Account or any Servicing
Account or that have been deposited by the Master Servicer in such accounts or
thereafter received by the Master Servicer with respect to the Mortgage Loans or
any REO Property received by the Master Servicer. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Mortgage Files to the successor Master Servicer and amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section shall be
paid by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
(c) The Master Servicer hereby covenants and agrees to act as the
Master Servicer under this Agreement for an initial term, commencing on the
Closing Date and ending on December 31, 1999, which term may be extended by the
Certificate Insurer for successive terms of three calendar months thereafter,
until the termination of the Trust Fund pursuant to Article X. Each such notice
of extension (a "Servicer Extension Notice"), if any, shall be delivered by the
Certificate Insurer to the Trustee, the Depositor and the Master Servicer. The
Master Servicer hereby agrees that, upon its receipt of any such Servicer
Extension Notice, the Master Servicer shall become bound for the duration of the
term covered by such Servicer Extension Notice to continue as the Master
Servicer subject to and in accordance with the other provisions of this
Agreement. The Master Servicer agrees that if as of the fifteenth (15th) day
prior to the last day of any term of the Master Servicer the Master Servicer
shall not have received any Servicer Extension Notice from the Certificate
Insurer, the Master Servicer shall within five (5) days thereafter, give written
notice of such non-receipt to the Certificate Insurer, the Trustee and the
Depositor. The failure of the Certificate Insurer to deliver a Servicer
Extension Notice by the end of a calendar term shall result in the termination
of the Master Servicer.
Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) From and after the date the Master Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, or the Master Servicer fails to receive a Servicer
Extension Notice pursuant to Section 7.01(c), the Trustee (or such other
successor Master Servicer designated by the Certificate Insurer) shall be the
successor in all respects to the Master Servicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Master Servicer by the terms and provisions hereof arising
on and after its succession. As compensation therefor, the Trustee (or such
other successor Master Servicer) shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given (or in the case of a successor Master Servicer other
than the Trustee, such compensation as is agreed to by the Certificate Insurer
and such other successor Master Servicer). Notwithstanding the above, (i) if the
Trustee is unwilling to act as successor Master Servicer or (ii) if the Trustee
is legally unable so to act, the Trustee shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $50,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder; provided, that the appointment
of any such successor Master Servicer shall be acceptable to the Certificate
Insurer, as evidenced by the Certificate Insurer's prior written consent and,
provided further, will not result in the qualification, reduction or withdrawal
of the ratings assigned to the Certificates or the ratings that are in effect
without taking into account the Certificate Insurance Policy by the Rating
Agencies as evidenced by a letter to such effect from the Rating Agencies.
Pending appointment of a successor to the Master Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
Master Servicer would otherwise have received pursuant to Section 3.18 (or such
other compensation as the Certificate Insurer and such successor shall agree).
The appointment of a successor Master Servicer shall not affect any liability of
the predecessor Master Servicer which may have arisen under this Agreement prior
to its termination as Master Servicer to pay any deductible under an insurance
policy pursuant to Section 3.14 or to indemnify the Trustee pursuant to Section
3.26), nor shall any successor Master Servicer be liable for any acts or
omissions of the predecessor Master Servicer or for any breach by such Master
Servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(b) Any successor, including the Trustee, to the Master Servicer as
master servicer shall during the term of its service as master servicer continue
to service and administer the Mortgage Loans for the benefit of
Certificateholders and the Certificate Insurer, and maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder and a Fidelity Bond in respect of its
officers, employees and agents to the same extent as the Master Servicer is so
required pursuant to Section 3.14.
Section 7.03 WAIVER OF DEFAULTS.
The Certificate Insurer or the Majority Certificateholders may with
the consent of the Certificate Insurer, on behalf of all Certificateholders,
waive any events permitting removal of the Master Servicer as servicer pursuant
to this Article VII, PROVIDED, HOWEVER, that the Majority Certificateholders may
not waive a default in making a required distribution on a Certificate without
the consent of the Holder of such Certificate. Upon any waiver of a past
default, such default shall cease to exist and any Servicer Event of 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 thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Trustee to the Rating Agencies.
Section 7.04 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination or appointment of a successor the Master
Servicer pursuant to this Article VII or Section 6.04, the Trustee shall give
prompt written notice thereof to the Certificate Insurer, the PMI Insurer, the
Certificateholders at their respective addresses appearing in the Certificate
Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Certificate Insurer promptly after any
such occurrence.
Section 7.05 SURVIVABILITY OF SERVICER LIABILITIES.
Notwithstanding anything herein to the contrary, upon termination of
the Master Servicer hereunder, any liabilities of the Master Servicer which
accrued prior to such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of a Servicer Event of
Termination and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee will not be responsible for the accuracy or content of any such
resolutions, certificates, statements, opinions, reports, documents or other
instruments. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner the Trustee shall take such action as it
deems appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice thereof
to the Certificate Insurer and will, at the expense of the Seller, which expense
shall be reasonable given the scope and nature of the required action, take such
further action as directed by the Certificate Insurer.
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 misconduct; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of a Servicer Event of Termination, and
after the curing of all such Servicer Events of Termination which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining or
investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or in accordance
with the direction of the Majority Certificateholders (with the consent of
the Certificate Insurer, so long as no Certificate Insurer Default exists)
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising or omitting to exercise any
trust or power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure by
the Master Servicer to comply with the obligations of the Master Servicer
referred to in clauses (i) and (ii) of Section 7.01(a) unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or the Trustee receives written notice of such
failure from the Master Servicer, the Certificate Insurer, or the Majority
Certificateholders.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties, and the
manner of obtaining consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe;
(ii) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, or the Certificate
Insurer, pursuant to the provisions of this Agreement, unless such
Certificateholders, and the Certificate Insurer shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; 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 any
such act;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or documents, unless requested in writing to do so by
the Certificate Insurer or the Majority Certificateholder (with the consent
of the Certificate Insurer, so long as no Certificate Insurer Default
exists and is continuing); PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition
to such proceeding. The reasonable expense of every such examination shall
be paid by the Master Servicer or, if paid by the Trustee, shall be
reimbursed by the Master Servicer upon demand. Nothing in this clause (v)
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability and
makes no representation as to any acts or omissions hereunder of the Master
Servicer until such time as the Trustee may be required to act as Master
Servicer pursuant to Section 7.02 and thereupon only for the acts or
omissions of the Trustee as successor Servicer;
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
(viii) 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.
Section 8.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer, or for the use or application of any
funds paid to the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Master Servicer. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02); the validity of the assignment of
any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 7.02); the compliance by the Depositor, the Seller
or the Master Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Master Servicer (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02), any Sub-Servicer or any
Mortgagor; any action of the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.02), or any
Sub-Servicer taken in the name of the Trustee; the failure of the Master
Servicer or any Sub-Servicer to act or perform any duties required of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Master Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 7.02); PROVIDED, HOWEVER, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement, including, without limitation, the Trustee's duty
to review the Mortgage Files pursuant to Section 2.01. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder (unless the Trustee shall have
become the successor Servicer).
Section 8.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the
Seller, the Master Servicer, the Depositor or their Affiliates.
Section 8.05 TRUSTEE'S FEES AND EXPENSES.
The Trustee shall be entitled to the Trustee's Fee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by the Trustee in the exercise and
performance of any of the powers and duties hereunder. The Trustee shall
withdraw from the Distribution Account on each Distribution Date and pay to
itself the Trustee's Fee. The Seller will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders or the Trustee hereunder. In
addition, the Seller covenants and agrees to indemnify the Trustee and its
officers, directors, employees and agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of obligations
and duties hereunder. This section shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
Section 8.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be an entity duly organized
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of Baa3 by Moody's and a short-term rating of at least A-1 by S&P,
and subject to supervision or examination by federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 8.06, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07 RESIGNATION OR REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Certificate Insurer and each Rating Agency. Upon receiving such
notice of resignation, the Depositor shall promptly appoint a successor Trustee
(approved in writing by the Certificate Insurer, so long as such approval shall
not be unreasonably withheld) by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
having 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.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Certificate Insurer of the Depositor, with the consent
of the Certificate Insurer (so long as no Certificate Insurer Default exists) or
if at any time the Trustee shall be legally unable to act, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor, the Certificate Insurer or the Master Servicer
may remove the Trustee. If the Depositor, Certificate Insurer or the Master
Servicer removes the Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Trustee (approved in
writing by the Certificate Insurer, so long as such approval is not unreasonably
withheld) by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor
trustee.
The Majority Certificateholders may, with the prior written consent of
the Certificate Insurer (so long as no Certificate Insurer Default exists and is
continuing), at any time remove the Trustee by written instrument or instruments
delivered to the Master Servicer, the Depositor and the Trustee; the Depositor
shall thereupon use its best efforts to appoint a successor trustee in
accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the Trustee may not be removed by the
Depositor or the Certificateholders without the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 8.08 SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Certificate Insurer, the
Master Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Depositor, the Master Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment of
a successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer, which consent shall not be unreasonably
withheld.
Section 8.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 8.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged 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 and the Certificate Insurer to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Master Servicer and the
Certificate Insurer (so long as no Certificate Insurer Default exists and is
continuing). If the Master Servicer and the Certificate Insurer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case a Servicer Event of Termination shall have occurred and
be continuing, the Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 8.06, and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08. The Master Servicer shall be responsible
for the fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) 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 Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee, with the consent of the
Certificate Insurer (so long as no Certificate Insurer Default exists and
is continuing), acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee except that following the
occurrence of a Servicer Event of Termination, the Trustee acting alone may
accept the resignation 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 Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Certificate Insurer and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11 LIMITATION OF LIABILITY.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by the Trust Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the Certificates
is made and intended not as a personal undertaking or agreement by the Trustee
but is made and intended for the purpose of binding only the Trust.
Section 8.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit or the Certificateholders and the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Master
Servicer, the Certificate Insurer, and each Certificateholder upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Depositor, the Master Servicer, the Certificate Insurer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Master Servicer, the Depositor, the
Certificate Insurer, and such Certificateholder and shall make available to the
Seller, the Master Servicer, the Depositor, the Certificate Insurer, and such
Certificateholder for review and copying such books, documents or records as may
be requested with respect to the Trustee's duties hereunder. The Seller, the
Depositor, the Master Servicer, the Certificate Insurer, and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 8.13 SUITS FOR ENFORCEMENT.
