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: September 30, 1998
(Date of earliest event reported)
Commission File No. 333-48053
EQCC Receivables Corporation
EQCC Asset Backed Corporation
- --------------------------------------------------------------------------------
59-3170055
Delaware 59-3170052
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(State of Incorporation) (I.R.S. Employer Identification No.)
10401 Deerwood Park Boulevard
Jacksonville, Florida 32256
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Address of principal executive offices (Zip Code)
(904) 987-5000
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Registrant's Telephone Number, including area code
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 5. Other Events
On April 23, 1998, EQCC Receivables Corporation and EQCC Asset Backed
Corporation (collectively, the "Registrant"), sold EQCC Home Equity Loan Asset
Backed Certificates, Series 1998-1, Class A-1F, Class A-2F, Class A-3F, Class
A-4F, Class A-5F, Class A-6F, Class A-7F, Class A-IO and Class A-1A (the
"Offered Certificates"), having an aggregate original principal balance of
$738,874,072.00. The Offered Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as of April 1, 1998, among the Registrant, Equicredit
Corporation of America, as representative and servicer (the "Servicer") and U.S.
Bank National Association, as trustee (the "Agreement"), a copy of which is
filed as an exhibit hereto. EQCC Home Equity Loan Asset Backed Certificates,
Series 1998-1, Class X, Class R, Class MR and Class LR Certificates (the
"Private Certificates" and, together with the Offered Certificates, the
"Certificates"), were also issued pursuant to the Agreement.
The Servicer obtained from Ambac Assurance Corporation (the "Insurer) a
securities guaranty surety bond in favor of the Trustee for the benefit of the
Certificateholders of the Offered Certificates (the "Securities Insurance
Policy").
As of the date of initial issuance, the Offered Certificates evidenced an
interest in a trust fund (the "Trust Estate"), consisting primarily of (i) a
pool of fixed- and adjustable-rate, mortgage loans, secured by mortgages, deeds
of trust or other instruments creating a first or second lien on one- to
four-family dwellings, (ii) all monies received on the Mortgage Loans on and
after the Cut-Off Date (other than the Representative's Yield, as described in
the Agreement), (iii) the Securities Insurance Policy and (iv) certain other
property. The remaining undivided interests in the Trust Estate are evidenced by
the Class X, Class R, Class MR and Class LR Certificates.
Interest on the Offered Certificates will be distributed on each Payment
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.
Elections will be made to treat certain assets in the Trust Fund as three
REMICs for federal income tax purposes (the "Upper-Tier REMIC", "Middle-Tier
REMIC" and "Lower-Tier REMIC," respectively). The Class A and Class X
Certificates will be treated as "regular interests" in the Upper-Tier REMIC and
the Class R, Class MR and Class A-LR Certificate will be treated as the
"residual interests" in the Upper-Tier REMIC, the Middle Tier REMIC and
Lower-Tier REMIC, respectively.
<PAGE>
Item 7. Financial Statements and Exhibits
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
(EX-4) Pooling and Servicing Agreement, dated
as of April 1, 1998, among EQCC
Receivables Corporation and EQCC Asset
Backed Corporation, Equicredit
Corporation of America and U.S. Bank
National Association, as trustee.
(EX-99.1) Securities Guaranty Surety Bond issued
by Ambac Assurance Corporation
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
EQCC RECEIVABLES CORPORATION
September 30, 1998
By: /s/ Lenore Hanapel
---------------------------
Name: Lenore Hanapel
Title: Senior Vice President
EQCC ASSET BACKED CORPORATION
September 15, 1998
By: /s/ Lenore Hanapel
---------------------------
Name: Lenore Hanapel
Title: Senior Vice President
<PAGE>
INDEX TO EXHIBITS
Paper (P) or
Exhibit No. Description Electronic (E)
- ----------- ----------- --------------
(EX-4) Pooling and Servicing Agreement, E
dated as of April 1, 1998,
among EQCC Receivables Corporation
and EQCC Asset Backed Corporation,
Equicredit Corporation of America and
U.S. Bank National Association, as trustee.
(EX-99.1) Securities Guaranty Surety Bond issued by E
Ambac Assurance Corporation
EX-4
================================================================================
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 1998
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
(Depositors)
and
EQUICREDIT CORPORATION OF AMERICA
(Representative and Servicer)
and
U.S. BANK NATIONAL ASSOCIATION
(Trustee)
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 1998-1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Account .............................................................
Accrual Period ......................................................
Acrual Loss Severity ................................................
Adjustable Rate Carry-Forward Amount ................................
Adjustable Rate Certificates ........................................
Adjustable Rate Certificateholder ...................................
Adjustable Rate Group ...............................................
Adjustable Rate Group Weighted Average Mortgage Interest Rate .......
Adjustable Rate Interest Remittance Amount ..........................
Adjustable Rate Principal Balance ...................................
Adjustable Rate Principal Remittance Amount .........................
Adjustable Rate Remittance Amount ...................................
Advance .............................................................
Affiliate ...........................................................
Agreement ...........................................................
Assignment of Beneficial Interest ...................................
Assignment of Mortgage ..............................................
Authorized Denominations ............................................
Available Payment Amount ............................................
Bankruptcy Loan .....................................................
Base Spread Account Requirement .....................................
Basic Documents .....................................................
Basic Principal Amount ..............................................
Book-Entry Certificates .............................................
Business Day ........................................................
Certificate .........................................................
Certificate Depository Agreement ....................................
Certificate Insurance Policy ........................................
Certificate Insurer .................................................
Certificate Owner ...................................................
Certificate Register ................................................
Certificateholder or Holder .........................................
Class ...............................................................
Class A Certificateholder ...........................................
Class A Certificates ................................................
Class A Remittance Amount ...........................................
Class A-1A Certificate ..............................................
Class A-1A Principal Balance ........................................
<PAGE>
Class A-1A LIBOR Rate ...............................................
Class A-1A Pass-Through Rate ........................................
Class A-1F Certificate ..............................................
Class A-1F Pass-Through Rate ........................................
Class A-1F Principal Balance ........................................
Class A-2F Certificate ..............................................
Class A-2F Pass-Through Rate ........................................
Class A-2F Principal Balance ........................................
Class A-3F Certificate ..............................................
Class A-3F Pass-Through Rate ........................................
Class A-3F Principal Balance ........................................
Class A-4F Certificate ..............................................
Class A-4F Pass-Through Rate ........................................
Class A-4F Principal Balance ........................................
Class A-5F Certificate ..............................................
Class A-5F Pass-Through Rate ........................................
Class A-5F Principal Balance ........................................
Class A-6F Certificate ..............................................
Class A-6F Pass-Through Rate ........................................
Class A-6F Principal Balance ........................................
Class A-7F Certificate ..............................................
Class A-7F Pass-Through Rate ........................................
Class A-7F Principal Balance ........................................
Class A-IO Certificate ..............................................
Class A-IO Notional Amount ..........................................
Class A-8F Pass-Through Rate ........................................
Class LR Certificate ................................................
Class LR Certificateholder ..........................................
Class LT1 Interest ..................................................
Class LT2 Interest ..................................................
Class LT3 Interest ..................................................
Class LT4 Interest ..................................................
Class LT5 Interest ..................................................
Class LT6 Interest ..................................................
Class LT7 Interest ..................................................
Class LT8 Interest ..................................................
Class MR Certificate ................................................
Class MR Certificateholder ..........................................
Class MT1 Interest ..................................................
Class MT2 Interest ..................................................
Class MT3 Interest ..................................................
Class MT4 Interest ..................................................
Class MT5 Interest ..................................................
Class MT6 Interest ..................................................
Class MT-6IO Interest ...............................................
<PAGE>
Class MT6 Notional Balance ..........................................
Class MT7 Interest ..................................................
Class MT-7IO Interest ...............................................
Class MT7 Notional Balance ..........................................
Class MT8 Interest ..................................................
Class R Certificate .................................................
Class R Certificateholder ...........................................
Class X Certificate .................................................
Class X Certificateholder ...........................................
Class X Interest ....................................................
Closing Date ........................................................
Code ................................................................
Collection Account ..................................................
Combined Loan-To-Value Ratio or CLTV ................................
Commission ..........................................................
Component X-1F Distribution Amount ..................................
Component X-1F Notional Balance .....................................
Component X-2F Distribution Amount ..................................
Component X-2F Notional Balance .....................................
Component X-3F Distribution Amount ..................................
Component X-3F Notional Balance .....................................
Component X-4F Distribution Amount ..................................
Component X-4F Notional Balance .....................................
Component X-5F Distribution Amount ..................................
Component X-5F Notional Balance .....................................
Component X-6F Distribution Amount ..................................
Component X-6F Notional Balance .....................................
Component X-7F Distribution Amount ..................................
Component X-7F Notional Balance .....................................
Component X-1A Distribution Amount ..................................
Component X-1A Notional Balance .....................................
Corporate Trust Office ..............................................
Cross-over Date .....................................................
Cumulative Excess Spread Receipts ...................................
Cumulative Losses ...................................................
Current CLTV ........................................................
Curtailment .........................................................
Custodial Agreement .................................................
Custodian ...........................................................
Cut-off Date ........................................................
Default .............................................................
Definitive Certificates .............................................
Deleted Mortgage Loan ...............................................
Depositor ...........................................................
Depository ..........................................................
<PAGE>
Depository Participant ..............................................
Destroyed Mortgage Note .............................................
Destroyed Mortgage Note Affidavit ...................................
Determination Date ..................................................
Disqualified Non-U.S. Person ........................................
Disqualified Organization ...........................................
Due Date ............................................................
Due Period ..........................................................
Eligible Account ....................................................
Event of Nonpayment .................................................
Excess Proceeds .....................................................
Excess Spread .......................................................
Exchange Act ........................................................
FDIC ................................................................
FHLMC ...............................................................
Fidelity Bond .......................................................
Final Scheduled Payment Date ........................................
First Lien ..........................................................
Fixed Rate Carry-Forward Amount .....................................
Fixed Rate Certificateholder ........................................
Fixed Rate Certificates .............................................
Fixed Rate Group ....................................................
Fixed Rate Group Weighted Average Mortgage Interest Rate ............
Fixed Rate Interest Remittance Amount ...............................
Fixed Rate Principal Balance ........................................
Fixed Rate Principal Remittance Amount ..............................
Fixed Rate Remittance Amount ........................................
FNMA ................................................................
Holder ..............................................................
IBCA ................................................................
Illinois Land Trust .................................................
Independent .........................................................
Up-Front Servicer Distribution Amount ...............................
Insurance Account ...................................................
Insurance Proceeds ..................................................
Insured Payment .....................................................
Latest Maturity Date ................................................
LIBOR ...............................................................
LIBOR Determination Date ............................................
LIBOR Interest Carryover ............................................
Lien ................................................................
Liquidated Mortgage Loan ............................................
Liquidation Proceeds ................................................
Lockout Percentage ..................................................
Lockout Pro Rata Remittance Amount ..................................
<PAGE>
Lockout Remittance Amount ...........................................
Loss Coverage Ratio .................................................
Loss Coverage Requirement ...........................................
Loss Trigger Date ...................................................
Lower-Tier Distribution Account .....................................
Lower-Tier Regular Interests ........................................
Majority in Aggregate Voting Interest ...............................
Middle-Tier Distribution Account ....................................
Middle-Tier Regular Interests .......................................
Monthly Excess Spread Amount ........................................
Monthly Payment .....................................................
Monthly Premium .....................................................
Moody's .............................................................
Mortgage ............................................................
Mortgage File .......................................................
Mortgage Impairment Insurance Policy ................................
Mortgage Interest Rate ..............................................
Mortgage Loan .......................................................
Mortgage Loan Group .................................................
Mortgage Loan Losses ................................................
Mortgage Loan Schedule ..............................................
Mortgage Note .......................................................
Mortgage Pool .......................................................
Mortgaged Property ..................................................
Mortgaged Property State ............................................
Mortgagor ...........................................................
Net Adjustable Rate Group Weighted Average Mortgage Interest Rate ...
Net Fixed Rate Group Weighted Average Mortgage Interest Rate ........
Net Funds Cap Rate ..................................................
Net Liquidation Proceeds ............................................
Nondisqualification Opinion .........................................
Nonrecoverable Advances .............................................
Non-United States Person ............................................
Officer's Certificate ...............................................
Opinion of Counsel ..................................................
Optional Purchase Date ..............................................
Original Class A-1A Principal Balance ...............................
Original Class A-1F Principal Balance ...............................
Original Class A-2F Principal Balance ...............................
Original Class A-3F Principal Balance ...............................
Original Class A-4F Principal Balance ...............................
Original Class A-5F Principal Balance ...............................
Original Class A-6F Principal Balance ...............................
Original Class A-7F Principal Balance ...............................
Original Class A-IO Notional Amount .................................
<PAGE>
Original Pool Principal Balance .....................................
Original Loss Severity ..............................................
Originator ..........................................................
Owner-Occupied Mortgaged Property ...................................
Ownership Interest ..................................................