In case a Servicer Event of Termination or other default by the Master
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the Certificate Insurer, or may, with the consent of
the Certificate Insurer, may proceed to protect and enforce its rights and the
rights of the Certificateholders or the Certificate Insurer under this Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this Agreement or
for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee, the
Certificate Insurer and the Certificateholders.
Section 8.14 WAIVER OF BOND REQUIREMENT.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
Section 8.15 WAIVER OF INVENTORY, ACCOUNTING AND APPRAISAL
REQUIREMENT.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC ADMINISTRATION.
(a) REMIC elections as set forth in the Preliminary Statement shall be
made by the Trustee on Form 1066 or other appropriate federal tax or information
return for the taxable year ending on the last day of the calendar year in which
the Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code. The "latest possible
maturity date" of the regular interests of each REMIC, within the meaning of
Treasury Regulation Section 1.860G-1(a)(4)(iii) will be October 25, 2029.
(c) The Master Servicer shall pay any and all tax related expenses
(not including taxes, except as provided in Section 9.01(l)) of each REMIC,
including but not limited to any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to any REMIC that
involve the Internal Revenue Service or state tax authorities, but only to the
extent that (i) such expenses are ordinary or routine expenses, including
expenses of a routine audit but not expenses of litigation (except as described
in (ii)); or (ii) such expenses or liabilities (including taxes and penalties)
are attributable to the negligence or willful misconduct of the Master Servicer
in fulfilling its duties hereunder (including its duties as tax return
preparer). The Master Servicer shall be entitled to reimbursement of expenses to
the extent provided in clause (i) above from the Collection Account.
(d) The Trustee shall prepare or cause to be prepared, and the Trustee
shall sign and file or cause to be filed, all of the REMICs' federal and state
tax and information returns as each REMIC's direct representative. The expenses
of preparing and filing such returns shall be borne by the Trustee.
(e) The Holder of the Class R Certificate at any time holding the
largest Percentage Interest thereof shall be the "tax matters person" as defined
in the REMIC Provisions (the "Tax Matters Person") with respect to each REMIC
and shall act as Tax Matters Person for each REMIC. The Trustee, as agent for
the Tax Matters Person, shall perform on behalf of each REMIC all reporting and
other tax compliance duties that are the responsibility of a REMIC under the
Code, the REMIC Provisions, or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
if required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the Internal
Revenue Service or other governmental authority such information as is necessary
for the application of any tax relating to the transfer of a Residual
Certificate to any disqualified person or organization and (ii) to the
Certificateholders such information or reports as are required by the Code or
REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause each REMIC to take any action necessary to create
or maintain the status of each REMIC as a REMIC under each REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Master Servicer nor the Holder of any Residual Certificate
shall take any action, cause any REMIC to take any action or fail to take (or
fail to cause to be taken) any action that, under any REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of any REMIC as
a REMIC or (ii) result in the imposition of a tax upon any REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to any REMIC or the assets
therein, or causing such REMIC to take any action, which not expressly permitted
under the terms of this Agreement, any Holder of a Residual Certificate will
consult with the Trustee and the Master Servicer, or their respective designees,
in writing, with respect to whether such action could cause an Adverse REMIC
Event to occur with respect to such REMIC, and no such Person shall take any
such action or cause any REMIC to take any such action as to which the Trustee
or the Master Servicer has advised it in writing that an Adverse REMIC Event
could occur.
(g) Subject to Section 9.03, each Holder of a Residual Certificate
shall pay when due any and all taxes imposed on any REMIC by federal or state
governmental authorities. To the extent that such Trust taxes are not paid by a
Residual Certificateholder, the Trustee shall pay any remaining REMIC taxes out
of current or future amounts otherwise distributable to the Holder of the
Residual Certificate in such REMIC or, if no such amounts are available, out of
other amounts held in the Distribution Account, and shall reduce amounts
otherwise payable to Holders of regular interests in such REMIC, as the case may
be.
(h) The Trustee, as agent for the Tax Matters Person, shall, for
federal income tax purposes, maintain books and records with respect to each
REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) On or before April 15 of each calendar year beginning in 2000, the
Master Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Master Servicer's compliance with the provisions of this
Section 9.01.
(l) The Master Servicer shall pay annually as an expense of the Trust
Fund, without right of reimbursement therefor, the annual minimum franchise tax
imposed on the REMICs by Sections 23153 and 24874 of the California Revenue and
Taxation Code.
Section 9.02 PROHIBITED TRANSACTIONS AND ACTIVITIES.
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of the REMICs pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the interests therein other
than the Residual Certificates as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.
Section 9.03 INDEMNIFICATION WITH RESPECT TO CERTAIN TAXES AND LOSS OF
REMIC STATUS.
In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Master Servicer of its duties and
obligations set forth herein, the Master Servicer shall indemnify the Holder of
the Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Master Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Master Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Master Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Master Servicer of its duties and
obligations set forth herein, and (3) for any special or consequential damages
to Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 9.04 REO PROPERTY.
(a) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not, and shall, to
the extent provided in the applicable Servicing Agreement, not permit any
Subservicer to, rent, lease, or otherwise earn income on behalf of REMIC I with
respect to any REO Property which might 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 any REMIC of any "income from non-permitted
assets" within the meaning of section 860F(a)(2) of the Code or any "net income
from foreclosure property" which is subject to tax under the REMIC Provisions
unless the Master Servicer has advised, or has caused the applicable Servicer to
advise, the Trustee in writing to the effect that, under the REMIC Provisions,
such action would not adversely affect the status of any REMIC as a REMIC and
any income generated for such REMIC by the REO Property would not result in the
imposition of a tax upon such REMIC.
(b) The Master Servicer shall make, or shall cause the Special
Servicer to make, reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Master Servicer shall, or shall cause
the Special Servicer to, dispose of any REO Property before the close of the
third calendar year beginning after its acquisition by the Trust Fund unless the
Master Servicer or Special Servicer, as applicable, on behalf of the Trust Fund
has received a grant of extension from the Internal Revenue Service to the
effect that, under the REMIC Provisions, such REMIC may hold REO Property for a
longer period without adversely affecting the REMIC status of any REMIC or
causing the imposition of a Federal or state tax upon such REMIC. If the Master
Servicer has received such an extension, then the Master Servicer shall, or
shall cause the Special Servicer to, continue to attempt to sell the REO
Property for its fair market value for such period as such extension permits
(the "Extended Period"). If the Master Servicer has not received such an
extension and the Master Servicer or the Special Servicer is unable to sell the
REO Property before September 30 of the third calendar year after its
acquisition by the Trust Fund or if the Master Servicer has received such an
extension, and the Master Servicer is unable to sell the REO Property within the
period ending three months before the close of the Extended Period, the Master
Servicer shall, or shall cause the Special Servicer to, before the end of the
applicable period, (i) purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Master Servicer or the Special Servicer) in an auction
reasonably designed to produce a fair price prior to the expiration of the
applicable period.
ARTICLE X
TERMINATION
Section 10.01 TERMINATION.
(a) The respective obligations and responsibilities of the Seller, the
Master Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Master Servicer to send
certain notices as hereinafter set forth) shall terminate upon notice to the
Trustee upon the later of (A) the payment in full of all amounts owing to the
Certificate Insurer unless the Certificate Insurer shall otherwise consent and
(B) the earliest of (i) the Distribution Date on which the Certificate Principal
Balance of each Class of Class A Certificates has been reduced to zero, (ii) the
final payment or other liquidation of the last Mortgage Loan in the Trust, (iii)
the optional purchase by the Master Servicer or the Certificate Insurer of the
Mortgage Loans as described below and (iv) the Distribution Date in October
2029. Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
The Master Servicer or, if such option is not exercised by the Master
Servicer, the Certificate Insurer may, at its option, terminate this Agreement
on any date on which the aggregate of the Principal Balances of the Mortgage
Loans on such date is equal to or less than 10% of the aggregate of the Cut-off
Date Principal Balance of the Mortgage Loans, by purchasing, on the next
succeeding Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price equal to the sum of the outstanding Stated Principal
Balance of the Mortgage Loans and accrued and unpaid interest thereon at the
weighted average of the Mortgage Rates through the end of the Due Period
preceding the final Distribution Date plus unreimbursed Servicing Advances; any
amount owed the Certificate Insurer under the Insurance Agreement, any unpaid
Servicing Fees allocable to such Mortgage Loans and REO Properties, and any
accrued and unpaid Interest Carryover (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Master Servicer shall deposit in the Distribution Account all
amounts then on deposit in the Collection Account, which deposit shall be deemed
to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price. The Master Servicer shall indemnify the Certificate
Insurer for any claims under the Certificate Insurance Policy due to the Master
Servicer's exercise of such option.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Master Servicer,
by letter to the Certificate Insurer and the Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month
immediately preceding the month of such final distribution specifying (1) the
Distribution Date upon which final distribution of the Certificates will be made
upon presentation and surrender of such Certificates at the office or agency of
the Trustee therein designated, (2) the amount of any such final distribution
and (3) that the Record Date otherwise applicable to such Distribution Date is
not applicable, distributions being made only upon presentation and surrender of
the Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Section 4.01 for such
Distribution Date. Such funds available for distribution shall be deemed to have
been distributed in final payment of the REMIC I Regular Interests and the REMIC
II Regular Interests in accordance with Section 4.02, and any remaining funds
shall be distributed to the holders of the Class R Certificates in respect of
the related REMIC. On the final Distribution Date, the Trustee will withdraw
from the Distribution Account and remit to the Certificate Insurer the lesser of
(x) the amount available for distribution on such final Distribution Date, net
of any portion thereof necessary to pay holders of Class A Certificates pursuant
to Section 4.01 and due and unpaid Monthly Advances and Servicing Fees, (y) the
unpaid amounts due and owing to the Certificate Insurer pursuant to Section 4.01
and the Insurance Agreement.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate Servicing Account for
the benefit of such Certificateholders, and the Master Servicer (if the Master
Servicer has exercised its right to purchase the Mortgage Loans) or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders, to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within nine months after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto, and the Trustee upon
transfer of such funds shall be discharged of any responsibility for such funds,
and the Certificateholders shall look to the Class R Certificateholders for
payment.
Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event that the Certificate Insurer or the Master Servicer
exercises its purchase option as provided in Section 10.01, the Trust shall be
terminated in accordance with the following additional requirements, unless the
Trustee shall have been furnished with an Opinion of Counsel to the effect that
the failure of the Trust to comply with the requirements of this Section will
not (i) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (ii) cause any REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) On the final tax return of each REMIC, the Trustee shall designate
a date which is within 90 days prior to the final Distribution Date as the
date of adoption of a plan of complete liquidation of each REMIC under
Section 860F of the Code and any regulations thereunder;
(ii) On or after the date of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Majority Class R
Certificateholder or the Master Servicer, as applicable, for cash pursuant
to the terms of the plan of complete liquidation; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Holders of each of the Class A
Certificates, the related Class Certificate Principal Balance, plus one
month's interest thereon at the applicable Pass-Through Rate and (B) to the
Certificate Insurer, all amounts owing to the Certificate Insurer under
this Agreement and the Insurance Agreement and the Trust shall terminate at
such time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation as appropriate or upon the written request of the
Certificate Insurer and (ii) to take such other action in connection therewith
as may be reasonably required to carry out such plan of complete liquidation all
in accordance with the terms hereof.
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01 RIGHTS OF THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
CLASS A CERTIFICATEHOLDERS.
Each of the Depositor, the Master Servicer, the Trustee, and, by
accepting its Certificate, each Class A Certificateholder, agrees that unless an
Certificate Insurer Default has occurred and is continuing, the Certificate
Insurer shall have the right to exercise all rights of the Class A
Certificateholders under this Agreement (except as provided in clause (i) of the
second paragraph of Section 12.01) without any further consent of the Class A
Certificateholders, including, without limitation:
(a) the right to require the Seller to repurchase or substitute for
Mortgage Loans pursuant to Section 2.03;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Master Servicer pursuant to Section 7.01;
(c) the right to direct the actions of the Trustee during the
continuance of a Master Servicer Event of Termination pursuant to Sections 7.01
and 7.02;
(d) the right to consent to or direct any waivers of Master Servicer
Events of Termination pursuant to Section 7.03;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 8.02(a)(v); and
(f) the right to remove the Trustee pursuant to Section 8.07 hereof.
In addition, each Class A Certificateholder agrees that, unless an
Certificate Insurer Default has occurred and is continuing, the rights
specifically set forth above may be exercised by the Class A Certificateholders
only with the prior written consent of the Certificate Insurer.
Section 11.02 TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
Unless an Certificate Insurer Default has occurred and is continuing,
the Trustee shall not:
(a) agree to any amendment pursuant to Section 12.01; or
(b) undertake any litigation pursuant to Section 8.02(a)(iii);
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld.
Section 11.03 TRUST FUND AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Fund and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all references
in this Agreement (including, without limitation, in Sections 2.01 and 2.02) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in all
reasonable respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement and the Certificates.
The Master Servicer hereby acknowledges and agrees that it shall
service and administer the Mortgage Loans and any REO Properties, and shall
maintain the Accounts, for the benefit of the Certificateholders and for the
benefit of the Certificate Insurer, and all references in this Agreement
(including, without limitation, in Section 3.01) to the benefit of or actions on
behalf of the Certificateholders shall be deemed to include the Certificate
Insurer. Unless an Certificate Insurer Default has occurred and is continuing,
the Master Servicer shall not terminate any sub-servicing agreements without the
prior consent of the Certificate Insurer. Unless an Certificate Insurer Default
has occurred and is continuing, neither the Master Servicer nor the Depositor
shall undertake any litigation pursuant to Section 6.03 (other than litigation
to enforce their respective rights hereunder) without the prior consent of the
Certificate Insurer.
Section 11.04 CLAIMS UPON THE CERTIFICATE INSURANCE POLICY;
CERTIFICATE INSURANCE POLICY PAYMENTS ACCOUNT.
(a) If, by the Close of Business on the third Business Day prior to a
Distribution Date, the Trustee determines that a Deficiency Amount for any
Distribution Date is greater than zero or that a claim may be made under the
Certificate Insurance Policy in respect to any amount paid to Certificateholders
which is recoverable in bankruptcy as a preference, then the Trustee shall give
notice to the Certificate Insurer by telephone or telecopy of the amount of such
Deficiency Amount or preference. Such notice of such Deficiency Amount shall be
confirmed in writing in the form set forth as Exhibit A to the Endorsement of
the Certificate Insurance Policy, to the Certificate Insurer and the Fiscal
Agent (as defined in the Certificate Insurance Policy), if any, at or before
12:00 noon New York time on the second Business Day prior to such Distribution
Date. Following Receipt (as defined in the Certificate Insurance Policy) by the
Certificate Insurer of such notice in such form, the Certificate Insurer or the
Fiscal Agent will pay any amount payable under the Certificate Insurance Policy
on the later to occur of (i) 12:00 noon New York time on the second Business Day
following such receipt and (ii) 12:00 noon New York time on the Distribution
Date to which such deficiency relates, as provided in the Endorsement to the
Certificate Insurance Policy.
(b) The Trustee shall establish a separate special purpose trust
account for the benefit of Holders of the Class A Certificates and the
Certificate Insurer referred to herein as the "Certificate Insurance Policy
Payments Account" over which the Trustee shall have exclusive control and sole
right of withdrawal. The Trustee shall deposit any amount paid under the
Certificate Insurance Policy in the Certificate Insurance Policy Payments
Account and distribute such amount only for purposes of payment to Holders of
Class A Certificates of the Insured Payment for which a claim was made, and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Master Servicer, the Trustee or the Trust Fund. Amounts paid under the
Certificate Insurance Policy shall be transferred to the Distribution Account in
accordance with the next succeeding paragraph and disbursed by the Trustee to
Holders of Class A Certificates in accordance with Section 4.01(c) or Section
10.01, as applicable. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
the Insured Payment with other funds available to make such payment. However,
the amount of any payment of principal of or interest on the Class A
Certificates to be paid from funds transferred from the Certificate Insurance
Policy Payments Account shall be noted as provided in paragraph (c) below in the
Certificate Register and in the statement to be furnished to Holders of the
Class A Certificates pursuant to Section 4.02. Funds held in the Certificate
Insurance Policy Payments Account shall not be invested.
On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of any funds received by the
Trustee as a result of any claim under the Certificate Insurance Policy, to the
extent required to make the Insured Payment on such Distribution Date, shall be
withdrawn from the Certificate Insurance Policy Payments Account and deposited
in the Distribution Account and applied by the Trustee, together with the other
funds to be withdrawn from the Distribution Account pursuant to Section 4.01(c)
or Section 10.01, as applicable, directly to the payment in full of the Insured
Payment due on the Class A Certificates. Funds received by the Trustee as a
result of any claim under the Certificate Insurance Policy shall be deposited by
the Trustee in the Certificate Insurance Policy Payments Account and used solely
for payment to the Holders of the Class A Certificates and may not be applied to
satisfy any costs, expenses or liabilities of the Master Servicer, the Trustee,
or the Trust Fund. Any funds remaining in the Certificate Insurance Policy
Payments Account on the first Business Day following a Distribution Date shall
be remitted to the Certificate Insurer, pursuant to the instructions of the
Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge seeking the avoidance as
a preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any Insured Payment made with respect to
the Class A Certificates. Each Holder of the Class A Certificates, by its
purchase of such Certificates, the Master Servicer, and the Trustee hereby agree
that the Certificate Insurer (so long as no Certificate Insurer Default has
occurred and is continuing) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to the rights of the Master Servicer, the Trustee, and each Holder of the Class
A Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
Section 11.05 EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Certificate Insurance
Policy shall not be considered payment of such Class A Certificates from the
Trust Fund and shall not result in the payment of or the provision for the
payment of the principal of or interest on such Certificates within the meaning
of Section 4.01. The Depositor, the Master Servicer and the Trustee acknowledge,
and each Holder by its acceptance of a Class A Certificate agrees, that without
the need for any further action on the part of the Certificate Insurer, the
Depositor, the Master Servicer or the Trustee (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Holders of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Holders to
receive such principal and interest from the Trust Fund and (b) the Certificate
Insurer shall be paid such principal and interest but only from the sources and
in the manner provided herein for the payment of such principal and interest.
The Trustee and the Master Servicer shall cooperate in all respects
with any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Holders as
otherwise set forth herein.
Section 11.06 NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Rating Agencies or
any of the Certificateholders shall also be sent to the Certificate Insurer.
Section 11.07 THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 11.08 TRUSTEE TO HOLD THE CERTIFICATE INSURANCE Policy.
The Trustee will hold the Certificate Insurance Policy in trust as
agent for the Holders of the Class A Certificates for the purpose of making
claims thereon and distributing the proceeds thereof. Upon the later of (i) the
date upon which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and all Insured Payments have been made
and (ii) the date the Term of the Certificate Insurance Policy (as defined in
the Certificate Insurance Policy) ends, the Trustee, shall surrender the
Certificate Insurance Policy to the Certificate Insurer for cancellation. Each
Holder of Class A Certificates, by accepting its Certificates, appoints the
Trustee as attorney-in-fact for the purpose of making claims on the Certificate
Insurance Policy.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 AMENDMENT.