Pass-Through Rate ...................................................
Payment Date ........................................................
Percentage Interest .................................................
Performance Default .................................................
Permitted Instruments ...............................................
Permitted Transferee ................................................
Person ..............................................................
Plan ................................................................
Pool Factor .........................................................
Pool Principal Balance ..............................................
Pre-Plan Interest ...................................................
Pre-Plan Interest Payments ..........................................
Principal and Interest Account ......................................
Principal Balance ...................................................
Principal Prepayment ................................................
Proceeding ..........................................................
Projected Excess Spread .............................................
Prospectus ..........................................................
Qualified Substitute Mortgage Loan ..................................
Rating Agencies .....................................................
Reassignment of Assignment of Beneficial Interest ...................
Record Date .........................................................
Recordation Trigger .................................................
Reference Banks .....................................................
Registered Holder ...................................................
Reimbursable Amounts ................................................
Released Mortgaged Property Proceeds ................................
Remainder Excess Spread Amount ......................................
REMIC ...............................................................
REMIC Provisions ....................................................
Remittance Report ...................................................
REO Disposition .....................................................
REO Property ........................................................
Representative ......................................................
Representative's Yield ..............................................
Residential Dwelling ................................................
Residual Certificate ................................................
Responsible Officer .................................................
Rule of 78s Method ..................................................
Rule of 78s Mortgage Loan ...........................................
<PAGE>
Series ..............................................................
Servicer ............................................................
Servicer Default ....................................................
Servicer Employees ..................................................
Servicing Advances ..................................................
Servicing Compensation ..............................................
Servicing Fee .......................................................
Servicing Officer ...................................................
Specified Spread Account Requirement ................................
Spread Account ......................................................
Spread Account Amount ...............................................
Spread Account Excess ...............................................
S&P .................................................................
Startup Day .........................................................
Subordinated Amount .................................................
Subservicer .........................................................
Subservicing Agreement ..............................................
Substitution Adjustment .............................................
Tax Matters Person ..................................................
Termination Price ...................................................
Transfer ............................................................
Transfer Agreement ..................................................
Transfer Affidavit and Agreement ....................................
Transferee ..........................................................
Transferor ..........................................................
Trust ...............................................................
Trust Fund ..........................................................
Trustee .............................................................
Trust REMIC .........................................................
UCC .................................................................
United States Person ................................................
Upper-Tier Distribution Account .....................................
Upper-Tier Regular Interests ........................................
Voting Interest .....................................................
ARTICLE II
CONVEYANCE OF THE TRUST ASSETS
Section 2.01 Sale and Conveyance of Trust Assets;
Priority and Subordination of Ownership
Interests ..........................................
Section 2.02 Possession of Mortgage Files ..........................
Section 2.03 Books and Records .....................................
Section 2.04 Delivery of Mortgage Loan Documents ...................
Section 2.05 [Reserved] ............................................
<PAGE>
Section 2.06 Acceptance by Trustee of the Trust Fund;
Certain Substitutions; Certification by
Trustee ............................................
Section 2.07 REMIC Administration ..................................
Section 2.08 Execution of Certificates .............................
Section 2.09 Application of Principal and Interest .................
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Depositors ....
Section 3.02 Assignment of Transfer Agreement;
Representations and Warranties as to the
Individual Mortgage Loans and the Mortgage Pool ....
Section 3.03 Purchase and Substitution .............................
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates ......................................
Section 4.02 Registration of Transfer and Exchange of Certificates .
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates .....
Section 4.04 Persons Deemed Owners .................................
Section 4.05 Determination of LIBOR ................................
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 Duties of the Servicer ................................
Section 5.02 Liquidation of Mortgage Loans .........................
Section 5.03 Establishment of Principal and
Interest Accounts; Deposits in Principal
and Interest Accounts ..............................
Section 5.04 Permitted Withdrawals from the Principal
and Interest Account ...............................
Section 5.05 Payment of Taxes, Insurance and Other Charges .........
Section 5.06 Transfer of Accounts; Monthly Statements ..............
Section 5.07 Maintenance of Hazard Insurance .......................
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy ...
Section 5.09 Fidelity Bond .........................................
Section 5.10 Title, Management and Disposition of REO Property .....
Section 5.11 Collection of Certain Mortgage Loan Payments ..........
Section 5.12 Access to Certain Documentation and
Information Regarding the Mortgage Loans ...........
Section 5.13 Superior Liens ........................................
<PAGE>
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Collection Accounts;
Deposit in Accounts ................................
Section 6.02 Permitted Withdrawals from Lower-Tier Distribution
Account, Middle-Tier Distribution Account and
Upper-Tier Distribution Account ....................
Section 6.03 Establishment of Insurance Account: Deposits in
Insurance Account: Permitted Withdrawals
from Insurance Account .............................
Section 6.04 Investment of Accounts ................................
Section 6.05 Priority and Subordination of Distributions ...........
Section 6.06 Certificate Insurer Default ...........................
Section 6.07 Statements ............................................
Section 6.08 Advances by the Servicer ..............................
Section 6.09 Establishment of Spread Account; Deposits in
Spread Account; Permitted Withdrawals
from Spread Account ................................
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Assumption Agreements .................................
Section 7.02 Satisfaction of Mortgages and
Release of Mortgage Files ..........................
Section 7.03 Servicing Compensation ................................
Section 7.04 Annual Statement as to Compliance .....................
Section 7.05 Annual Independent Public Accountants'
Servicing Report ...................................
Section 7.06 Right to Examine Servicer Records .....................
Section 7.07 Reports to the Trustee; Principal
and Interest Account Statements ....................
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements ..................................
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims ...................
Section 9.02 Merger or Consolidation of the Servicer ...............
Section 9.03 Limitation on Liability of the Servicer and Others ....
Section 9.04 Servicer Not to Resign ................................
Section 9.05 Removal of Servicer ...................................
ARTICLE X
SERVICER DEFAULT
Section 10.01 Servicer Default .....................................
Section 10.02 Trustee to Act; Appointment of Successor Servicer ....
Section 10.03 Waiver of Defaults ...................................
Section 10.04 Control by Majority in Aggregate Voting Interest .....
ARTICLE XI
TERMINATION
Section 11.01 Termination ..........................................
Section 11.02 Additional Termination Requirements ..................
Section 11.03 Accounting Upon Termination of Servicer ..............
Section 11.04 Representative's Right to Representative's
Yield Absolute ....................................
Section 11.05 Termination Upon Loss of REMIC Status ................
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee ....................................
Section 12.02 Certain Matters Affecting the Trustee ................
Section 12.03 Trustee Not Liable for Certificates or
Mortgage Loans ....................................
Section 12.04 Trustee May Own Certificates .........................
Section 12.05 Servicer to Pay Trustee's Fees and Expenses ..........
Section 12.06 Eligibility Requirements for Trustee .................
Section 12.07 Resignation and Removal of the Trustee ...............
Section 12.08 Successor Trustee ....................................
Section 12.09 Merger or Consolidation of Trustee ...................
Section 12.10 Appointment of Co-Trustee or Separate Trustee ........
Section 12.11 Appointment of Custodians ............................
Section 12.12 Protection of Trust Fund .............................
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 The Certificate Insurer ..............................
Section 13.02 Amendment ............................................
Section 13.03 Recordation of Agreement .............................
Section 13.04 Duration of Agreement ................................
Section 13.05 Governing Law ........................................
Section 13.06 Notices ..............................................
<PAGE>
Section 13.07 Severability of Provisions ...........................
Section 13.08 No Partnership .......................................
Section 13.09 Counterparts .........................................
Section 13.10 Successors and Assigns ...............................
Section 13.11 Headings .............................................
Section 13.12 Limitation of Liability of Trustee ...................
Section 13.13 Limitations on Rights of Others ......................
Section 13.14 No Petition ..........................................
Section 13.15 Third Party Beneficiary ..............................
<PAGE>
EXHIBITS
--------
EXHIBIT A - Contents of Mortgage File
EXHIBIT B-1 - Form of Class A-1F Certificate
EXHIBIT B-2 - Form of Class A-2F Certificate
EXHIBIT B-3 - Form of Class A-3F Certificate
EXHIBIT B-4 - Form of Class A-4F Certificate
EXHIBIT B-5 - Form of Class A-5F Certificate
EXHIBIT B-6 - Form of Class A-6F Certificate
EXHIBIT B-7 - Form of Class A-7F Certificate
EXHIBIT B-8 - Form of Class A-IO Certificate
EXHIBIT B-9 - Form of Class A-1A Certificate
EXHIBIT B-10 - Form of Class X Certificate
EXHIBIT B-11 - Form of Class R Certificate
EXHIBIT B-12 - Form of Class MR Certificate
EXHIBIT B-13 - Form of Class LR Certificate
EXHIBIT B-14 - Form of Reverse of Certificate
EXHIBIT C - [Reserved]
EXHIBIT D - Mortgage Loan Schedule
EXHIBIT E - Form of Trustee Initial Certification
EXHIBIT F-1 - Form of Trustee Interim Certification
EXHIBIT F-2 - Form of Trustee Final Certification
EXHIBIT G - List of Bankruptcy Loans
EXHIBIT H - Form of Delinquency Report
EXHIBIT I - Certificate Insurance Policy
EXHIBIT J - Form of Transferor Certificate
EXHIBIT K - List of Originators
EXHIBIT L - [Reserved]
EXHIBIT M-1 - Form of Transfer Affidavit and Agreement
EXHIBIT M-2 - Form of Investor Representation Letter
EXHIBIT M-3 - Form of Transferor Representation Letter
EXHIBIT M-4 - Form of Rule 144A Investment Representation
EXHIBIT N - Form of Custodial Agreement
EXHIBIT O - Form of Liquidation Report
EXHIBIT P - Principal and Interest Account Letter Agreement
EXHIBIT Q - Form of Notice of Event of Nonpayment
EXHIBIT R - Monthly Information Delivered by Servicer
EXHIBIT S - List of Delinquent Loans
EXHIBIT T - Schedule of Mortgage Loans subject to the Home
Ownership and Equity Protection Act of 1994
EXHIBIT U - Destroyed Mortgage Note Affidavit
EXHIBIT V - Schedule of Mortgage Loans that do not have
Title Insurance Policies
<PAGE>
POOLING AND SERVICING AGREEMENT
This Pooling and Servicing Agreement, dated as of April 1, 1998 (the
"Agreement"), is by and among EQUICREDIT CORPORATION OF AMERICA, as
representative (the "Representative") and as servicer (the "Servicer"), EQCC
RECEIVABLES CORPORATION and EQCC ASSET BACKED CORPORATION (collectively, the
"Depositors") and U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee"):
PRELIMINARY STATEMENT
In order to transfer certain Mortgage Loans from the Depositors to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
as their interests may appear, and to facilitate the servicing of certain
Mortgage Loans by the Servicer, the Representative, the Servicer and the
Depositors are entering into this Agreement with the Trustee. The Depositors are
transferring the Mortgage Loans to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, as their interests may appear,
under this Agreement, pursuant to which thirteen classes of Certificates are
being issued, denominated on the face thereof as EQCC Home Equity Loan Asset
Backed Certificates, Series 1998-1, Class A-1F, Class A-2F, Class A-3F, Class
A-4F, Class A-5F, Class A-6F, Class A-7F, Class A-IO, Class A-1A, Class X, Class
R, Class MR and Class LR, respectively, representing in the aggregate a 100%
ownership interest in the Mortgage Loans and all payments and other collections
thereon received on or after April 1, 1998 (the "Cut-off Date") (exclusive of
the Representative's Yield and amounts received after the Cut-off Date in
respect of interest accrued prior to the Cut-off Date). As of the Cut-off Date,
the Mortgage Loans have an aggregate outstanding principal balance of
$738,874,073.22, the Mortgage Loans in the Adjustable Rate Group have an
aggregate outstanding principal balance of $70,551,229.45, and the Mortgage
Loans in the Fixed Rate Group have an aggregate outstanding principal balance of
$668,322,843.77, in each case after application of payments received by the
Depositors on or before such date.
As provided herein, the Trustee will make an election to treat the assets
of the Trust Fund other than the Spread Account as three separate REMICs (as
defined herein) for federal income tax purposes. The Class A Certificates and
the Class X Interest represented by the Class X Certificates represent all of
the "regular interests" in the Upper-Tier REMIC and the Class R Certificates
represent the sole class of "residual interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. Each of the Class LR and Class MR Certificates
represent the sole class of "residual interest" in the Lower-Tier REMIC and the
Middle-Tier REMIC, respectively, for purposes of the REMIC Provisions. There are
also eight classes of uncertificated Lower-Tier Regular Interests issued under
this Agreement (the Class LT1, Class LT2, Class LT3, Class LT4, Class LT5, Class
LT6, Class LT7 and Class LT8 Interests), each of which will constitute regular
interests in the Lower-Tier REMIC, and ten classes of uncertificated Middle-Tier
Regular Interests (the Class MT1, Class MT2, Class MT3, Class MT4, Class MT5,
Class MT6, Class MT-6IO, Class MT7, Class MT-7IO and Class MT8 Interests), each
of which will constitute regular interests in the Middle-Tier REMIC. The Lower-
<PAGE>
Tier Regular Interests will be held as assets of the Middle-Tier REMIC and the
Middle-Tier Regular Interests will be held as assets of the Upper-Tier REMIC.