This Agreement may be amended from time to time by Seller, the
Depositor, the Master Servicer, the Special Servicer and the Trustee; and
without the consent of the Certificateholders, but only with the consent of the
Certificate Insurer (if no Certificate Insurer Default exists and is continuing
and the Class A Certificates are outstanding or any amounts are owed to the
Certificate Insurer under the Insurance Agreement), (i) to cure any ambiguity or
mistake, (ii) to correct or supplement any provisions herein which may be
defective or inconsistent with any other provisions herein or (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement or the Certificate Insurance Policy, as the case may be, which shall
not be inconsistent with the provisions of this Agreement; PROVIDED, HOWEVER,
that any such action listed in clause (i) through (iii) above shall be deemed
not to adversely affect in any respect the interests of any Certificateholder,
if evidenced by (i) written notice to the Depositor, the Master Servicer and the
Trustee from the Rating Agencies that such action will not result in the
reduction or withdrawal of the rating of any outstanding Class of Certificates
with respect to which it is a Rating Agency or (ii) an Opinion of Counsel
delivered to the Master Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by
Seller, the Depositor, the Master Servicer, the Special Servicer and the Trustee
with the consent of the Certificate Insurer (if no Insurer Default exists and is
continuing and the Class A Certificates are outstanding or any amounts are owed
to the Certificate Insurer under the Insurance Agreement) with the consent of
the Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; PROVIDED,
HOWEVER, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates or distributions
or payments under the Certificate Insurance Policy which are required to be made
on any Certificate without the consent of the Holder of such Certificate, (y)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in clause (x) above,
without the consent of the Holders of Certificates of such Class evidencing at
least a 66% Percentage Interest in such Class, or (z) reduce the percentage of
Voting Rights required by clause (y) above without the consent of the Holders of
all Certificates of such Class then outstanding. Upon approval of an amendment,
a copy of such amendment shall be sent to the Rating Agencies.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause any REMIC constituting part of
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding and that the amendment is being made in accordance with the
terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is Seller or the Master Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Master Servicer, the Certificate Insurer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed amendment;
instead it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this 12.01 Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 12.02 RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders or the Certificate Insurer accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
Section 12.03 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also (i) if no
Certificate Insurer Default exists and is continuing, the Certificate Insurer so
agrees or (ii) if a Certificate Insurer Default exists and is continuing, the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 12.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 12.04 GOVERNING LAW; JURISDICTION.
This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 12.05 NOTICES.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first Class Mail, postage prepaid, or by express delivery service, to (a) in the
case of Seller and/or Master Servicer, Pan American Bank, FSB, 625 The City
Drive, Ste. 490, Orange, CA 92868, Attention: Blair F. Kenny, or such other
address or telecopy number as may hereafter be furnished to the Depositor and
the Trustee in writing by Seller, (b) in the case of the Trustee, Bankers Trust
Company of California, N.A., 1761 East St. Andrew Place, Santa Ana, California
92705-4934, Attention: UP9902, or such other address or telecopy number as may
hereafter be furnished to the Depositor, Seller and the Master Servicer in
writing by the Trustee, (c) in the case of the Depositor, Asset Backed Funding
Corporation, Bank of America Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255, Attention: General Counsel, (704) 388-1770
(telecopy number (704) 388-9668), or such other address or telecopy number as
may be furnished to Seller, the Master Servicer and the Trustee in writing by
the Depositor, (d) in the case of the Special Servicer, Fairbanks Capital Corp.,
3815 South West Temple, Salt Lake City, Utah 84115 Attention: Sean Arnold,
and (e) in the case of the Certificate Insurer, Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022, Attention:
Surveillance Department. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Master Servicer Default shall be given by telecopy and by certified mail. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.
Section 12.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.07 ARTICLE AND SECTION REFERENCES.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 12.08 NOTICE TO THE RATING AGENCIES AND THE CERTIFICATE
INSURER.
(a) Each of the Trustee and the Master Servicer shall be obligated to
use its best reasonable efforts promptly to provide notice to the Rating
Agencies and the Certificate Insurer with respect to each of the following of
which a Responsible Officer of the Trustee or Servicer, as the case may be, has
actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Master Servicer Event of Termination that
has not been cured or waived;
(iii) the resignation or termination of the Master Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Master Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency and the Certificate Insurer copies of each Statement to
Certificateholders described in Section 4.03 hereof; and the Master Servicer
shall promptly furnish to each Rating Agency copies of the following:
(i) each annual statement as to compliance described in Section 3.20
hereof;
(ii) each annual independent public accountants' servicing report
described in Section 3.21 hereof; and
(iii) each notice delivered pursuant to Section 7.01(a) hereof which
relates to the fact that the Master Servicer has not made an Advance.
Any such notice pursuant to this Section 12.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Moody's
Investors Service, Inc., 99 Church Street, New York, NY 10048, Attention: MBS
Monitoring/United PanAm Mortgage Loan Trust 1999-2; and Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, NY
10041, Attention: Mortgage Surveillance Group.
Section 12.09 FURTHER ASSURANCES.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.
Section 12.10 BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders, the
Certificate Insurer and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 12.11 ACTS OF CERTIFICATEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing, and such action shall become effective when
such instrument or instruments are delivered to the Trustee, Seller and the
Master Servicer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders 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 12.11.
(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 a 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 a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder 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 Certificate.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller and the Master Servicer
and the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
ASSET BACKED FUNDING CORPORATION, as
Depositor
By:____________________________________
Name: Robert Perret
Title: Senior Vice President
PAN AMERICAN BANK, FSB,
as Seller and Master Servicer
By:____________________________________
Name:
Title:
FAIRBANKS CAPITAL CORP.,
as Special Servicer
By:____________________________________
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.,
as Trustee
By:____________________________________
Name:
Title:
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared Robert Perret known to me to be a Senior Vice
President of Asset Backed Funding Corporation, a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared ______________ known to me to be a
_______________________ of Pan American Bank, FSB, a company that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said company, and acknowledged to me that such company executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared _______________, known to me to be
____________________ of Bankers Trust Company of California, N.A., a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said association, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared _______________, known to me to be
____________________ of Fairbanks Capital Corp., a _________ corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
Certificate No.: 1
Cut-off Date: With respect to any Mortgage
Loan, the later of (i) the
date of origination of such
Mortgage Loan or (ii) October
1, 1999
First Distribution Date: November 26, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination"): $[___________]
Original Class Certificate
Principal Balance of this
Class: $[___________]
Percentage Interest: 100%
Initial Pass-Through Rate:* [___________]
CUSIP: [___________]
Common Code: [___________]
Class: A-1
Assumed Maturity Date: October 25, 2029
- -----------------
* Subject to adjustment as described in the Agreement.
<PAGE>
United PanAm Mortgage Loan Trust 1999-2
Asset Backed Certificates,
Series 1999-2
Class A-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
group of fixed-rate and adjustable-rate mortgage loans ("Loan Group
I"), which comprise part of the Trust consisting primarily of two
groups of first lien residential mortgage loans (the "Mortgage
Loans")
ASSET BACKED FUNDING CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Seller, the Master Servicer, the Special
Servicer or the Trustee referred to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class A-1 Certificate (obtained by dividing the
Initial Certificate Principal Balance of this Class A-1 Certificate by the
Original Class Certificate Principal Balance) in certain monthly distributions
with respect to a Trust consisting primarily of the Mortgage Loans deposited by
Asset Backed Funding Corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of October 1, 1999 (the
"Agreement") among the Depositor, Pan American Bank, FSB, as seller (in such
capacity, the "Seller") and master servicer (in such capacity, the "Master
Servicer"), Fairbanks Capital Corp., as special servicer (the "Special
Servicer"), and Bankers Trust Company of California, N.A., a New York banking
corporation, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-1 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this Class A-1
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Solely for U.S. federal income tax purposes, this Certificate represents
(i) a beneficial interest in a "regular interest" in a "real estate mortgage
investment conduit" as those terms are defined, respectively, in Sections 860G
and 860D of the Internal Revenue Code of 1986, as amended, and (ii) the right to
receive payments in respect of Group 1 Interest Carryovers.
This Class A-1 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: October 12, 1999
UNITED PANAM MORTGAGE LOAN
TRUST 1999-2
By: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity,
but solely as Trustee
By:_______________________________________
This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement
By:____________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A., as Trustee
<PAGE>
[Reverse of Class A-1 Certificate]
UNITED PANAM MORTGAGE LOAN TRUST 1999-2
Asset Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as United PanAm Mortgage Loan Trust 1999-2, Asset Backed
Certificates, Series 1999-2 (herein collectively called the "Certificates"), and
representing a beneficial ownership interest in the Trust created by the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account and the
guarantee provided by the Certificate Insurer for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning Class
A-1 Certificates of a Class having denominations aggregating at least
$1,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Seller,
the Master Servicer and the Trustee and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the Depositor
or the Trustee may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee nor
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Principal Balance of the Mortgage Loans as of their Cut-off Dates, the
Master Servicer or the Certificate Insurer may purchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the later of (A) the payment in full of all amounts
owing to the Certificate Insurer unless the Certificate Insurer shall otherwise
consent and (B) the earliest of (i) the Distribution Date on which the aggregate
Class Certificate Principal Balance of the Class A Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust and (iii) the Distribution Date in October, 2029. In no event,
however, will the trust created by the Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at the
date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s)unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
Dated:__________________
------------------------------------------
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of_____________________________________________________________,
________________________________________________________________________________
account number _________________________, or, if mailed by check, to ___________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by__________________________________________,
the assignee named above, or___________________________________________________,
as its agent.
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
Certificate No.: 1
Cut-off Date: With respect to any Mortgage
Loan, the later of (i) the
date of origination of such
Mortgage Loan or (ii) October
1, 1999
First Distribution Date: November 26, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination"): $[___________]
Original Class Certificate
Principal Balance of this
Class: $[___________]
Percentage Interest: 100%
Initial Pass-Through Rate:* [___________]
CUSIP: [___________]
Common Code: [___________]
Class: A-2
Assumed Maturity Date: September 25, 2029
- -------------------------
* Subject to adjustment as described in the Agreement.
<PAGE>
United PanAm Mortgage Loan Trust 1999-2
Asset Backed Certificates,
Series 1999-2
Class A-2
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
group of fixed-rate and adjustable-rate mortgage loans ("Loan Group
II"), which comprise part of the Trust consisting primarily of two
groups of first lien residential mortgage loans (the "Mortgage
Loans")
ASSET BACKED FUNDING CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-2
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Seller, the Master Servicer, the Special
Servicer or the Trustee referred to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class A-2 Certificate (obtained by dividing the
Initial Certificate Principal Balance of this Class A-2 Certificate by the
Original Class Certificate Principal Balance) in certain monthly distributions
with respect to a Trust consisting primarily of the Mortgage Loans deposited by
Asset Backed Funding Corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of October 1, 1999 (the
"Agreement") among the Depositor, Pan American Bank, FSB, as seller (in such
capacity, the "Seller") and master servicer (in such capacity, the "Master
Servicer"), Fairbanks Capital Corp., as special servicer (the "Special
Servicer"), and Bankers Trust Company of California, N.A., a New York banking
corporation, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-2 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this Class A-2
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
Reference is hereby made to the further provisions of this Class A-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Solely for U.S. federal income tax purposes, this Certificate represents
(i) a beneficial interest in a "regular interest" in a "real estate mortgage
investment conduit" as those terms are defined, respectively, in Sections 860G
and 860D of the Internal Revenue Code of 1986, as amended, and (ii) the right to
receive payments in respect of Group I Interest Carryovers.