The following table sets forth the designation, type, aggregate Original
Principal Balance or Original Notional Amount and Final Scheduled Payment Date
for each Class of Certificates comprising the interests in the Trust Fund.
Aggregate Original Principal
Balance or Original Notional Final Scheduled
Designation Type Amount Payment Date
----------- ---- ------ ------------
Class A-1F Senior $251,364,000 December 15, 2007
Class A-2F Senior $49,113,000 April 15, 2009
Class A-3F Senior $145,552,000 December 15, 2012
Class A-4F Senior $64,596,500 March 15, 2021
Class A-5F Senior $57,497,343 January 15, 2028
Class A-6F Senior $52,737,000 December 15, 2007
Class A-7F Senior $47,463,000 November 15, 2027
Class A-IO Senior $100,200,000* September 15, 2000
Class A-1A Senior $70,551,229 October 15, 2027
Class X Subordinate N/A January 15, 2028
Class R Residual N/A N/A
Class MR Residual N/A N/A
Class LR Residual N/A N/A
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*Notional Amount
Unless otherwise noted, references in this Agreement to percentages of
Mortgage Loans refer in each case to the percentage of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date, based on the outstanding
principal balances of the Mortgage Loans as of the Cut-off Date, and giving
effect to principal payments received prior to the Cut-off Date.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings.
Account: The Principal and Interest Account, the Collection Account, the
Spread Account, the Lower-Tier Distribution Account, the Middle-Tier
Distribution Account, the Upper-Tier Distribution Account or the Insurance
Account.
<PAGE>
Accrual Period: With respect to each Payment Date and the Fixed Rate
Certificates, the period from and including the first day of the immediately
preceding calendar month, commencing April 1, 1998, to and including the last
day of the calendar month immediately preceding the month in which such Payment
Date occurs. With respect to each Payment Date and the Adjustable Rate
Certificates, the period from and including the immediately preceding Payment
Date or, in the case of the initial Accrual Period, April 23, 1998, to but
excluding such Payment Date.
Actual Loss Severity: With respect to any Payment Date, a fraction,
expressed as a percentage, (a) the numerator of which equals the sum of all
Mortgage Loan Losses incurred with respect to Liquidated Mortgage Loans as of
the last day of the immediately preceding calendar month and (b) the denominator
of which equals the sum as of such Payment Date of the Principal Balances of all
Liquidated Mortgage Loans, the amount of such Principal Balances to be
determined in each case as of the last day of the calendar month immediately
preceding the month in which such Mortgage Loan became a Liquidated Mortgage
Loan.
Adjustable Rate Carry-Forward Amount: As of any Payment Date, the sum of
(i) the amount, if any, by which (x) the Adjustable Rate Remittance Amount as of
the immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Adjustable Rate Certificateholders pursuant to Section
6.05 hereof, exclusive of any portion of such amount attributable to any Insured
Payment, on such immediately preceding Payment Date and (ii) if any portion of
the amount in clause (i) represents Insured Payments made by the Certificate
Insurer, interest on such portion, if any, described in clause (i) above, at the
Class A-1A LIBOR Rate (for the related Accrual Period) from such immediately
preceding Payment Date.
Adjustable Rate Certificates: The Class A-1A Certificates.
Adjustable Rate Certificateholder: A Holder of an Adjustable Rate
Certificate.
Adjustable Rate Group: The group of Mortgage Loans indicated on the
Mortgage Loan Schedule as belonging to the Adjustable Rate Group.
Adjustable Rate Group Weighted Average Mortgage Interest Rate: The weighted
average of the Mortgage Interest Rates on the Mortgage Loans in the Adjustable
Rate Group.
Adjustable Rate Interest Remittance Amount: For any Payment Date, the
aggregate interest accrued during the related Accrual Period at the Class A-1A
Pass-Through Rate on the Adjustable Rate Principal Balance from time to time
outstanding during such Accrual Period (after giving effect to payments of
principal made on the preceding Payment Date), calculated on the basis of actual
number of days over a 360-day year.
Adjustable Rate Principal Balance: As of any date of determination, the
Original Class A-1A Principal Balance, reduced by the sum of all amounts
(including, except
<PAGE>
for purposes of effecting the Certificate Insurer's subrogation rights, that
portion of Insured Payments, if any, made in respect of principal) previously
distributed to Class A-1A Certificateholders in respect of principal.
Adjustable Rate Principal Remittance Amount: As to any Payment Date, the
lesser of (A) the Adjustable Rate Principal Balance as of such Payment Date and
(B) the sum of (a) the Basic Principal Amount for the Adjustable Rate Group for
such Payment Date and (b) the Adjustable Rate Carry-Forward Amount.
Adjustable Rate Remittance Amount: As to any Payment Date, the sum of (i)
the Adjustable Rate Principal Remittance Amount and (ii) the Adjustable Rate
Interest Remittance Amount.
Adjusted Fixed Rate Servicing Fee: With respect to any Accrual Period, the
rate equal to the sum of (i) 0.09% and (ii) the rate (expressed as a percentage)
obtained by dividing (a) 12 times the Fixed Rate Servicing Fee by (b) the
aggregate of the principal balances (as of the beginning of such Accrual Period)
of the Mortgage Loans in the Fixed Rate Group.
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate: With
respect to any Accrual Period, a rate equal to (i) the Fixed Rate Group Weighted
Average Mortgage Interest Rate minus (ii) the Adjusted Fixed Rate Servicing Fee.
Advance: An advance made by the Servicer pursuant to Section 6.08 hereof.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Assignment of Beneficial Interest: With respect to each Mortgage Loan
secured by an interest in an Illinois Land Trust, an instrument executed by all
of the beneficiaries of such Illinois Land Trust and by any Person having any
interest in such Illinois Land Trust or the power to direct the trustee under
such Illinois Land Trust, which assigns and transfers to the respective
Depositor as a secured party, all of the beneficiaries' rights, powers,
privileges and beneficial interest in such Illinois Land Trust.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument sufficient, upon proper recordation thereof, under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the transfer of the Mortgage to the party named as assignee
therein.
<PAGE>
Authorized Denominations: The authorized denominations of the Certificates,
as set forth in Section 4.01 of this Agreement.
Available Payment Amount: With respect to any Payment Date and any Mortgage
Loan Group, an amount equal to (i) the sum of all amounts described in clauses
(i) through (vii), inclusive, of Section 5.03 received by the Servicer or any
Subservicer (including any amounts paid by the Servicer and the Representative
and excluding any amounts not required to be deposited in the Principal and
Interest Account pursuant to Section 5.03 and excluding any amounts withdrawn by
the Servicer pursuant to Section 5.04(ii), (iii), (v), (vi), (vii) and (x) as of
the related Determination Date) during the related Due Period with respect to
the Mortgage Loans in such Mortgage Loan Group and on deposit in the Collection
Account on such Payment Date, plus (ii) the amount of any Advances remitted
pursuant to Section 6.08 for such Payment Date with respect to the Mortgage
Loans in such Mortgage Loan Group and on deposit in the Collection Account on
such Payment Date, less (iii) the Excess Spread with respect to such Payment
Date and such Mortgage Loan Group. No amount included in the Available Payment
Amount by virtue of being described by any component of the definition thereof
shall be included more than once by virtue of also being described by any other
component or otherwise.
Bankruptcy Loan: Each Mortgage Loan set forth on Exhibit G hereto (as such
Exhibit G may be supplemented in accordance with an Assignment Agreement).
Base Spread Account Requirement: (x) $32,141,022.13, provided, however,
that the Certificate Insurer may, in its sole discretion, reduce the Base Spread
Account Requirement to such amount as is specified in a notice delivered to the
Trustee, the Representative and each Rating Agency; provided, further, that such
reduction shall not affect the rating assigned to the Certificates.
Basic Documents: The Transfer Agreement, this Pooling and Servicing
Agreement, the Custodial Agreement, the Certificate Depository Agreement, and
the other documents and certificates delivered in connection therewith.
Basic Principal Amount: With respect to the Mortgage Loans in a Mortgage
Loan Group and any Payment Date and related Due Period, the sum (without
duplication) of (i) the principal portion of all Monthly Payments received by
the Servicer or any Subservicer in the related Due Period, (ii) all Curtailments
and all Principal Prepayments received during such related Due Period, (iii) the
principal portion of all Insurance Proceeds, Released Mortgaged Property
Proceeds and Net Liquidation Proceeds received during the related Due Period,
(iv) (A) that portion of the purchase price (as set forth in Section 2.06(b)) of
any purchased Mortgage Loans which represents principal and (B) the principal
portion of any Substitution Adjustments deposited into the Principal and
Interest Account as of the related Determination Date and (v) the Principal
Balance of each Mortgage Loan as of the beginning of the related Due Period
which became a Liquidated Mortgage Loan during the related Due Period (exclusive
of any principal payments in respect thereof included in clauses (i) through
(iv) above).
<PAGE>
Book-Entry Certificates: A beneficial interest in the Certificates, the
ownership and transfer of which shall be made through book entries by the
Depository as described in Section 4.01 hereof.
Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in the States of Illinois, New York or Florida are
authorized or obligated by law or executive order to be closed; provided,
however, that on the Closing Date the Servicer shall provide the Trustee and the
Certificate Insurer with an Officer's Certificate listing the dates on which
banking institutions in the States of Illinois, Florida and New York are
authorized or obligated by law or executive order to be closed and the Servicer
shall deliver a new Officer's Certificate annually thereafter to the Trustee and
the Certificate Insurer prior to the expiration of the most recent list
provided. Failure to provide such an Officer's Certificate shall not constitute
an Event of Default; provided that the Trustee and the Certificate Insurer may
rely on the most recently delivered list without further investigation.
Certificate: Any Class A-1F Certificate, Class A-2F Certificate, Class A-3F
Certificate, Class A-4F Certificate, Class A-5F Certificate, Class A-6F
Certificate, Class A-7F Certificate, Class A-IO Certificate, Class A-1A
Certificate, Class X Certificate, Class R Certificate, Class MR Certificate or
Class LR Certificate executed by the Trustee on behalf of the Trust Fund and
authenticated by the Trustee or its authenticating agent, substantially in the
form annexed hereto as Exhibits B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, B-9,
B-10, B-11, B-12 or B-13, respectively.
Certificate Custodian: Initially, U.S. Bank National Association;
thereafter any other Certificate Custodian acceptable to the Depository and
selected by the Trustee.
Certificate Depository Agreement: The agreement, dated as of the Closing
Date, among the Depositors and the initial Depository, relating to the Class A
Certificates.
Certificate Insurance Policy: The certificate guaranty surety bond, policy
number AB0166BE, in the name of the Trustee, dated the Closing Date, issued by
the Certificate Insurer for the benefit of the Class A Certificateholders,
pursuant to which the Certificate Insurer guarantees Insured Payments, a copy of
which is attached hereto as Exhibit I.
Certificate Insurer: Ambac Assurance Corporation, a Wisconsin stock
insurance company, or any successor thereof, as issuer of the Certificate
Insurance Policy.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who
is the beneficial owner of such Certificate as reflected on the books of the
Depository or on the books of a Depository Participant.
Certificate Register: As described in Section 4.02 hereof.
Certificateholder or Holder: Each Person in whose name a Certificate is
registered in the Certificate Register; provided, however, that, solely for the
purposes of
<PAGE>
giving any consent (except any consent required to be obtained pursuant to
Section 10.02), waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Representative, the Servicer, any
Originator or either Depositor, or any Affiliate of any of them, shall be deemed
not to be outstanding and the undivided Percentage Interest evidenced thereby
shall not be taken into account in determining whether the requisite percentage
of Certificates necessary to effect any such consent, waiver, request or demand
has been obtained. For purposes of any consent, waiver, request or demand of
Certificateholders pursuant to this Agreement, upon the Trustee's or the
Certificate Insurer's request, the Servicer, the Representative, any Originator
and either Depositor shall provide to the Trustee and the Certificate Insurer a
notice identifying any of their respective Affiliates that is a
Certificateholder as of the date(s) specified by the Trustee or the Certificate
Insurer in such request.
Class: Collectively, Certificates bearing the same alphabetical designation
(A-1F, A-2F, A-3F, A-4F, A-5F, A-6F, A-7F, A-IO, A-1A, X, R, MR or LR).
Class A Certificateholder: A Holder of a Class A Certificate.
Class A Certificates: The Class A-1F Certificates, Class A-2F Certificates,
Class A-3F Certificates, Class A-4F Certificates, Class A-5F Certificates, Class
A-6F Certificates, Class A-7F Certificates, Class A-IO Certificates and Class
A-1A Certificates.