This Class A-2 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated:______October 12, 1999
UNITED PANAM MORTGAGE LOAN
TRUST 1999-2
By: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity,
but solely as Trustee
By:_______________________________________
This is one of the Class A-2 Certificates
referenced in the within-mentioned Agreement
By:____________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A., as Trustee
<PAGE>
[Reverse of Class A-2 Certificate]
UNITED PANAM MORTGAGE LOAN TRUST 1999-2
Asset Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as United PanAm Mortgage Loan Trust 1999-2, Asset Backed
Certificates, Series 1999-2 (herein collectively called the "Certificates"), and
representing a beneficial ownership interest in the Trust created by the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account and the
guarantee provided by the Certificate Insurer for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning Class
A-2 Certificates of a Class having denominations aggregating at least
$1,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Seller,
the Master Servicer and the Trustee and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the Depositor
or the Trustee may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee nor
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Principal Balance of the Mortgage Loans as of their Cut-off Dates, the
Master Servicer or the Certificate Insurer may purchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the later of (A) the payment in full of all amounts
owing to the Certificate Insurer unless the Certificate Insurer shall otherwise
consent and (B) the earliest of (i) the Distribution Date on which the aggregate
Class Certificate Principal Balance of the Class A Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust and (iii) the Distribution Date in October, 2029. In no event,
however, will the trust created by the Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at the
date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
Dated:__________________
__________________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
_______________________________________________________________________________.
for the account of_____________________________________________________________,
account number _________________________, or, if mailed by check, to ___________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by__________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
EXHIBIT B
[Reserved]
<PAGE>
EXHIBIT C
FORM OF CLASS X CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (I) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (II) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
THIS CERTIFICATE OR INTEREST HEREIN WITH FUNDS CONTAINED IN AN "INSURANCE
COMPANY GENERAL ACCOUNT" AS DEFINED IN PTCE 95-60 AND THAT THE PURCHASING AND
HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60, OR (III) AN OPINION
OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO
HEREIN. SUCH REPRESENTATION SHALL BE DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY
THE TRANSFEREE'S ACCEPTANCE OF THIS CERTIFICATE OR BY THE ACCEPTANCE BY A
BENEFICIAL OWNER OF THE BENEFICIAL INTEREST REPRESENTED HEREBY UNLESS THE
TRUSTEE SHALL HAVE RECEIVED FROM THE TRANSFEREE AN ALTERNATIVE REPRESENTATION
ACCEPTABLE IN FORM AND SUBSTANCE TO THE TRUSTEE AND THE DEPOSITOR.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
<PAGE>
Certificate No.: 1
Cut-off Date: With respect to any Mortgage Loan, the
later of (i) the date of origination
of such Mortgage Loan or (ii) October
1, 1999
First Distribution Date: November 26, 1999
Percentage Interest: 100%
Class: X
Assumed Maturity Date: October 25, 2029
UNITED PANAM MORTGAGE LOAN TRUST 1999-2
Asset Backed Certificates,
Series 1999-2
Class X
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of two groups of first lien fixed-rate
and adjustable-rate residential mortgage loans (the "Mortgage
Loans")
ASSET BACKED FUNDING CORPORATION, as Depositor
Distributions in respect of this Certificate are distributable monthly as
set forth herein. This Class X Certificate does not evidence an obligation of,
or an interest in, and is not guaranteed by the Depositor, the Seller, the
Master Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that PAN AMERICAN BANK, FSB is the registered owner of the
Percentage Interest evidenced by this Class X Certificate in certain monthly
distributions with respect to a Trust consisting primarily of the Mortgage Loans
deposited by Asset Backed Funding Corporation (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of October 1,
1999 (the "Agreement") among the Depositor, Pan American Bank, FSB, as seller
(in such capacity, the "Seller") and master servicer (in such capacity, the
"Master Servicer"), Fairbanks Capital Corp., as special servicer (the "Special
Servicer"), and Bankers Trust Company of California, N.A., a New York banking
corporation, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class X Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class X
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer not is to be made pursuant to
Rule 144A of the Act there shall be delivered to the Trustee and the Depositor
an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Seller or the Depositor or there shall be delivered to the
Trustee and the Depositor a transferor certificate by the transferor and an
investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, (ii) if the purchaser is an insurance company, a representation
that the purchaser is an insurance company which is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, or (iii) an Opinion of Counsel with respect to certain ERISA
matters described in the Agreements. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Reference is hereby made to the further provisions of this Class X
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class X Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: October 12, 1999
UNITED PANAM MORTGAGE LOAN
TRUST 1999-2
By: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual
capacity, but solely as Trustee
By:_______________________________________
This is one of the Class X Certificates
referenced in the within-mentioned Agreement
By:____________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A., as Trustee
<PAGE>
[Reverse of Class X Certificate]
UNITED PANAM MORTGAGE LOAN TRUST 1999-2
Asset Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as United PanAm Mortgage Loan Trust 1999-2, Asset Backed
Certificates, Series 1999-2 (herein collectively called the "Certificates"), and
representing a beneficial ownership interest in the Trust created by the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning Class X
Certificates having a 100% Percentage Interest, by Wire transfer or otherwise,
as set forth in the Agreement. The final distribution on each Certificate will
be made in like manner, but only upon presentment and surrender of such
Certificate at the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Seller,
the Master Servicer and the Trustee and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the Depositor
or the Trustee may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee nor
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-off Date, the
Master Servicer or the Certificate Insurer may purchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the later of (A) the payment in full of all amounts
owing to the Certificate Insurer unless the Certificate Insurer shall otherwise
consent and (B) the earliest of (i) the Distribution Date on which the aggregate
Class Certificate Principal Balance of the Class X Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust and (iii) the Distribution Date in October, 2029. In no event,
however, will the trust created by the Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at the
date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
Dated:__________________
__________________________________________
Signature by or on behalf of assignor
<PAGE>
EXHIBIT D
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND CLASS X
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
BENEFICIAL INTEREST IN MULTIPLE "RESIDUAL INTERESTS" IN "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
<PAGE>
Certificate No.: [_________________]
Percentage Interest: 100%
UNITED PANAM MORTGAGE LOAN TRUST 1999-2
Asset Backed Certificates,
Series 1999-2
Class R
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of two groups of first lien fixed-rate
and adjustable-rate residential mortgage loans (the "Mortgage
Loans")
ASSET BACKED FUNDING CORPORATION, as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Master Servicer, the
Special Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that Pan American Bank, FSB is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs in a Trust consisting primarily of the Mortgage Loans deposited by Asset
Backed Funding Corporation (the "Depositor"). The Trust was created pursuant to
a Pooling and Servicing Agreement dated as of October 1, 1999 (the "Agreement")
among the Depositor, Pan American Bank, FSB, as seller (in such capacity, the
"Seller") and master servicer (in such capacity, the "Master Servicer"),
Fairbanks Capital Corp., as special servicer (the "Special Servicer"), and
Bankers Trust Company of California, N.A., a New York banking corporation, as
trustee (the "Trustee"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee or the Depositor; or there shall be delivered to the Trustee and the
Depositor a transferor certificate by the transferor and an investment letter
shall be executed by the transferee. The Holder hereof desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) an Opinion of Counsel
with respect to certain ERISA matters described in the Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate of this Class to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the opinion of counsel satisfactory to the
Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. The Trustee will provide the Internal
Revenue Service and any pertinent persons with the information needed to compute
the tax imposed under the applicable tax laws on transfers of residual interests
to disqualified organizations, if any person other than a Permitted Transferee
acquires an Ownership Interest on a Class R Certificate in violation of the
restrictions mentioned above.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: October 12, 1999
UNITED PANAM MORTGAGE LOAN
TRUST 1999-2
By: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual
capacity, but solely as Trustee
By:_______________________________________
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By:____________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A., as Trustee
<PAGE>
[Reverse of Class R Certificate]
United PanAm Mortgage Loan Trust 1999-2
Asset Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as United PanAm Mortgage Loan Trust 1999-2, Asset Backed
Certificates, Series 1999-2 (herein collectively called the "Certificates"), and
representing a beneficial ownership interest in the Trust created by the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to funds on deposit in the Distribution Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning Class R
Certificates having a 100% Percentage Interest, by wire transfer or otherwise,
as set forth in the Agreement. The final distribution on each Certificate will
be made in like manner, but only upon presentment and surrender of such
Certificate at the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Seller,
the Master Servicer and the Trustee and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the Depositor
or the Trustee may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee nor
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-off Date
specified in the Agreement, the Master Servicer or the Certificate Insurer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the later of (A) the
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the
Distribution Date on which the aggregate Class Certificate Principal Balance of
the Class A Certificates has been reduced to zero, (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust and (iii) the
Distribution Date in October, 2029. In no event, however, will the trust created
by the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
Dated:__________________
___________________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
_______________________________________________________________________________.
for the account of_____________________________________________________________,
account number _________________________, or, if mailed by check, to ___________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by__________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
EXHIBIT E
MORTGAGE LOAN SCHEDULE
[PROVIDED TO TRUSTEE ONLY]
<PAGE>
EXHIBIT F
REQUEST FOR RELEASE OF DOCUMENTS
To: Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Attn: ________________
Re: Pooling and Servicing Agreement dated as of October 1, 1999 among Asset
Backed Funding Corporation, as depositor, Pan American Bank, FSB, as
seller and master servicer, Fairbanks Capital Corp., as special servicer,
and Bankers Trust Company of California, N.A., as trustee (the "Trustee").