Class A Remittance Amount: As to any Payment Date, the sum of (i) the
Adjustable Rate Remittance Amount and (ii) the Fixed Rate Remittance Amount.
Class A-1A Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-1A Certificate, and
evidencing (i) an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions and (ii) the right to receive
payments in respect of LIBOR Interest Carryovers from the Spread Account.
Class A-1A Principal Balance: As of any date of determination, the Original
Class A-1A Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-1A Certificateholders in respect of principal.
Class A-1A LIBOR Rate: For any Accrual Period, LIBOR as of the related
LIBOR Determination Date plus (i) 0.16% per annum on each Payment Date on or
prior to the Optional Purchase Date and (ii) 0.32% per annum on each Payment
Date following the Optional Purchase Date.
Class A-1A Pass-Through Rate: For any Accrual Period, the lesser of the
Class A-1A LIBOR Rate for such Accrual Period and the Net Funds Cap Rate for
such Accrual Period.
<PAGE>
Class A-1F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-1F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-1F Pass-Through Rate: 6.210% per annum.
Class A-1F Principal Balance: As of any date of determination, the Original
Class A-1F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-1F Certificateholders in respect of principal.
Class A-2F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-2F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-2F Pass-Through Rate: 6.136% per annum.
Class A-2F Principal Balance: As of any date of determination, the Original
Class A-2F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-2F Certificateholders in respect of principal.
Class A-3F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-3F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-3F Pass-Through Rate: 6.225% per annum.
Class A-3F Principal Balance: As of any date of determination, the Original
Class A-3F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-3F Certificateholders in respect of principal.
Class A-4F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-4F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-4F Pass-Through Rate: 6.459% per annum.
<PAGE>
Class A-4F Principal Balance: As of any date of determination, the Original
Class A-4F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-4F Certificateholders in respect of principal.
Class A-5F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-5F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-5F Pass-Through Rate: 6.847% per annum.
Class A-5F Principal Balance: As of any date of determination, the Original
Class A-5F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-5F Certificateholders in respect of principal.
Class A-6F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-6F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-6F Pass-Through Rate: 6.252% per annum.
Class A-6F Principal Balance: As of any date of determination, the Original
Class A-6F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-6F Certificateholders in respect of principal.
Class A-7F Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-7F Certificate, and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-7F Pass-Through Rate: 6.415% per annum.
Class A-7F Principal Balance: As of any date of determination, the Original
Class A-7F Principal Balance, reduced by the sum of all amounts (including,
except for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments, if any, made in respect of principal)
previously distributed to Class A-7F Certificateholders in respect of principal.
<PAGE>
Class A-IO Certificate: A Certificate designated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1998-1, Class A-IO Certificate and
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC for purposes of the REMIC Provisions.
Class A-IO Notional Amount: As of any date of determination, the sum of the
principal balance of the Class MT6 Interest, corresponding to the Class A-6F
Principal Balance and the principal balance of the Class MT7 Interest,
corresponding to the Class A-7F Principal Balance.
Class A-IO Pass-Through Rate: 2.50% per annum.
Class LR Certificate: A Certificate designated as an EQCC Home Equity Loan
Asset Backed Certificate, Series 1998-1, Class LR Certificate and evidencing an
interest designated as the "residual interest" in the Lower-Tier REMIC for
purposes of the REMIC Provisions.
Class LR Certificateholder: A Holder of a Class LR Certificate.
Class LT1 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-1F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT2 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-2F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT3 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-3F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT4 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-4F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT5 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-5F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT6 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original
<PAGE>
Class A-6F Principal Balance and bears interest at the Adjusted Net Fixed Rate
Group Weighted Average Mortgage Interest Rate.
Class LT7 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-7F Principal Balance and bears interest at the Adjusted
Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class LT8 Interest: A regular interest in the Lower-Tier REMIC that is held
as an asset of the Middle-Tier REMIC that has an initial principal balance equal
to the Original Class A-1A Principal Balance and bears interest at the Net
Adjustable Rate Group Weighted Average Mortgage Interest Rate.
Class MR Certificate: A certificate designated as an EQCC Home Equity Loan
Asset Backed Certificate, Series 1998-1, Class MR Certificate, and evidencing an
interest designated as the "residual interest" in the Middle-Tier REMIC for
purposes of the REMIC Provisions.
Class MR Certificateholder: A Holder of a Class MR Certificate.
Class MT1 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-1F Principal Balance and bears interest at the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class MT2 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-2F Principal Balance and bears interest at the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class MT3 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-3F Principal Balance and bears interest at the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class MT4 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-4F Principal Balance and bears interest at the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
Class MT5 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-5F Principal Balance and bears interest at the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate.
<PAGE>
Class MT6 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-6F Principal Balance and bears interest (i) on and
prior to August 31, 2000, at the excess of (a) Adjusted Net Fixed Rate Group
Weighted Average Mortgage Interest Rate over (b) 2.50% and (ii) on and after
September 1, 2000, at the Adjusted Net Fixed Rate Group Weighted Average
Mortgage Interest Rate.
Class MT6IO Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial notional balance
equal to the Class MT6 Notional Balance and bears interest at 2.50%. The Class
MT6IO Interest will be retired on the Payment Date occurring in September 2000.
Class MT6 Notional Balance: With respect to any Payment Date, a notional
principal balance equal to the principal balance of the Class A-LT6 Interest
immediately prior to the distribution of principal in respect thereof on such
Payment Date.
Class MT7 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-7F Principal Balance and bears interest (i) on and
prior to August 31, 2000, at the excess of (a) the Adjusted Net Fixed Rate Group
Weighted Average Mortgage Interest Rate over (b) 2.50% and (ii) on and after
September 1, 2000, at the Adjusted Net Fixed Rate Group Weighted Average
Mortgage Interest Rate.
Class MT7IO Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Class MT7 Notional Balance and bears interest at 2.50%. The Class
MT7IO Interest will be retired on the Payment Date occurring in September 2000.
Class MT7 Notional Balance: With respect to any Payment Date, a notional
principal balance equal to the principal balance of the Class A-LT7 Interest
immediately prior to the distribution of principal in respect thereof on such
Payment Date.
Class MT8 Interest: A regular interest in the Middle-Tier REMIC that is
held as an asset of the Upper-Tier REMIC that has an initial principal balance
equal to the Original Class A-1A Principal Balance and bears interest at the Net
Adjustable Rate Group Weighted Average Mortgage Interest Rate.
Class R Certificate: A Certificate designated as an EQCC Home Equity Loan
Asset Backed Certificate, Series 1998-1, Class R Certificate, and evidencing an
interest designated as the "residual interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions.
Class R Certificateholder: A Holder of a Class R Certificate.
Class X Certificate: A Certificate designated as an EQCC Home Equity Loan
Asset Backed Certificate, Series 1998-1, Class X Certificate evidencing (i) the
Class X Interest
<PAGE>
designated as a "regular interest" in the Upper-Tier REMIC for purposes of the
REMIC Provisions and (ii) rights under the Spread Account as described herein.
Class X Certificateholder: A Holder of a Class X Certificate.
Class X Interest: A regular interest in the Upper-Tier REMIC, ownership of
which is evidenced by the Class X Certificates.
Closing Date: April 23, 1998.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Collection Account: The collection account established and maintained by
the Trustee pursuant to Section 6.01 hereof.
Combined Loan-To-Value Ratio or CLTV: With respect to any Mortgage Loan,
the ratio (expressed as a percentage) of (a) the sum of the original principal
balance of such Mortgage Loan and the outstanding principal balance of any
related First Lien as of the date of origination of the Mortgage Loan, divided
by (b) (i) the lesser of (1) the value of the related Mortgaged Property, based
upon the appraisal made at the time such Mortgage Loan was originated, or (2)
the purchase price of the Mortgaged Property if the Mortgage Loan proceeds were
used to purchase the Mortgaged Property or (ii) in the case of a Mortgage Loan
that has been deemed reissued for purposes of Section 1001 of the Code as a
result of modifications thereto, the value of the Mortgaged Property based upon
the appraisal made at the date of the most recent deemed reissuance.
Commission: The Securities and Exchange Commission.
Component X-1F Distribution Amount: With respect to any Payment Date, an
amount equal to the product of (i) 1/12th of the Component X-1F Notional Balance
and (ii) the Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest
Rate less the Class A-1F Pass-Through Rate.
Component X-1F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT1
Interest, corresponding to the Class A-1F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Component X-2F Distribution Amount: With respect to any Payment Date, an
amount equal to (A) the product of (i) 1/12th of the Component X-2F Notional
Balance and (ii) the Adjusted Net Fixed Rate Group Weighted Average Mortgage
Interest Rate less the Class A-2F Pass-Through Rate.
Component X-2F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT2
Interest,
<PAGE>
corresponding to the Class A-2F Principal Balance, immediately prior to the
distribution of principal in respect thereof on such Payment Date.
Component X-3F Distribution Amount: With respect to any Payment Date, an
amount equal to the product of (i) 1/12th of the Component X-3F Notional Balance
and (ii) the Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest
Rate less the Class A-3F Pass-Through Rate.
Component X-3F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT3
Interest, corresponding to the Class A-3F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Component X-4F Distribution Amount: With respect to any Payment Date, an
amount equal to the product of (i) 1/12th of the Component X-4F Notional Balance
and (ii) the Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest
Rate less the Class A-4F Pass-Through Rate.
Component X-4F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT4
Interest, corresponding to the Class A-4F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Component X-5F Distribution Amount: With respect to any Payment Date, an
amount equal to the product of (i) 1/12th of the Component X-5F Notional Balance
and (ii) the Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest
Rate less the Class A-5F Pass-Through Rate.
Component X-5F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT5
Interest, corresponding to the Class A-5F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Component X-6F Distribution Amount: With respect to any Payment Date, an
amount equal to (A) the product of (i) 1/12th of the Component X-6F Notional
Balance and (ii) (a) on and prior to August 31, 2000, the excess of (1) the
Adjusted Net Fixed Rate Group Weighted Average Mortgage Interest Rate over (2)
the sum of 2.50% and the Class A-6 Pass-Through Rate and (b) on and after
September 1, 2000, the excess of (1) the Adjusted Net Fixed Rate Group Weighted
Average Mortgage Interest Rate over (2) the Class A-6F Pass-Through Rate.
Component X-6F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT6
Interest, corresponding to the Class A-6F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
<PAGE>
Component X-7F Distribution Amount: With respect to any Payment Date, an
amount equal to (A) the product of (i) the Component X-7F Notional Balance and
(ii) (a) on and prior to August 31, 2000, the excess of (1) the Adjusted Net
Fixed Rate Group Weighted Average Mortgage Interest Rate over (2) the sum of
2.50% and the Class A-7F Pass-Through Rate and (b) on and after September 1,
2000, the excess of (1) the Adjusted Net Fixed Rate Group Weighted Average
Mortgage Interest Rate over (2) the Class A-7F Pass-Through Rate.
Component X-7F Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT7
Interest, corresponding to the Class A-7F Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Component X-1A Distribution Amount: With respect to any Payment Date, an
amount equal to the product of (i) 1/12th of the Component X-1A Notional Balance
and (ii) the excess of (a) the Net Adjustable Rate Group Weighted Average
Mortgage Interest Rate over (b) the Class A-1A Pass-Through Rate.
Component X-1A Notional Balance: With respect to any Payment Date, a
notional principal balance equal to the principal balance of the Class MT8
Interest, corresponding to the Class A-1A Principal Balance, immediately prior
to the distribution of principal in respect thereof on such Payment Date.
Corporate Trust Office: With respect to the Trustee, the principal office
at which at any particular time the corporate trust business of the Trustee
shall be principally administered, which offices at the Closing Date are located
at U.S. Bank National Association, 111 East Wacker Drive, Suite 3000, Chicago,
Illinois 60601.
Cross-over Date: The date on which the Subordinated Amount is reduced to
zero.
Cumulative Excess Spread Receipts: As of any date of determination, the
aggregate amount of Excess Spread from and after the Closing Date paid to the
Class A Certificateholders pursuant to Section 6.09(b)(ii), to the extent
attributable to Mortgage Loan Losses.
Cumulative Losses: As of any date of determination, the aggregate Mortgage
Loan Losses for all Due Periods since the Cut-off Date.
Current CLTV: With respect to any Bankruptcy Loan, the ratio (expressed as
a percentage) of (a) the sum of (i) the outstanding principal balance as of the
Cut-off Date of such Mortgage Loan and (ii) the outstanding principal balance of
any related First Lien as of the Cut-off Date divided by (b) the current
appraised value of the related Mortgaged Property, as determined by an
independent fee appraiser acceptable to the Certificate Insurer within 60 days
of the Closing Date.
<PAGE>
Curtailment: With respect to a Mortgage Loan, any payment of principal
received in any month during a Due Period as part of a payment which is neither
intended to satisfy the Mortgage Loan in full nor to cure a delinquency.
Custodial Agreement: The agreement for the retention of the Mortgage Files
initially in the form attached hereto as Exhibit N.