In connection with the administration of the Mortgage Loans held by you as
Trustee pursuant to the above-captioned Pooling and Servicing Agreement,
we request the release, and hereby acknowledge receipt, of the Trustee's
Mortgage File for the Mortgage Loan described below, for the reason
indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (check one):
_____1. Mortgage Paid in Full
_____2. Foreclosure
_____3. Substitution
_____4. Other Liquidation (Repurchases, etc.)
_____5. Nonliquidation Reason:____________________
Address to which Trustee should deliver the Trustee's Mortgage File:
________________________________________________________________________________
________________________________________________________________________________
By:________________________
(authorized signer)
Issuer:____________________
Address:___________________
Date:______________________
TRUSTEE
Bankers Trust Company of California, N.A.
Please acknowledge the execution of the above request by your signature
and date below:
_____________________________________ ___________________
Signature Date
Documents returned to Trustee:
_____________________________________ ___________________
Trustee Date
<PAGE>
EXHIBIT G-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
___________________
[Date]
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Pooling and Servicing Agreement (the "POOLING AND SERVICING
Agreement"), dated as of October 1, 1999 among Asset Backed Funding
Corporation, as depositor, Pan American Bank, FSB, as seller and
master servicer, Fairbanks Capital Corp., as special servicer, and
Bankers Trust Company of California, N.A., as trustee with respect to
United Panam Mortgage Loan Trust 1999-2, Asset Backed Certificates,
Series 1999-2.
----------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement,
subject to review of the contents thereof, the undersigned, as Trustee, hereby
certifies that it (or its custodian) has received the documents listed in
Section 2.01 of the Pooling and Servicing Agreement for each Mortgage File
pertaining to each Mortgage Loan listed on Exhibit E, to the Pooling and
Servicing Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement sections cross-referenced therein.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT G-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
___________________
[Date]
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Pooling and Servicing Agreement (the "POOLING AND SERVICING
Agreement"), dated as of October 1, 1999 among Asset Backed Funding
Corporation, as depositor, Pan American Bank, FSB, as seller and
master servicer, Fairbanks Capital Corp., as special servicer, and
Bankers Trust Company of California, N.A., as trustee with respect to
United Panam Mortgage Loan Trust 1999-2, Asset Backed Certificates,
Series 1999-2.
----------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement,
the undersigned, as Trustee, hereby certifies that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or listed on Schedule I hereto) it (or its custodian) has received the
applicable documents listed in Section 2.01 of the Pooling and Servicing
Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT G-3
FORM OF RECEIPT OF MORTGAGE NOTE
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: United PanAm Mortgage Loan
Asset Backed Certificates, Series 1999-2
----------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated as
of October 1, 1999, among Asset Backed Funding Corporation, as depositor, Pan
American Bank, FSB, as seller and master servicer, Fairbanks Capital Corp., as
special servicer, and Bankers Trust Company of California, N.A., as trustee, we
hereby acknowledge the receipt of the original Mortgage Note (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT H
LIST OF PMI MORTGAGE LOANS
(See Schedule E of Pooling and Servicing Agreement)
<PAGE>
EXHIBIT I
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to administer
oaths, _____________________ who first being duly sworn deposes and says:
Deponent is _____________________ of _______________________________, successor
by merger to __________________________________________ ("Seller") and who has
personal knowledge of the facts set out in this affidavit.
On _____________________, _____________________ did execute and deliver a
promissory note in the principal amount of $_______________.
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing Bankers Trust
Company of California, N.A., as trustee on behalf of United PanAm Mortgage Loan
Asset Backed Certificates, Series 1999-2, to accept the
transfer of the above described loan from Seller.
Seller agrees to indemnify Bankers Trust Company of California, N.A.,
Asset Backed Funding Corporation and Pan American Bank, FSB and hold them
harmless for any losses incurred by such parties resulting from the fact that
the above described Note has been lost or misplaced.
By:____________________________________
____________________________________
STATE OF )
) ss:
COUNTY OF )
On this ____ day of_______ 199__, before me, a Notary Public, in and for
said County and State, appeared ________________________ who acknowledged the
extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.
Witness my hand and Notarial Seal this ____ day of_______ 199__.
_______________________________________
_______________________________________
My commission expires ________________.
<PAGE>
EXHIBIT J
FORM OF ERISA REPRESENTATION
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: United PanAm Mortgage Loan Trust 1999-2,
Asset Backed Certificates, Series 1999-2
----------------------------------------
Ladies and Gentlemen:
1. The undersigned is the __________________ of (the "Transferee") a
[corporation duly organized] and existing under the laws of ______, on behalf of
which he makes this affidavit.
2. The Transferee either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (in
the case of the Class X Certificates) if the Transferee is an insurance company,
such Transferee is purchasing such Certificates with funds contained in an
"Insurance Company General Account" (as such term is defined in Section v(e) of
the Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and the
purchase and holding of such Certificates are covered under PTCE 95-60; or (y)
shall deliver to the Trustee and the Depositor an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Trustee and the Depositor, and upon which the
Trustee and the Depositor shall be entitled to rely, to the effect that the
purchase or holding of such Certificate by the Transferee will not result in the
assets of the Trust Fund being deemed to be plan assets and subject to the
prohibited transaction provisions of ERISA or the Code and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken by
such entities in the Pooling and Servicing Agreement, which opinion of counsel
shall not be an expense of the Trustee or the Depositor.
3. The Transferee hereby acknowledges that under the terms of the Pooling
and Servicing Agreement (the "Agreement") among Asset Backed Funding
Corporation, as Depositor, Pan American Bank, FSB, as Seller and Master Servicer
(the "Seller" and "Master Servicer"), Fairbanks Capital Corp., as Special
Servicer (the "Special Servicer"), and Bankers Trust Company of California,
N.A., as Trustee (the "Trustee"), no transfer of the ERISA-Restricted
Certificates shall be permitted to be made to any person unless the Depositor
and Trustee have received a certificate from such transferee in the form hereof.
<PAGE>
IN WITNESS WHEREOF, the Transferee has executed this certificate.
__________________________________________
[Transferee]
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT K
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine California 92614
Re: United PanAm Mortgage Loan Trust 1999-2,
Asset Backed Certificates, Series 1999-2
----------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned Certificates, we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:_______________________________________
Authorized Officer
<PAGE>
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Re: United PanAm Mortgage Loan Trust 1999-2,
Asset Backed Certificates, Series 1999-2
----------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:_______________________________________
Authorized Officer
<PAGE>
ANNEX 1 TO EXHIBIT K
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (1) (A) the
Buyer owned and/or invested on a discretionary basis $______(1) in
securities (except for the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A and (B) the Buyer satisfies the
criteria in the category marked below or (2) each equity owner of Buyer
satisfies the conditions set forth in clause (1) above (in which case
"Buyer", as used in paragraphs ii (other than this subclause (2)), iii and
iv hereof shall refer to each such equity owner) and Buyer is acting for
its own account or the account of other qualified institutional buyers.
- ---------------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
____ CORPORATION, ETC. The Buyer is a corporation (other
than a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or charitable
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
____ BANK. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
____ SAVINGS AND LOAN. The Buyer (a) is a savings and
loan association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
____ BROKER-DEALER. The Buyer is a dealer
registered pursuant to Section 15 of the Securities Exchange Act
of 1934.
____ INSURANCE COMPANY. The Buyer is an insurance
company whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a State,
territory or the District of Columbia.
____ STATE OR LOCAL PLAN. The Buyer is a plan
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees.
____ ERISA PLAN. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
____ INVESTMENT ADVISOR. The Buyer is an investment
advisor registered under the Investment Advisors Act of 1940.
____ SMALL BUSINESS INVESTMENT COMPANY. Buyer is a
small business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
____ BUSINESS DEVELOPMENT COMPANY. Buyer is a
business development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
iii. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if
the Buyer is a dealer, (iii) securities issued or guaranteed by the U.S.
or any instrumentality thereof, (iv) bank deposit notes and certificates
of deposit, (v) loan participations, (vi) repurchase agreements, (vii)
securities owned but subject to a repurchase agreement and (viii)
currency, interest rate and commodity swaps.
iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer
used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where
the Buyer reports its securities holdings in its financial statements on
the basis of their market value, and (ii) no current information with
respect to the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued at market.
Further, in determining such aggregate amount, the Buyer may have included
securities owned by subsidiaries of the Buyer, but only if such
subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and
if the investments of such subsidiaries are managed under the Buyer's
direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act
of 1934, as amended.
v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule
144A.
vi. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such
notice is given, the Buyer's purchase of the Certificates will constitute
a reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan as provided above,
the Buyer agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
____________________________________
Print Name of Buyer
By:_________________________________
Name:
Title:
Date:_______________________________
<PAGE>
ANNEX 2 TO EXHIBIT K
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $____ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
____ The Buyer is part of a Family of Investment
Companies which owned in the aggregate $____ in securities (other
than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
____________________________________
Print Name of Buyer or Adviser
By:_________________________________
Name:
Title:
IF AN ADVISER:
____________________________________
Print Name of Buyer or Adviser
Date:_______________________________
<PAGE>
Exhibit 1
<PAGE>
Exhibit 2
<PAGE>
EXHIBIT L
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 5.02(d)
UNITED PANAM MORTGAGE LOAN
TRUST 1999-1 ASSET BACKED CERTIFICATES, SERIES 1999-2
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ___________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling and Servicing Agreement, (the "Agreement"),
relating to the above-referenced Certificates, among Asset Backed Funding
Corporation, as depositor, Pan American Bank, FSB, as seller and master servicer
(the "Seller" and "Master Servicer"), Fairbanks Capital Corp., as special
servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"'). Capitalized terms used, but not defined herein or in Exhibit 1
hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(d) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit M to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ______.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of ____________, 19__.
[NAME OF TRANSFEREE]
By:___________________________
Name:
Title:
[Corporate Seal]
ATTEST:
________________________
[Assistant] Secretary
Personally appeared before me the above-named ______, known or proved to
me to be the same person who executed the foregoing instrument and to be the
__________ of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of ___________, 19__.
_____________________________________
NOTARY PUBLIC
My Commission expires the ____ day of
___________, 19__.
<PAGE>
EXHIBIT 1 to EXHIBIT L
CERTAIN DEFINITIONS
-------------------
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as a pledgee.