Custodian: Initially, with respect to all Mortgage Loans, BankBoston, N.A.,
and thereafter, any successor custodian approved by the Certificate Insurer
appointed pursuant to either Custodial Agreement which is not affiliated with
the Servicer, the Representative, the Depositors or the Originators.
Cut-off Date: April 1, 1998.
Default: Any occurrence that is, or with notice or the lapse of time or
both would become, a Servicer Default under Section 10.01 hereof.
Definitive Certificates: As set forth in Section 4.01 hereof.
Deleted Mortgage Loan: A Mortgage Loan replaced by or to be replaced by a
Qualified Substitute Mortgage Loan.
Depositor: Either EQCC Asset Backed Corporation or EQCC Receivables
Corporation, each of which is a direct or an indirect wholly-owned subsidiary of
the Representative.
Depository: Initially, The Depository Trust Company, the nominee of which
is Cede & Co., as the registered Holder of the Book Entry Certificates. The
Depository shall at all times constitute 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.
Destroyed Mortgage Note: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Destroyed Mortgage Note Affidavit: An affidavit in the form of Exhibit U
delivered pursuant to Section 2.04(a)(i)(B) with respect to a Destroyed Mortgage
Note.
Determination Date: With respect to each Payment Date, the seventh Business
Day of the month in which such Payment Date occurs.
Disqualified Non-United States Person: A transferee of a Class R, Class MR
or Class LR Certificate other than a person that (i) is a United States Person
or (ii) is a Non-United States Person that holds a Class R, Class MR or Class LR
Certificate in connection
<PAGE>
with the conduct of a trade or business within the United States and has
furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or (iii) is a Non-United States Person that has delivered to
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of such Class R, Class MR or Class LR
Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of a Class R, Class MR
or Class LR Certificate will not be disregarded for federal income tax purposes.
Disqualified Organization: Either (i) the United States, (ii) any state or
political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt 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, (vii) any organization described in Section 1381(a)(2)(C) of the
Code, or (viii) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. Notwithstanding the
foregoing, 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
such governmental unit. The terms "United States" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
Due Date: The day of the month on which the Monthly Payment is due from the
Mortgagor on a Mortgage Loan.
Due Period: With respect to any Payment Date, the calendar month
immediately preceding the calendar month in which such Payment Date occurs.
Eligible Account: Either (A) a segregated account or segregated accounts
maintained with an institution whose deposits are insured by the Bank Insurance
Fund or the Savings Association Insurance Fund of the FDIC, (x) the unsecured
and uncollateralized debt obligations of which shall be rated "A" or better by
S&P or have the highest short-term rating by S&P and (y) the unsecured and
uncollateralized debt obligations of which shall be rated A1 or better by
Moody's and have the highest short-term rating by Moody's and which is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the
Certificate Insurer, S&P and Moody's or (B) a segregated trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company, having capital and surplus of
not less than $50,000,000, acting in its fiduciary capacity, and has a rating
from Moody's for long-term deposits of at least Baa3; provided, that any
Eligible Account maintained with any Affiliate of NationsBank Corporation must
be
<PAGE>
consented to by the Certificate Insurer. Any Eligible Accounts maintained with
the Trustee shall conform to the preceding clause (B).
Event of Nonpayment: An event of nonpayment shall occur with respect to any
Payment Date if the amount remitted by the Servicer pursuant to Sections
5.04(i), 6.04(e) and 6.08 and on deposit in the Collection Account for such
Payment Date, plus any amounts withdrawn from the Spread Account pursuant to
Section 6.09(b)(ii) and on deposit in the Collection Account, that are not
subject to any automatic stay under Section 362 of the United States Bankruptcy
Code pursuant to an order of a United States bankruptcy court of competent
jurisdiction, will not, taken together, be sufficient to pay the sum of (X) the
Fixed Rate Remittance Amount and the Adjustable Rate Remittance Amount
(exclusive of the portion of the Fixed Rate Carry-Forward Amount and the
Adjustable Rate Carry-Forward Amount representing amounts previously paid to the
Fixed Rate Certificateholders and Adjustable Rate Certificateholders,
respectively, as Insured Payments) and (Y) the amount to be withdrawn from the
Collection Account for deposit into the Insurance Account pursuant to Section
6.02(i) in respect of such Payment Date, unless such insufficiency results from
a failure by the Certificate Insurer to perform in accordance with the terms of
this Agreement or the Certificate Insurance Policy or a failure by the Trustee
to perform in accordance with this Agreement.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the excess,
if any, of (a) the Net Liquidation Proceeds received in respect thereof over (b)
the Principal Balance of such Mortgage Loan as of the date such Mortgage Loan
became a Liquidated Mortgage Loan plus accrued but unpaid interest thereon at
the Mortgage Interest Rate.
Excess Spread: With respect to any Payment Date, the excess (if any) of the
aggregate interest accrued for the related Due Period on the Mortgage Loans at
their respective Mortgage Interest Rates over the sum of (i) interest accrued on
the Fixed Rate Certificates and Adjustable Rate Certificates since the
immediately prior Payment Date and (ii) the product of (a) 1/12th of 0.69% and
(b) the aggregate of the principal balances of the Mortgage Loans on which
interest for such Due Period was calculated. Excess Spread is equal to the
aggregate of (i) the Component X-1F Distribution Amount, (ii) the Component X-2F
Distribution Amount, (iii) the Component X-3F Distribution Amount, (iv) the
Component X-4F Distribution Amount, (v) the Component X-5F Distribution Amount,
(vi) the Component X-6F Distribution Amount, (vii) the Component X-7F
Distribution Amount and (viii) the Component X-1A Distribution Amount.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
Fidelity Bond: As described in Section 5.09.
<PAGE>
Final Scheduled Payment Date: With respect to each Class of Certificates,
as specified in the table under the Preliminary Statement.
First Lien: With respect to any Mortgage Loan secured by a second priority
lien, the mortgage loan relating to the corresponding Mortgaged Property secured
by a first priority lien.
Fixed Rate Carry-Forward Amount: As of any Payment Date, the sum of (i) the
amount, if any, by which (x) the Fixed Rate Remittance Amount as of the
immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Fixed Rate Certificateholders pursuant to Section 6.05
hereof, exclusive of any portion of such amount attributable to any Insured
Payment, on such immediately preceding Payment Date and (ii) if any portion of
the amount in clause (i) represents Insured Payments made by the Certificate
Insurer, interest on such portion, if any, described in clause (i) above, at the
Pass-Through Rate with respect to the Class of Fixed Rate Certificates to which
such Insured Payment was applied from such immediately preceding Payment Date.
Fixed Rate Certificateholder: A Holder of a Fixed Rate Certificate.
Fixed Rate Certificates: The Class A-1F Certificates, Class A-2F
Certificates, Class A-3F Certificates, Class A-4F Certificates, Class A-5F
Certificates, Class A-6F Certificates, Class A-7F Certificates and Class A-IO
Certificates.
Fixed Rate Group: The group of Mortgage Loans indicated on the Mortgage
Loan Schedule as belonging to the Fixed Rate Group.
Fixed Rate Group Weighted Average Mortgage Interest Rate: The weighted
average of the Mortgage Interest Rates on the Mortgage Loans in the Fixed Rate
Group.
Fixed Rate Interest Remittance Amount: For any Payment Date, the aggregate
interest accrued during the related Accrual Period at the Class A-1F
Pass-Through Rate, Class A-2F Pass-Through Rate, Class A-3F Pass-Through Rate,
Class A-4F Pass-Through Rate, Class A-5F Pass-Through Rate, Class A-6F
Pass-Through Rate, Class A-7F Pass-Through Rate and Class A-IO Pass-Through Rate
on the principal balance (or Class A-IO Notional Amount, in the case of the
Class A-IO Certificates) of the related Fixed Rate Certificates outstanding
during such Accrual Period (after giving effect to payments of principal made on
the preceding Payment Date) calculated on the basis of 30 days over a 360 day
year.
Fixed Rate Principal Balance: As of any date of determination, the sum of
the Original Class A-1F Principal Balance, the Original Class A-2F Principal
Balance, the Original Class A-3F Principal Balance, the Original Class A-4F
Principal Balance, the Original Class A-5F Principal Balance, the Original Class
A-6F Principal Balance and the Original Class A-7F Principal Balance, reduced by
the sum of all amounts (including, except for purposes of effecting the
Certificate Insurer's subrogation rights, that portion of Insured Payments, if
any, made in respect of principal) previously distributed to Fixed Rate
Certificateholders in respect of principal.
<PAGE>
Fixed Rate Principal Remittance Amount: As to any Payment Date, the lesser
of (A) the Fixed Rate Principal Balance as of such Payment Date and (B) the sum
of (a) the Basic Principal Amount for the Fixed Rate Group for such Payment Date
and (b) the Fixed Rate Carry-Forward Amount.
Fixed Rate Remittance Amount: The sum of (i) the Fixed Rate Principal
Remittance Amount and (ii) the Fixed Rate Interest Remittance Amount.
Fixed Rate Servicing Fee: With respect to any Accrual Period, the amount
equal to the lesser of (a) one month's interest at the Servicing Fee Rate on the
aggregate of the principal balances of the Mortgage Loans in the Fixed Rate
Group (calculated on the basis of 30 days over a 360 day year) and (b) the
excess, if any, of (1) one month's interest at the Net Fixed Rate Group Weighted
Average Mortgage Interest Rate on the aggregate Principal Balance of the
Mortgage Loans in the Fixed Rate Group (calculated on the basis of 30 days over
a 360 day year) over (2) the Fixed Rate Interest Remittance Amount.
FNMA: Fannie Mae and any successor thereto.
Holder: A Certificateholder.
IBCA: International Bank Credit Agency.
Illinois Land Trust: A trust formed under a trust agreement between the
trustee and one or more beneficiaries named therein, pursuant to which such
trustee holds legal and equitable title to a Mortgaged Property located in the
State of Illinois and such beneficiaries are the owners of the beneficial
interest in such trust.
Independent: When used with respect to any specified Person, that the
Person (i) does not have any direct financial interest or any material indirect
financial interest in the Depositors, the Representative, the Servicer, the
Originators or any Affiliate of any of the foregoing Persons and (ii) is not
connected with the Representative, the Servicer, the Originators or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Initial Premium Fee Recovery Amount: With respect to any Payment Date, the
product of (i) 0.09% and (ii) the excess of (A) the sum of the Adjustable Rate
Principal Balance and the Fixed Rate Principal Balance immediately prior to
giving effect to distributions of principal and interest on the Certificates
over (B) the sum of the Adjustable Rate Principal Balance and the Fixed Rate
Principal Balance immediately after giving effect to distributions of principal
and interest on the Certificates.
Insurance Account: The insurance account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
Insurance Proceeds: Proceeds paid to the Trustee or the Servicer by any
insurer (except the Certificate Insurer) or by the Servicer pursuant to a
deductible clause under a
<PAGE>
blanket policy insuring against fire and hazards of extended coverage on all of
the Mortgage Loans pursuant to Section 5.08, in either event pursuant to any
insurance policy covering a Mortgage Loan, Mortgaged Property, or REO Property
or any other insurance policy net of any expenses which are incurred by the
Servicer or the Trustee in connection with the collection of such proceeds and
not otherwise reimbursed to the Servicer, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with customary second mortgage servicing procedures.
Insured Payment: As of each Payment Date, the amount, if any, by which (A)
the sum of the Fixed Rate Remittance Amount and the Adjustable Rate Remittance
Amount (excluding from such amounts any amount thereof attributable to clause
(iv) of the definition of "Basic Principal Amount," to the extent such amount is
due but not paid by the Representative, the Depositors, or the Originators)
exceeds (B) the sum of (x) the Available Payment Amounts for each Mortgage Loan
Group (minus the amount withdrawable from the Collection Account pursuant to
Sections 6.02(i), (ii) and (iii)) plus any amount transferred from the Spread
Account to the Collection Account pursuant to Section 6.09(b)(ii) and (y) the
aggregate amount of any previous Insured Payments for which the Certificate
Insurer has not been reimbursed pursuant to Section 6.05(c); provided, however,
that the determination of Insured Payments shall not be affected in any way by
any recharacterization of the transactions contemplated by this Agreement as a
financing in any bankruptcy, insolvency or similar proceeding to which the
Depositors or the Originators may be subject, and the Available Payment Amount
shall for the purpose of this definition be deemed to be decreased by the amount
thereof that has been deposited in the Collection Account but may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy court of
competent jurisdiction imposing a stay pursuant to Section 362 of the United
States Bankruptcy Code.
Latest Maturity Date: With respect to any Class of Certificates, its Final
Scheduled Maturity Date.
LIBOR: For any Accrual Period and the Adjustable Rate Certificates, the
London interbank offered rate for one-month United States dollar deposits
determined by the Trustee for each Accrual Period in accordance with the
provisions of Section 4.05.
LIBOR Determination Date: With respect to any Accrual Period, the second
business day preceding such Accrual Period (which for the initial Accrual Period
shall be April 21, 1998).