"Permitted Transferee": Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, international organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Code Section 511 on unrelated business taxable income) on any excess inclusions
(as defined in Code Section 860E(c)(1)) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States, any state thereof or the District of
Columbia, or an estate or trust whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, and any other Person so designated by the Trustee
based upon an Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual Certificate to such Person may cause the Trust Fund to fail to qualify
as a REMIC at any time that certain Certificates are outstanding. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Code Section 7701 or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof if all of its activities are subject to tax,
and, with the exception of the Freddie Mac, a majority of its board of directors
is not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture, bank,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
<PAGE>
EXHIBIT 2 to EXHIBIT L
SECTION 5.02(D) OF THE AGREEMENT
--------------------------------
(d) Except with respect to the initial transfer of the Class X and Class
R Certificates by the Depositor, no transfer, sale, pledge or other disposition
of any Class X or Class R Certificate shall be made unless such disposition is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and any applicable state securities laws or is made in
accordance with the 1933 Act and laws. In the event of any such transfer, (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit K under the 1933 Act, the Trustee and the Depositor shall
require a written Opinion of Counsel (which may be in-house counsel) acceptable
to and in form and substance reasonably satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from the 1933 Act or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense
of the Trustee or the Depositor or (ii) the Trustee shall require the transferor
to execute a transferor certificate (in substantially the form attached hereto
as Exhibit M) and the transferee to execute an investment letter (in
substantially the form attached hereto as Exhibit K) acceptable to and in form
and substance reasonably satisfactory to the Depositor and the Trustee
certifying to the Depositor and the Trustee the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee or the Depositor.
The Holder of a Class X or Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Depositor against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of a Class X or Class R Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Depositor, (such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the form
of Exhibit J hereto, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) (in the case of the Class X Certificates) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under PTCE 95-60 or (iii)
in the case of any such Class X or Class R Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or a plan
or arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement or using such plan's or
arrangement's assets, an Opinion of Counsel satisfactory to the Trustee which
Opinion of Counsel shall not be an expense of either the Trustee or the Trust,
addressed to the Trustee, to the effect that the purchase or holding of such
Class X or Class R Certificate will not result in the assets of the Trust being
deemed to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee to any obligation in
addition to those expressly undertaken in this Agreement or to any liability.
For purposes of clause (i) of the preceding sentence, such representation shall
be deemed to have been made to the Trustee by the transferee's acceptance of a
Class X or Class R Certificate (or the acceptance by a Certificate Owner of the
beneficial interest in any such Class X or Class R Certificate) unless the
Trustee shall have received from the transferee an alternative representation
acceptable in form and substance to the Depositor. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class X or Class R
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit L hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section, become a Holder of a Class R Certificate,
then the prior Holder of such Class R Certificate that is a Permitted
Transferee shall, upon discovery that the registration of transfer of such
Class R Certificate was not in fact permitted by this Section, be restored
to all rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making
any distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions
of this Agreement so long as the Trustee received the documents specified
in clause (iii). The Trustee shall be entitled to recover from any Holder
of a Class R Certificate that was in fact not a Permitted Transferee at
the time such distributions were made all distributions made on such Class
R Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but
not the obligation, without notice to the Holder of such Class R
Certificate or any other Person having an Ownership Interest therein, to
notify the Depositor to arrange for the sale of such Class R Certificate.
The proceeds of such sale, net of commissions (which may include
commissions payable to the Depositor or its affiliates in connection with
such sale), expenses and taxes due, if any, will be remitted by the
Trustee to the previous Holder of such Class R Certificate that is a
Permitted Transferee, except that in the event that the Trustee determines
that the Holder of such Class R Certificate may be liable for any amount
due under this Section or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale under this
clause (v) shall be determined in the sole discretion of the Trustee and
it shall not be liable to any Person having an Ownership Interest in a
Class R Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of reasonable
compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
(vii) All rights of the Directing Holder under this Agreement shall
terminate immediately upon any transfer of the Class X Certificate to any
other Person, unless (i) the Special Servicer consents in writing to the
transfer of such rights and (ii) the Trustee is provided with a letter
from each Rating Agency to the effect that the transfer of the rights of
the Directing Holder to such transferee will not result in the
qualification, withdrawal or downgrade of the ratings then assigned to any
Class of Certificates.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC hereunder to fail to qualify
as a REMIC.
<PAGE>
EXHIBIT M
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Asset Backed Funding Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: United PanAm Mortgage Loan Trust 1999-2,
Asset Backed Certificates, Series 1999-2
----------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class R Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class R Certificate is to impede the assessment or collection
of tax.
Very truly yours,
[_______________________]
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of P50
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds _______
Insurance Proceeds ___________
Other (itemize) ______________
Total Proceeds $______________
3. Liquidation Expenses
Servicing Advances $__________
Delinquency Advances _________
Monthly Advances _____________
Servicing Fees _______________
Other Servicing Compensation _
Total Advances $______________
4. Net Liquidation Proceeds $____ (Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $______
6. Loss, if any (Item 5 minus Item 4) $______
<PAGE>
EXHIBIT O
FORM OF ADDITIONAL TRANSFER AGREEMENT
Transfer No. ___ of Additional Mortgage Loans, dated ____________, 1999,
between Pam American Bank, FSB, a federal savings bank ("Pan American Bank"), as
seller (in such capacity, the "Seller"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee").
WITNESSETH:
WHEREAS, Pan American Bank, FSB (in its capacity as Seller) and the
Trustee are parties to that certain pooling and servicing agreement dated as of
October 1, 1999 (the "Pooling and Servicing Agreement") relating to the United
PanAm Mortgage Loan Asset Backed Certificates, Series 1999-2; and
WHEREAS, as contemplated in the Pooling and Servicing Agreement, the
Seller desires to convey certain Additional Mortgage Loans (as hereinafter
defined) to the Trustee.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1.01. DEFINED TERMS. Capitalized terms used herein that
are not otherwise defined shall have the meanings ascribed thereto in Pooling
and Servicing Agreement.
"AGREEMENT" means this Additional Transfer Agreement and all amendments
hereof and supplements hereto.
"ADDITIONAL MORTGAGE LOANS" means the Mortgage Loans identified on the
Mortgage Loan Schedule specified in Section 1.02 hereof
"ADDITIONAL TRANSFER DATE" means, with respect to the Additional Mortgage
Loans conveyed hereby, _______________ ___, 1999.
"CUT-OFF DATE" means, with respect to each of the Additional Mortgage
Loans conveyed hereby, the date of origination of such Additional Mortgage Loan.
Section 1.02. MORTGAGE LOAN SCHEDULE. Annexed hereto is a supplement to
Exhibit E to the Pooling and Servicing Agreement listing the Additional Mortgage
Loans to be conveyed by the Seller to the Trustee pursuant to this Agreement on
the Additional Transfer Date.
Section 1.03. CONVEYANCE OF ADDITIONAL MORTGAGE LOANS BY THE Seller.
Subject to the conditions set forth in Section 1.05, in consideration of the
Seller's delivery to or upon the order of the Seller of an amount equal to
$________ (i.e., the aggregate Principal Balance of the Additional Mortgage
Loans as of the Cut-off Date), the Seller does hereby sell, transfer, assign and
otherwise convey to the Trustee, without recourse (subject to the Seller's
obligations hereunder) all of the Seller's right, title and interest in and to
the Additional Mortgage Loans, including (i) the related Principal Balance, all
interest payments due after the related Cut-off Date and all collections in
respect of principal received after such Cut-off Date; (ii) any real property
that secured such Additional Mortgage Loan and that has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance
policies in respect of such Additional Mortgage Loan; and (iv) all proceeds of
the foregoing.
Section 1.04. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller does
hereby reaffirm the representations and warranties set forth in Section 2.08 of
the Pooling and Servicing Agreement for the benefit of the Trustee as purchaser
hereunder, and further represents and warrants that the statements set forth in
Section 2.04 of the Pooling and Servicing Agreement with respect to the Mortgage
Loans are true with respect to the Additional Mortgage Loans, provided, that
references therein to "Closing Date" shall be deemed herein to be "Additional
Transfer Date". Such representations and warranties shall survive the sale,
transfer and assignment of the Additional Mortgage Loans to the Trustee.
Section 1.05. CONDITIONS PRECEDENT. The obligation of the Trustee to
acquire the Additional Mortgage Loans hereunder is subject to the satisfaction,
on or prior to the Additional Transfer Date, of the following condition
precedent: each of the representations and warranties made by the Seller in
Section 1.04 hereof shall be true and correct as of the date of this Agreement
and as of the Additional Transfer Date.
The Trustee shall not be required to investigate or otherwise verify
satisfaction of the conditions listed above, but shall be entitled to
conclusively rely upon Opinions of Counsel and Officer's Certificates confirming
such fulfillment.
Section 1.06. REAFFIRMATION OF AGREEMENT. All terms, conditions
and provisions of the Pooling and Servicing Agreement are hereby reaffirmed
and incorporated by reference by the Seller as to the Additional Mortgage
Loans.
Section 1.07. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties under this Agreement shall be determined in
accordance with such laws; provided, however, the immunities, authority and
standard of care of the Trustee shall be governed by the jurisdiction in which
its Corporate Trust Office is located.
<PAGE>
IN WITNESS WHEREOF, the Seller and the Trustee have caused this Agreement
to be duly executed and delivered by their respective duly authorized officers
as of the day and the year first above written.
PAN AMERICAN BANK, FSB, as Seller
By:_______________________________________
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:_______________________________________
Name:
Title:
<PAGE>
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT P
PREPAYMENT PREMIUM SCHEDULE
FINANCIAL FINANCIAL GUARANTY
SECURITY ASSURANCE INSURANCE POLICY
Trust: As described in Endorsement No. 1. Policy No.: 50864-N
Certificates: $233,144,000 United PanAm Mortgage Date of Issuance:
Loan Asset Backed Certificates, Series 10/12/99
1999-2, Class A-1 and Class A-2
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the
Trustee for the benefit of each Holder, subject only to the terms of this Policy
(which includes each endorsement hereto), the full and complete payment of
Guaranteed Distributions with respect to the Certificates of the Trust referred
to above.
For the further protection of each Holder, Financial Security irrevocably
and unconditionally guarantees payment of the amount of any distribution of
principal or interest with respect to the Certificates made during the Term of
this Policy to such Holder that is subsequently avoided in whole or in part as a
preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of the
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security, and
shall not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment thereto. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever. This Policy may not be canceled or
revoked during the Term of this Policy. An acceleration payment shall not be due
under this Policy unless such acceleration is at the sole option of Financial
Security. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY
FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:____________________________________
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 101NY (5/89)
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Policy No.: 50864-N Date of Issuance: October 12, 1999
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing
Agreement, dated as of October 1, 1999, among Asset
Backed Funding Corporation as Depositor, Pan American
Bank FSB as Seller and Master Servicer, Fairbanks
Capital Corp. as Sub-servicer and Bankers Trust Company
of California, N.A. as Trustee
CERTIFICATES: $233,144,000 United PanAm Mortgage Loan Asset Backed
Certificates, Series 1999-2, Class A-1 and Class A-2
POLICY NO.: 50864-N
DATE OF ISSUANCE: October 12, 1999
1. DEFINITIONS. For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in the
Pooling and Servicing Agreement unless the context shall otherwise require.
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or (ii)
a day on which banking institutions in the City of New York or in the city in
which the Corporate Trust Office of the Trustee is located, are authorized or
obligated by law or executive order to be closed.
"GUARANTEED DISTRIBUTIONS" means, with respect to each Distribution Date,
the distribution to be made to the Holders of the Class A-1 and Class A-2
Certificates on such Distribution Date, in an aggregate amount equal to the sum
of (a) the Interest Distributable Amount for the Class A-1 and Class A-2
Certificates for such Distribution Date (net of any Relief Act Interest
shortfalls and Prepayment Interest Shortfalls for such Distribution Date) and
(b) the Guaranteed Principal Amount for such Distribution Date, in each case in
accordance with the original terms of the Certificates when issued and without
regard to any amendment or modification of the Certificates or the Pooling and
Servicing Agreement except amendments or modifications to which Financial
Security has given its prior written consent. Guaranteed Distributions shall not
include, nor shall coverage be provided under this Policy in respect of any
taxes, withholding or other charge imposed by any governmental authority.
"POLICY" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement dated as of October 1, 1999, among Financial Asset Securities Corp. as
Depositor, Pan American Bank, FSB as Seller and Master Servicer, Fairbanks
Capital Corp. as Sub-servicer and Bankers Trust Company of California, N.A.
Company as Trustee, as amended from time to time with the consent of Financial
Security.
"RECEIPT" and "RECEIVED" mean actual delivery to Financial Security and to
the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New York
City time, on a Business Day; delivery either on a day that is not a Business
Day, or after 12:00 noon, New York City time, shall be deemed to be Received on
the next succeeding Business Day. If any notice or certificate given hereunder
by the Trustee is not in proper form or is not properly completed, executed or
delivered, it shall be deemed not to have been Received, and Financial Security
or its Fiscal Agent shall promptly so advise the Trustee and the Trustee may
submit an amended notice.
"TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all of the Certificates is zero, (ii) any period during which any
payment on the Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding has
been entered.
"TRUSTEE" means Bankers Company of California, N.A., in its capacity as
Trustee under the Pooling and Servicing Agreement and any successor in such
capacity.
2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
Distributions. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Guaranteed Distributions out of the funds of Financial Security on the later
to occur of (a) 12:00 noon, New York City time, on the second Business Day
following such Receipt; and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed Distributions will be disbursed by wire transfer of immediately
available funds to the Policy Payments Account established pursuant to the
Pooling and Servicing Agreement or, if no such Policy Payments Account has been
established, to the Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions, including any acceleration payment, whether
or not any notice and certificate shall have been Received by Financial Security
as provided above, provided, however, that by acceptance of this Policy the
Trustee agrees to provide upon request to Financial Security a notice and
certificate in respect of any such payments made by Financial Security.
Financial Security shall be entitled to pay principal hereunder on an
accelerated basis if Financial Security shall so elect at its sole discretion,
at any time or from time to time, in whole or in part, at an earlier
distribution date than provided in the definition of "Guaranteed Distributions,"
if such principal would have been payable under the Pooling and Servicing
Agreement were funds sufficient to make such payment available to the Trustee
for such purpose. Guaranteed Distributions insured hereunder shall not include
interest, in respect of principal paid hereunder on an accelerated basis,
accruing from after the date of such payment of principal. Financial Security's
obligations hereunder in respect of Guaranteed Distributions shall be discharged
to the extent funds are disbursed by Financial Security as provided herein
whether or not such funds are properly applied by the Trustee.
3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution is
avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of the
funds of Financial Security on the later of (a) the date when due to be paid
pursuant to the Order referred to below or (b) the first to occur of (i) the
fourth Business Day following Receipt by Financial Security from the Trustee of
(A) a certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that the relevant Holder is required to
return principal or interest distributed with respect to the Certificates during
the Term of this Policy because such distributions were avoidable as preference
payments under applicable bankruptcy law (the "Order"), (B) a certificate of the
relevant Holder that the Order has been entered and is not subject to any stay
and (C) an assignment duly executed and delivered by the relevant Holder, in
such form as is reasonably required by Financial Security and provided to the
relevant Holder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the Holder relating to or arising under the
Certificates against the debtor which made such preference payment or otherwise
with respect to such preference payment or (ii) the date of Receipt by Financial
Security from the Trustee of the items referred to in clauses (A), (B) and (C)
above if, at least four Business Days prior to such date of Receipt, Financial
Security shall have Received written notice from the Trustee that such items
were to be delivered on such date and such date was specified in such notice.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trustee or any Holder directly (unless such Holder has previously paid such
amount to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order, in which case such payment shall be disbursed to
the Trustee for distribution to such Holder upon proof of such payment
reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided pursuant to
Sections 11.04(d) and 11.05 of the Pooling and Servicing Agreement.
4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. FISCAL AGENT. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trustee at the notice address specified in the
Pooling and Servicing Agreement specifying the name and notice address of the
Fiscal Agent. From and after the date of receipt of such notice by the Trustee,
(i) copies of all notices and documents required to be delivered to Financial
Security pursuant to this Policy shall be simultaneously delivered to the Fiscal
Agent and to Financial Security and shall not be deemed Received until Received
by both and (ii) all payments required to be made by Financial Security under
this Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf of Financial Security. The Fiscal Agent is the agent of Financial
Security only and the Fiscal Agent shall in no event be liable to any Holder for
any acts of the Fiscal Agent or any failure of Financial Security to deposit, or
cause to be deposited, sufficient funds to make payments due under this Policy.
6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
7. NOTICES. All notices to be given hereunder shall be in writing (except
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President - Surveillance
Re: United PanAm Mortgage Loan Asset-Backed Certificates,
Series 1999-2
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing,
mailed or delivered to the Trustee.
8. PRIORITIES. In the event any term or provision on the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not covered by
the Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not covered by the Florida Insurance Guaranty
Association created under Part II of Chapter 631 of the Florida Insurance Code.
In the event Financial Security were to become insolvent, any claims arising
under this Policy are excluded from coverage by the California Insurance
Guaranty Association, established pursuant to Article 14.2 of Chapter 1 of Part
2 of Division 1 of the California Insurance Code.
10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.
<PAGE>
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:____________________________________
Authorized Officer
Exhibit A
To Endorsement 1
<PAGE>
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50864-N, dated October 12, 1999 (the "Policy") issued by
Financial Security in respect of $233,144,000 United PanAm Mortgage Loan
Asset-Backed Certificates, Series 1999-2, Class A-1 and Class A-2 (the
"Certificates"), that:
(i) The Trustee is the Trustee under the Pooling and
Servicing Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Distribution Account and available for distribution to the
Holders pursuant to the Pooling and Servicing Agreement will be
$_______________ (the "Shortfall") less than the Guaranteed Distributions
with respect to the Distribution Date occurring on _________________.
(iii) The Trustee is making a claim under the Policy for the
Shortfall to be applied to distributions of principal or interest or both
with respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply the
same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose; (c)
not commingle such funds with other funds held by the Trustee and (d)
maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds thereof
and, if the Certificate is required to be surrendered for such payment,
shall stamp on each such Certificate the legend "$ [INSERT APPLICABLE
AMOUNT] paid by Financial Security and the balance hereof has been
canceled and reissued" and then shall deliver such Certificate to
Financial Security.
(v) The Trustee, on behalf of the Holders, hereby assigns to
Financial Security the rights of the Holders with respect to the
Certificates to the extent of any payments under the Policy, including,
without limitation, any amounts due to the Holders in respect of
securities law violations arising from the offer and sale of the
Certificates. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trustee shall take such action
and deliver such instruments as may be reasonably requested or required by
Financial Security to effectuate the purpose or provisions of this clause
(v).
(vi) The Trustee, on its behalf and on behalf of the Holders, hereby
appoints Financial Security as agent and attorney-in-fact for the Trustee
and each such Holder in any legal proceeding with respect to the
Certificates. The Trustee hereby agrees that, so long as a Certificate
Insurer Default (as defined in the Pooling and Servicing Agreement) shall
not exist, Financial Security may at any time during the continuation of
any proceeding by or against the Depositor under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to solvency Proceeding, including without
limitation, (A) all matters relating to any claim in connection with an
Insolvency Proceeding seeking the avoidance as a preferential transfer of
any payment made with respect to the Certificates (a "Preference Claim"),
(B) the direction of any appeal of or relating to any Preference Claim at
the expense of Financial Security but subject to reimbursement as provided
in the Insurance Agreement and (C) the posting of any surety, supersedes
or performance bond pending any such appeal. In addition, the Trustee
hereby agrees that Financial Security shall be subrogated to, and the
Trustee on its behalf and on behalf of each Holder, hereby delegates and
assigns, to the fullest extent permitted by law, the rights of the Trustee
and each Holder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding or
action with respect to any court order issued in connection with any such
Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to Policy
Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice of
Claim and Certificate as of the ________ day of _______________, _____.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_______________________________
Title:____________________________
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent __________ by _______________
Confirmation Number ____________________________