LIBOR Interest Carryover: An amount, calculated on any Payment Date on
which the Class A-1A Pass-Through Rate is equal to the Net Funds Cap Rate, equal
to (i) the difference between (a) the amount of interest the Adjustable Rate
Certificates would be entitled to receive on such Payment Date without regard to
the Net Funds Cap Rate and (b) the amount of interest actually distributed to
the Adjustable Rate Certificates on such Payment Date, plus (ii) any portion of
the amount calculated pursuant to clause (i) remaining unpaid from prior Payment
Dates and interest accrued thereon at the then-applicable Class A-1A LIBOR Rate.
<PAGE>
Lien: Any security interest, lien, charge, pledge, equity or encumbrance of
any kind other than tax liens, mechanics' liens and any liens that attach by
operation of law.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan or REO Property as to
which the Servicer has determined that all amounts which it reasonably and in
good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
Liquidation Proceeds: Cash, including Insurance Proceeds, proceeds of any
REO Disposition, amounts required to be deposited in the Principal and Interest
Account pursuant to Section 5.10 hereof, and any other amounts received in
connection with the liquidation of defaulted Mortgage Loans, whether through
trustee's sale, foreclosure sale or otherwise.
Lockout Percentage: For any Payment Date, the percentage that corresponds
to the range of Payment Dates in which such Payment Date is included, as set
forth in the following table:
Payment Dates Lockout Percentage
- ------------- ------------------
May 1998 - April 2001 0%
May 2001 - April 2003 45%
May 2003 - April 2004 80%
May 2004 - April 2005 100%
May 2005 and thereafter 300%
Lockout Pro Rata Remittance Amount: For any Payment Date, an amount,
determined immediately prior to giving effect to any payment of principal of the
Fixed Rate Certificates on such date, equal to the product of (x) a fraction,
the numerator of which is the sum of the principal balance of the Class A-6F
Certificates and the Class A-7F Certificates as of such Payment Date and the
denominator of which is the Fixed Rate Principal Balance as of such Payment
Date, and (y) the Fixed Rate Principal Remittance Amount for such Payment Date.
Lockout Remittance Amount: For any Payment Date, an amount, determined
immediately prior to giving effect to any payment of principal of the Fixed Rate
Certificates on such date, equal to the least of: (a) the product of (i) the
applicable Lockout Percentage for such Payment Date and (ii) the Lockout Pro
Rata Remittance Amount for such Payment Date; (b) the Fixed Rate Principal
Remittance Amount for such Payment Date; and (c) the sum of the Class A-6F
Certificate Principal Balance and the Class A-7F Certificate Principal Balance
as of such Payment Date.
Loss Coverage Ratio: With respect to any Payment Date, a fraction,
expressed as a percentage, (a) the numerator of which equals the sum of (i) the
product of (A) the sum of (I) 25% of the aggregate Principal Balance of all
Mortgage Loans that are 30-59 days delinquent, plus (II) 50% of the aggregate
Principal Balance of all Mortgage Loans that are 60-89 days delinquent, plus
(III) 100% of the aggregate Principal Balance of all Mortgage Loans that are 90
or more days delinquent, in each case as of the close of business on the last
<PAGE>
day of the immediately preceding calendar month and including Mortgage Loans
that are in foreclosure or that have been converted to REO Properties, and (B)
the greater of (I) the Original Loss Severity and (II) prior to the Loss Trigger
Date, zero, and on or after the Loss Trigger Date, the Actual Loss Severity,
plus (ii) the Cumulative Losses, and (b) the denominator of which equals the
product of (I) the Loss Coverage Requirement and (II) the Original Pool
Principal Balance.
Loss Coverage Requirement: 11.25%.
Loss Trigger Date: The date that is the earlier of (i) the 30th Payment
Date and (ii) the first Payment Date after which the Trust has incurred Mortgage
Loan Losses with respect to at least 20 Liquidated Mortgage Loans.
Lower-Tier Distribution Account: The account established in accordance with
Section 6.01(a) hereof and maintained by the Trustee.
Lower-Tier Regular Interests: The Class LT1, LT2, LT3, LT4, LT5, LT6, LT7
and LT8 Interests.
Majority in Aggregate Voting Interest: Class A and Class X
Certificateholders representing Class A and Class X Certificates voting together
as a single class evidencing an aggregate Voting Interest of at least 51% when
expressed as a percentage rounded to four decimal places.
Middle-Tier Distribution Account: The account established in accordance
with Section 6.01(a) hereof and maintained by the Trustee.
Middle-Tier Regular Interests: The Class MT1, Class MT2, Class MT3, Class
MT4, Class MT5, Class MT6, Class MT-6IO, Class MT7, Class MT-7IO and Class MT8
Interests.
Monthly Excess Spread Amount: On any Payment Date, the amount equal to the
product of 100% and the amount of the Excess Spread as of such Payment Date;
provided, however, that the percentage set forth above may be reduced at any
time, solely at the discretion of the Certificate Insurer, with the consent of
each Account Party, at which time written notice shall be sent to the
Representative, the Trustee, S&P and Moody's.
Monthly Payment: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Mortgage Loan, as set forth in
the related Mortgage Note.
Monthly Premium: The monthly premium payable to the Certificate Insurer
pursuant to the Certificate Insurance Policy and the letter agreement dated as
of the Closing Date, among the Certificate Insurer and the Depositors.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
<PAGE>
Mortgage: The mortgage, deed of trust or other instrument creating a first
or second lien on the Mortgaged Property.
Mortgage File: As described in Exhibit A.
Mortgage Impairment Insurance Policy: As defined in Section 5.08.
Mortgage Interest Rate: With respect to a Mortgage Loan in the Fixed Rate
Group, the fixed per annum rate of interest borne by a Mortgage Note, as shown
on the Mortgage Loan Schedule, and with respect to a Mortgage Loan in the
Adjustable Rate Group and any date of determination, the per annum rate of
interest for the related Due Period computed in accordance with the related
Mortgage Note, subject to any minimum rate, maximum rate and periodic cap on
such rate applicable from time to time to the calculation of interest thereon as
set forth in the related Mortgage Note.
Mortgage Loan: An individual mortgage loan which is assigned and
transferred to the Trustee pursuant to this Agreement, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom,
the Mortgage Loans originally subject to this Agreement being identified on the
Mortgage Loan Schedules annexed hereto as Exhibit D. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trustee by the applicable Depositor, in fact was
not transferred and assigned to the Trustee for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 3.02(g) hereof with respect to such mortgage loan, shall nevertheless be
considered a "Mortgage Loan" for all purposes of this Agreement. As applicable,
Mortgage Loan shall be deemed to refer to the related REO Property.
Mortgage Loan Group: Either the Fixed Rate Group or the Adjustable Rate
Group.
Mortgage Loan Losses: With respect to any Payment Date, the sum of the
following amounts for each Mortgage Loan that became a Liquidated Mortgage Loan
during the related Due Period: the amount, if any, by which (i) the sum of (A)
the Principal Balance of such Mortgage Loan (determined immediately before such
Mortgage Loan became a Liquidated Mortgage Loan) and (B) accrued and unpaid
interest thereon at the Mortgage Interest Rate to the date on which such
Mortgage Loan became a Liquidated Mortgage Loan exceeds (ii) the Net Liquidation
Proceeds received during such Due Period in connection with the liquidation of
such Mortgage Loan which have not theretofore been used to reduce the Principal
Balance of such Mortgage Loan. For purposes of this definition, a Mortgage Loan
as to which the related Mortgaged Property is held by the Trust Fund shall be
deemed to have continued to accrue interest at the related Mortgage Interest
Rate.
Mortgage Loan Schedule: The schedules of Mortgage Loans attached hereto as
Exhibit D as each may be amended to reflect Qualified Substitute Mortgage Loans,
such schedule identifying each applicable Mortgage Loan by address of the
Mortgaged Property and the name of the Mortgagor and setting forth as to each
such Mortgage Loan the following
<PAGE>
information: (i) the Principal Balance as of the Cut-off Date, (ii) the account
number, (iii) the original principal amount, (iv) the CLTV as of the date of the
origination of the related Mortgage Loan, (v) the Due Date, (vi) the Mortgage
Interest Rate, (vii) the first date on which a Monthly Payment is due under the
Mortgage Note, (viii) the Monthly Payment, (ix) the original stated maturity
date of the Mortgage Note, (x) the remaining number of months to maturity as of
the Cut-off Date, (xi) the Mortgaged Property State and (xii) whether the
Mortgage Loan is included in the Fixed Rate Group or the Adjustable Rate Group.
Mortgage Note: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The Mortgage Loans indicated on the Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate or, with respect to certain properties located
in Maryland, a leasehold estate, in a single parcel of land improved by a
Residential Dwelling.
Mortgaged Property State: The state in which the Mortgaged Property related
to a Mortgage Loan is located, as set forth on the Mortgage Loan Schedule.
Mortgagor: The obligor on a Mortgage Note.
Net Adjustable Rate Group Weighted Average Mortgage Interest Rate: With
respect to any Accrual Period, a rate equal to the Adjustable Group Weighted
Average Mortgage Interest Rate as of the first day of the related Due Period
less 0.69%.
Net Fixed Rate Group Weighted Average Mortgage Interest Rate: With respect
to any Accrual Period, a rate equal to the Fixed Rate Group Weighted Average
Mortgage Interest Rate less 0.69%.
Net Funds Cap Rate: With respect to any Accrual Period, a rate equal to the
Adjustable Rate Group Weighted Average Mortgage Interest Rate as of the first
day of the related Due Period less either (i) 0.69% per annum, with respect to
the first twelve Accrual Periods or (ii) 1.19% per annum, with respect to each
subsequent Accrual Period.
Net Liquidation Proceeds: Liquidation Proceeds net of any reimbursements to
the Servicer made therefrom pursuant to Section 5.04(ii).
Nondisqualification Opinion: An Independent Opinion of Counsel addressed to
the Trustee that a contemplated action will neither cause any Trust REMIC to
fail to qualify as a REMIC at any time the Class A Certificates are outstanding
nor cause an unindemnified "prohibited transaction" or a "prohibited
contribution" tax to be imposed on any Trust REMIC.
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Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Advance previously made and not reimbursed pursuant to
Section 5.04(ii), or (ii) a Servicing Advance proposed to be made, in respect of
any Mortgage Loan or REO Property which, in the good faith business judgment of
the Servicer would not be ultimately recoverable from late collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property
or otherwise.
Non-United States Person: Any Person other than a United States Person.
Officer's Certificate: A certificate delivered hereunder or under any other
Basic Document signed by the President or a Vice President or an Assistant Vice
President of the Representative, a Depositor, the Trustee or the Servicer, as
required hereunder or thereunder.
Opinion of Counsel: A written opinion of counsel delivered hereunder or
under any Basic Document, reasonably acceptable to the Trustee, and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of any Trust REMIC as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact Independent of the Representative and the Servicer, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Representative or the Servicer or in an affiliate thereof and (iii) is not
connected with the Representative or Servicer as an officer, employee, director
or person performing similar functions.
Optional Purchase Date: As defined in Section 11.01.
Original Class A-1A Principal Balance: $70,551,229.
Original Class A-1F Principal Balance: $251,364,000.
Original Class A-2F Principal Balance: $49,113,000.
Original Class A-3F Principal Balance: $145,552,000.
Original Class A-4F Principal Balance: $64,596,500.
Original Class A-5F Principal Balance: $57,497,343.
Original Class A-6F Principal Balance: $52,737,000.
Original Class A-7F Principal Balance: $47,463,000.
Original Class A-IO Notional Amount: $100,200,000.
Original Pool Principal Balance: The Pool Principal Balance as of the
Cut-off Date, which amount is equal to $738,874,073.22.
Original Loss Severity: 50.50%.
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Originator: Any of the entities listed on Exhibit K hereto, each of which
is an "Originator" pursuant to the Transfer Agreement and, other than EquiCredit
Corporation of America, is (i) a direct wholly-owned subsidiary of the
Representative, and (ii) a Subservicer as of the date hereof with respect to the
Mortgage Loans sold by it to either Depositor pursuant to the Transfer
Agreement.
Owner-Occupied Mortgaged Property: A Residential Dwelling that the related
Mortgagor represented an intent to occupy as such Mortgagor's primary or
secondary residence at the origination of the Mortgage Loan.
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: Any one of the Class A-1F, Class A-2F, Class A-3F, Class
A-4F, Class A-5F, Class A-6F, Class A-7F, Class A-IO or Class A-1A Pass-Through
Rates.
Payment Date: The 15th day of any month, or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing on May
15, 1998.
Percentage Interest: With respect to a Class A-1F, Class A-2F, Class A-3F,
Class A-4F, Class A-5F, Class A-6F, Class A-7F, Class A-IO or Class A-1A
Certificate, the portion of the Certificates evidenced by such Class A-1F, Class
A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class A-7F, Class A-IO or
Class A-1A Certificate, respectively, expressed as a percentage rounded to four
decimal places, equal to a fraction the numerator of which is the denomination
represented by such Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F,
Class A-6F, Class A-7F, Class A-IO or Class A-1A Certificate, respectively, and
the denominator of which is the Original Class A-1F Principal Balance, Original
Class A-2F Principal Balance, Original Class A-3F Principal Balance, Original
Class A-4F Principal Balance, Original Class A-5F Principal Balance, Original
Class A-6F Principal Balance, Original Class A-7F Principal Balance, Original
Class A-IO Notional Amount or Original Class A-1A Principal Balance,
respectively. With respect to a, Class X Certificate, Class R Certificate, Class
MR Certificate or Class LR Certificate, the portion of the Class evidenced
thereby as stated on the face of such Certificate.
Performance Default: The Servicing Default described in clause (vii) of
Section 10.01(a).
Permitted Instruments: As used herein, Permitted Instruments shall include
the following:
(i) (A) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, and (B)
<PAGE>
Federal Housing Administration debentures, FHLMC senior debt obligations,
and FNMA senior debt obligations assigned ratings in at least one of the
top two long-term rating categories by S&P and Moody's, but excluding any
of such securities described in clauses (A) and (B) whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(ii) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (in each case having maturities of not more than
365 days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that (A) the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated "A-1+" or better by S&P (or, if so consented to by
the Certificate Insurer, "A-1" or better by S&P) and (B) the short-term and
long-term debt obligations of such bank or trust company at the date of
acquisition thereof have been rated Prime-1 and A1 or better, respectively,
by Moody's;
(iii) deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of at least $3,000,000,
which deposits are not in excess of the applicable limits insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
provided that the long-term deposits of such bank or savings and loan
association are rated at least "BBB" by S&P and Baa3 by Moody's;
(iv) commercial paper (having original maturities of not more than 180
days) rated "A-1+" or better by S&P and Prime-1 by Moody's;
(v) investments in money market funds rated "AAAm" or "AAAm-G" by S&P
and Aaa by Moody's;
(vi) investments in Permitted Instruments on an overnight basis in
investment accounts maintained at the Trustee; provided, however, that any
such account shall be an Eligible Account; and
(vii) any other obligation or security acceptable to the Rating
Agencies and the Certificate Insurer (as certified by a letter from each
Rating Agency and the Certificate Insurer to the Trustee); 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 provided a yield to maturity at
par greater than 120% of the yield to maturity at par of the underlying
obligations; and provided, further, that no instrument described hereunder
may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated
maturity; and provided, further that no instrument shall be a Permitted
<PAGE>
Instrument unless such instrument is a "permitted investment" within the
meaning of Section 860G(a)(5) of the Code.
Permitted Transferee: Any Person other than a Disqualified Organization or
a Disqualified Non-United States Person, or an agent or nominee acting on behalf
of a Disqualified Organization or a Disqualified Non-United States Person.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: A Plan filed by a Mortgagor pursuant to the Bankruptcy Code (11
U.S.C. Section 1321) and either confirmed or pending confirmation by a court of
competent jurisdiction pursuant to the Bankruptcy Code (11 U.S.C. Section 1325),
providing for, among other things, the payment of defaulted Mortgage Loan
payments all of which were due prior to, but in no event after, the
effectiveness of the Plan.
Pool Factor: As of any date of determination, the Pool Principal Balance as
of such date divided by the Original Pool Principal Balance.
Pool Principal Balance: With respect to either or both Mortgage Loan
Groups, the aggregate Principal Balances of the related Mortgage Loans, as of
any date of determination.
Pre-Plan Interest: With respect to a Bankruptcy Loan, accrued but unpaid
interest relating to the period prior to the filing of the related Plan.
Pre-Plan Interest Payments: With respect to a Bankruptcy Loan, payments
made by a Mortgagor on account of Pre-Plan Interest.
Principal and Interest Account: One of the principal and interest accounts
established and maintained in the name of the Trustee by the Servicer pursuant
to Section 5.03 hereof.
Principal Balance: With respect to any Mortgage Loan or related REO
Property, at any date of determination, the principal balance of the Mortgage
Loan outstanding as of such date. The Principal Balance of any REO Property as
of the date on which such REO Property became an REO Property shall be the
Principal Balance of the related Mortgage Loan as of the date referred to in the
preceding sentence, and the Principal Balance of a Mortgage Loan at the time it
becomes a Liquidated Mortgage Loan shall be zero.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date, that is intended to satisfy a Mortgage
Loan in full.
<PAGE>
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Projected Excess Spread: With respect to any Payment Date, five (5) times
the amount of the Monthly Excess Spread Amount deposited in the Spread Account
pursuant to Section 6.09(a) hereof as of such Payment Date.
Prospectus: The prospectus (including the prospectus supplement) prepared
by the Representative and the Depositors in connection with the initial issuance
and sale of the Class A Certificates.
Qualified Substitute Mortgage Loan: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.06 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates of not less than (and
not more than two percentage points more than) the Mortgage Interest Rate for
the Deleted Mortgage Loan (which, in the case of a Mortgage Loan in the
Adjustable Rate Group, shall mean a Mortgage Loan having the same interest rate
index, and a margin over such index and a maximum interest rate at least equal
to (and in each case not more than two percentage points more than) those
applicable to the related Deleted Mortgage Loan), (ii) relates or relate to the
same type of Residential Dwelling as the Deleted Mortgage Loan, or relates to a
one- to four-family dwelling, and has or have a lien priority that is no more
junior or subordinate than that of the Deleted Mortgage Loan, (iii) matures or
mature no later than (and not more than one year earlier than) the Deleted
Mortgage Loan, (iv) has or have a Combined Loan-to-Value Ratio or Combined
Loan-to-Value Ratios at the time of such substitution no higher than the
Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance of the Deleted Mortgage Loan as of such date, (vi) is of equal
or better Class quality (as described in the Prospectus) as the Deleted Mortgage
Loan, (vii) complies or comply as of the date of substitution with each
representation and warranty set forth in Sections 3.01(b) and 3.02, (viii) is of
the same type, either a balloon loan or fully-amortizing Mortgage Loan, as the
Deleted Mortgage Loan and (ix) would be in the same Mortgage Loan Group, the
Fixed Rate Group or Adjustable Rate Group, as the related Deleted Mortgage Loan.
Rating Agencies: Collectively, Moody's and S&P.
Reassignment of Assignment of Beneficial Interest: With respect to each
Mortgage Loan secured by an interest in an Illinois Land Trust, an assignment of
the Assignment of Beneficial Interest, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to effect the
transfer of the entire beneficial interest in such Illinois Land Trust to the
Depositors and the sale of such beneficial interest to the Trustee for the
benefit of the Certificateholders.
Record Date: The calendar day immediately preceding each Payment Date or,
if Definitive Certificates are issued, the last calendar day of the month
preceding the month in which each such Payment Date occurs.
<PAGE>
Recordation Trigger: The date on which (i) the long-term senior unsecured
debt of NationsBank Corporation or its successor in interest is reduced below
"A-" by S&P or below A3 by Moody's or is withdrawn.
Reference Banks: Barclay's Bank PLC, Chase Manhattan Bank, Citibank, N.A.
and National Westminster Bank PLC; provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
any Depositor or any affiliate thereof, (iii) whose quotations appear on the
Telerate LIBOR Page on the relevant Interest Determination Date and (iv) which
have been designated as such by the Trustee.
Registered Holder: The Person in whose name a Certificate is registered on
the Certificate Register.
Reimbursable Amounts: As of any date of determination, an amount payable to
the Servicer, the Representative or the Depositors with respect to (i) the
Servicing Advances and Advances reimbursable pursuant to Section 5.04(ii) not
previously reimbursed, (ii) any advances reimbursable pursuant to Section 9.01
and not previously reimbursed pursuant to Section 6.05(d)(vi), and (iii) any
other amounts expressly reimbursable to the Servicer or the Depositors pursuant
to this Agreement.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law, customary mortgage servicing
procedures and this Agreement.
Remainder Excess Spread Amount: As of any Payment Date, the amount equal to
the excess of the aggregate Excess Spread over the Monthly Excess Spread Amount.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Sections 860A through 860G
of the Code, and related provisions, and 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: As defined in Section 6.07.
<PAGE>
REO Disposition: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO Property: As described in Section 5.10.
Representative: EquiCredit Corporation of America, or its successor in
interest.
Representative's Yield: For each Mortgage Loan, the sum of (A) prepayment
penalties and premiums collected on the Mortgage Loans and (B) any sum or other
finance charge payable by the Mortgagor on a prepaid Rule of 78s Mortgage Loan
that is in addition to (i) the Curtailment or Principal Prepayment (as the case
may be) on the related Mortgage Loan, together with accrued and unpaid interest
thereon at the Mortgage Interest Rate, plus (ii) the Servicing Compensation
exclusive of Servicing Fees. The Representative's Yield is retained by the
Representative and is not part of the assets of the Trust Fund.
Residential Dwelling: Any of the following: (i) a one- to four-family
dwelling, (ii) a unit in a planned unit development, (iii) a unit in a
condominium development, or (iv) a permanently affixed mobile home or a
permanently affixed manufactured housing unit, as defined in the FNMA Selling
Guide, which does not constitute other than real property under state law
provided that such home or housing would qualify as a single family residence
under Section 25(c)(10) of the Code.
Residual Certificate: Any of the Class R, Class MR and Class LR
Certificates.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto) with direct
responsibility for the administration of this Agreement, including any Vice
President, Assistant Vice President, Senior Trust Officer, Trust Officer,
Assistant Trust Officer, any Assistant Secretary, any trust officer or any other
officer of such Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to the
Representative, a Depositor, an Originator or the Servicer, the President or any
Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary authorized to perform the actions required, including, without
limitation, each Person whose name appears on a list of Responsible Officers
furnished to the Trustee and the Certificate Insurer on the Closing Date, as
such list may be amended from time to time.
Rule of 78s Method: The method of calculating interest on indebtedness
represented by a Mortgage Note under which (a) the total of the Monthly Payments
specified in the Mortgage Note represents the principal amount borrowed plus
interest in an amount calculated on the basis of the stated Mortgage Interest
Rate for the term of the Mortgage Loan, (b) the portion of a Monthly Payment
allocated to reduction of the outstanding Principal Balance is determined by
multiplying the total amount of add-on interest payable over the term
<PAGE>
of the Mortgage Loan by a fraction (i) the numerator of which is the sum of the
series of numbers representing the number of each Monthly Payment remaining due
under the Mortgage Loan (prior to giving effect to the payment to which the
fraction is being applied) and (ii) the denominator of which is the sum of the
series of numbers representing the number of each Monthly Payment originally due
under the Mortgage Loan (from the first to the last, inclusive) and (c) upon the
prepayment in full of the Mortgage Loan, a rebate is made in an amount equal to
the difference between the amount described in the preceding clause (b) minus
the amount of interest calculated on the basis of the stated Mortgage Interest
Rate at the origination of the Mortgage Loan. Notwithstanding the foregoing or
any provision of this Agreement to the contrary, payments to the
Certificateholders and the Servicing Fee and with respect to Rule of 78s
Mortgage Loans will be computed as if such Mortgage Loans were simple interest
Mortgage Loans.
Rule of 78s Mortgage Loan: A Mortgage Loan that uses the Rule of 78s Method
of allocating interest payments during the term of such Mortgage Loan.
Series: 1998-1.
Servicer: EquiCredit Corporation of America or any successor appointed as
herein provided.
Servicer Default: As specified in Section 10.01(a).
Servicer Employees: As defined in Section 5.09.
Servicing Advances: All reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations which are "unanticipated," within the meaning of Treasury
Regulations Section 1.860G-1(b)(3)(iii), including, but not limited to, the cost
of (i) the preservation, restoration and protection of the Mortgaged Property,
including, without limitation, advances in respect of real estate taxes and
assessments and insurance premiums on fire, hazard and flood insurance policies
and leasehold payments, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of the REO Property, (iv)
compliance with the obligations under Sections 5.02, 5.05 and 5.07, which
Servicing Advances are reimbursable to the Servicer to the extent provided in
Section 5.04(ii), and (v) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of the First Lien pursuant
to Section 5.13, for all of which costs and expenses the Servicer is entitled to
reimbursement in accordance with this Agreement. Notwithstanding anything herein
to the contrary, no Servicing Advance shall be required to be made hereunder if
such Servicing Advance would, if made, constitute a Nonrecoverable Advance. The
determination by the Servicer that it has made a Nonrecoverable Advance or that
any proposed Servicing Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer's Certificate delivered to the
Certificate Insurer, the Depositors and the Trustee no later than the Business
Day following such determination.
<PAGE>
Servicing Compensation: The Servicing Fee and other amounts to which the
Servicer is entitled pursuant to Section 7.03.
Servicing Fee: With respect to any Accrual Period, the amount equal to the
sum of (i) one month's interest at the Servicing Fee Rate on the aggregate of
the principal balances of the Mortgage Loans in the Adjustable Rate Group
(calculated on the basis of actual number of days over a 360-day year) and (ii)
the lesser of (a) one month's interest at the Servicing Fee Rate on the
aggregate of the Principal Balances of the Mortgage Loans in the Fixed Rate
Group (calculated on the basis of 30 days over a 360 day year)and (b) the
excess, if any, of (1) one month's interest at the Net Fixed Rate Group Weighted
Average Mortgage Interest Rate on the aggregate Principal Balance of the
Mortgage Loans in the Fixed Rate Group (calculated on the basis of 30 days over
a 360 day year) over (2) the Fixed Rate Interest Remittance Amount. The
Servicing Fee is payable solely from the interest portion of (i) Monthly
Payments, (ii) Liquidation Proceeds or (iii) Released Mortgaged Property
Proceeds collected by the Servicer or as otherwise provided in Section 5.04. The
Servicing Fee with respect to each Mortgage Loan shall accrue on the same
principal balance on which interest accrues on such Mortgage Loan. The Servicing
Fee includes any Servicing Fees owed or payable to any Subservicer.
Servicing Fee Rate: With respect to any Accrual Period, a rate equal to
0.60% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date, as such list may from time to time
be amended.
Specified Spread Account Requirement: As of:
(x) any date on or prior to the thirtieth Payment Date (occurring in
October 2001), the greatest of (a) the Base Spread Account Requirement as of
such date; (b) the sum of the Principal Balances of the three largest Mortgage
Loans as of such date; and (c) two times the excess of (i) one-half of the
aggregate Principal Balance of the Mortgage Loans which are 90 or more days
delinquent (including REO Properties) over (ii) the Projected Excess Spread as
of such date;
(y) any date after the thirtieth Payment Date (occurring in October 2001),
the greatest of (a) the lesser of (A) the Base Spread Account Requirement as of
such date and (B) the product of (x) 8.70% and (y) the Pool Principal Balance as
of such date; (b) the sum of the Principal Balances of the three largest
Mortgage Loans as of such date; and (c) two times the excess of (i) one-half of
the aggregate Principal Balance of the Mortgage Loans which are 90 or more days
delinquent (including REO Properties) over (ii) the Projected Excess Spread as
of such date. Notwithstanding the foregoing, however, the Specified Spread
Account Requirement for any date shall in no event be greater than the
Subordinated Amount as of such date and may be reduced by the Certificate
Insurer at any time after the amount in the Spread
<PAGE>
Account is equal to the Base Spread Account Requirement; provided that such
reductions shall not affect the rating assigned by S&P or Moody's to the Class A
Certificates.
Spread Account: The account maintained pursuant to Section 6.09, which
shall not be an asset of any Trust REMIC.
Spread Account Amount: As defined in Section 6.09(b)(ii) hereof.
Spread Account Excess: As defined in Section 6.09(b)(iv) hereof.
S&P: Standard & Poor's, or any successor thereto.
Startup Day: The day designated as such pursuant to Section 2.06 hereof.
Subordinated Amount: (a) The Subordinated Amount as of the Cut-off Date
shall be 11.25% times the sum of the Original Pool Principal Balance (which is
initially equal to $83,123,333.24.
(b) As of any Payment Date, the Subordinated Amount shall equal the
Subordinated Amount as of the preceding April 1, minus Cumulative Excess Spread
Receipts since such preceding April 1, through the last day of the month
preceding such Payment Date. After giving effect to such adjustment, the
Subordinated Amount may be further adjusted on each respective April 1 as
follows to equal:
(i) on each April 1 up to but not including April 1, 2003 the amount,
if any, by which (A) 11.25% of the Original Pool Principal Balance exceeds
(B) Cumulative Excess Spread Receipts since the Cut-off Date through the
last day of March preceding such April 1;
(ii) on April 1, 2003, the lesser of (A) the Subordinated Amount as of
the preceding Payment Date, and (B) the sum of (x) 11.25% of the Pool
Principal Balance at the close of business on April 1, 2003, and (y) 80% of
the amount, if any, by which the amount set forth under (A) exceeds the
amount computed under clause (B)(x) of this paragraph (ii);
(iii) on April 1, 2004, the lesser of (A) the Subordinated Amount as
of the preceding Payment Date, and (B) the sum of (x) 11.25% of the Pool
Principal Balance at the close of business on April 1, 2004, and (y) 75% of
the amount, if any, by which the amount set forth under (A) exceeds the
amount computed under clause (B)(x) of this paragraph (iii);
(iv) on April 1, 2005, the lesser of (A) the Subordinated Amount as of
the preceding Payment Date, and (B) the sum of (x) 11.25% of the Pool
Principal Balance at the close of business on April 1, 2005, and (y)
66-2/3% of the amount, if any, by which the amount set forth under (A)
exceeds the amount computed under clause (B)(x) of this paragraph (iv);
<PAGE>
(v) on April 1, 2006, the lesser of (A) the Subordinated Amount as of
the preceding Payment Date, and (B) the sum of (x) 11.25% of the Pool
Principal Balance at the close of business on April 1, 2006, and (y) 50% of
the amount, if any, by which the amount set forth under (A) exceeds the
amount computed under clause (B)(x) of this paragraph (v); and
(vi) on April 1, 2007, and on each April 1, thereafter, the lesser of
(A) the applicable Subordinated Amount on the preceding April 1, minus
Cumulative Excess Spread Receipts since such preceding April 1, through the
last day of the preceding April 1, as appropriate, and (B) 11.25% of the
Pool Principal Balance at the close of business on such current April 1;
provided, however, that the amount determined for part (B) of clauses (ii)
through (vi) above shall not be less than the sum of the Principal Balances of
the three largest Mortgage Loans at the beginning of each such period. Subject
to the preceding sentence, the Subordinated Amount as of any date other than a
Payment Date shall be equal to the Subordinated Amount as of the immediately
preceding Payment Date; and provided, further, however, that in no event shall
the Subordinated Amount be less than zero.
Notwithstanding anything to the contrary herein contained, no reduction to
the Subordinated Amount described in clauses (ii) through (vi) hereof shall be
permitted to take effect if (x) as of April 1, 2003, the amount equal to
aggregate Cumulative Excess Spread Receipts exceeds 1% of the Original Pool
Principal Balance or (y) as of any April 1, after April 1, 2003, (I) the amount
equal to aggregate Cumulative Excess Spread Receipts exceeds 5% of the
Subordinated Amount in effect on the preceding April 1, or (II) on any Payment
Date occurring within the annual period immediately preceding such April 1, the
aggregate principal balance of all Mortgage Loans which were 60 or more days
delinquent on such Payment Date equaled or exceeded 2.5% of the aggregate
principal balance of all Mortgage Loans outstanding on such Payment Date. If, by
reason of the application of the provisions of clause (y) of the immediately
preceding sentence, reduction of the Subordinated Amount pursuant to the
provisions of any one of clauses (ii) through (vi) shall not have taken effect,
and, if as of any subsequent April 1, no event shall have occurred the effect of
which would be to prohibit a reduction in the Subordinated Amount as of such
April 1, then the Subordinated Amount shall be reduced on such April 1, to the
amount permitted by the clause which would have otherwise taken effect had the
provisions of the immediately preceding sentence not been applied.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer. As of the
Closing Date, the only Subservicers are the Originators (other than EquiCredit
Corporation of America).
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as
<PAGE>
provided in Section 5.01(b), a copy of which shall be delivered, along with any
modifications thereto, to the Certificate Insurer and the Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.06 or 3.03, the amount (if any) by which the aggregate
Principal Balances of any Qualified Substitute Mortgage Loans as of the date of
substitution, together with accrued and unpaid interest thereon (but only to the
extent deposited in the Principal and Interest Account and transferred to the
Collection Account), are less than the aggregate of the Principal Balances
(after application of principal payments received on or before the date of
substitution and deposited into the Principal and Interest Account), together
with accrued and unpaid interest thereon to the date of substitution, of the
related Deleted Mortgage Loans plus any unreimbursed Servicing Advances.
Tax Matters Person: The Person or Persons appointed from time to time to
act as the "tax matters person" (within the meaning of the REMIC Provisions) of
each of the Lower-Tier REMIC, the Middle-Tier REMIC and the Upper-Tier REMIC.
Termination Price: As defined in Section 11.01.
Testing Date: As defined in Section 3.02(fff).
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or
other form of assignment of any Ownership Interest in a Certificate.
Transfer Agreement: The agreement, dated as of April 1, 1998, among the
Originators and the Depositors, pursuant to which the Originators transferred
the Mortgage Loans to the Depositors.
Transfer Affidavit and Agreement: As defined in Section 4.02(j).
Transferee: Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.
Transferor: Any Person who is disposing by Transfer any Ownership Interest
in a Certificate.
Trust: EQCC Home Equity Loan Trust 1998-1.
Trust Fund: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto and all proceeds thereof, (ii) such assets
as from time to time are identified as REO Property or are deposited in the
Collection Account, Lower-Tier Distribution Account, Middle-Tier Distribution
Account, Upper-Tier Distribution Account, Principal and Interest Account, Spread
Account and Insurance Account, including amounts on deposit in the foregoing
accounts and invested in Permitted Instruments, (iii) the Trustee's rights under
all
<PAGE>
insurance policies with respect to the Mortgage Loans required to be maintained
pursuant to this Agreement and any Insurance Proceeds, (iv) the Certificate
Insurance Policy, (v) Liquidation Proceeds and (vi) Released Mortgaged Property
Proceeds. The Representative's Yield and amounts received on and after the
Cut-off Date in respect of interest accrued on the Mortgage Loans prior to the
Cut-off Date do not constitute part of the Trust Fund.
Trustee: U.S. Bank National Association, not in its individual capacity but
solely as trustee under this Agreement, or its successor in interest, or any
successor trustee appointed pursuant to this Agreement.
Trust REMIC: As defined in Section 2.07(a)(1).
UCC: The Uniform Commercial Code as in effect in the relevant jurisdiction.
United States Person: (i) A citizen or resident of the United States, (ii)
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, (iii) an estate
the income of which is includible in gross income for United States federal
income tax purposes, regardless of its source or (iv) a trust if a court within
the United States is able to exercise primary supervision over the
administration of such trust and one or more United States Persons have the
authority to control all substantial decisions of such trust.
Upper-Tier Distribution Account: The account established in accordance with
Section 6.01(a) hereof and maintained by the Trustee.
Upper-Tier Regular Interests: The Class X Interest and the Class A
Certificates.
Voting Interest: The aggregate Voting Interests of each Class of Class A
Certificates (other than the Class A-IO Certificates) on any date will be equal
to a percentage, expressed as a fraction, the numerator of which is the
principal balance of such Class and the denominator of which is 95% of the sum
of the Adjustable Rate Principal Balance and the Fixed Rate Principal Balance.
The Class A-IO Certificates have no Voting Interest. The aggregate Voting
Interests of the Class X Certificates will be equal to a percentage, expressed
as a fraction, the numerator of which is 5% of the sum of the Adjustable Rate
Principal Balance and the Fixed Rate Principal Balance and the denominator of
which is the sum of the Adjustable Rate Principal Balance and the Fixed Rate
Principal Balance. Each Certificateholder of a Class will have a Voting Interest
equal to the product of the Voting Interest to which such Class is collectively
entitled and the Percentage Interest in such Class represented by such Holder's
Certificates.
<PAGE>
ARTICLE II
CONVEYANCE OF THE TRUST ASSETS
Section 2.01 Sale and Conveyance of Trust Assets; Priority and
Subordination of Ownership Interests.
(a) The Depositors do hereby sell, transfer, assign, set over and convey to
the Trustee (for the benefit of the Certificateholders and the Certificate
Insurer, as their interests may appear) without recourse, all of the right,
title and interest of the Depositors in and to (i) the Mortgage Loans (excepting
the Representative's Yield and amounts received on and after the Cut-off Date in
respect of interest accrued on the Mortgage Loans prior to the Cut-off Date),
(ii) the Mortgage Files relating to the Mortgage Loans, (iii) the related
Mortgaged Properties, (iv) the Depositors' rights under all insurance policies
with respect to the Mortgage Loans required to be maintained by it, (v) all
right, title and interest of the Depositors in, to and under the Transfer
Agreement, including the right to cause the Originators to repurchase the
Mortgage Loans under certain circumstances, (vi) all right, title and interest
of the Depositors in each of the Accounts established and maintained pursuant to
Articles V and VI and (vii) the interest of the Depositors in any proceeds of
the property described in clauses (i), (ii), (iii), (iv), (v) and (vi),
including all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation, all amounts from time to time held or invested in the
Accounts.
(b) The rights of the Holders to receive payments with respect to the
Mortgage Loans in respect of the Certificates, and all ownership interests of
the Certificateholders in such payments, shall be as set forth in this
Agreement.
(c) It is the intention of this Agreement that the transfer of the
Depositors' right, title and interest in and to the assets of the Trust pursuant
to this Agreement shall constitute an absolute sale by the Depositors to the
Trustee of the Mortgage Loans for the benefit of the Certificateholders and not
a loan. If a transfer of Mortgage Loans from an Originator to a Depositor
pursuant to the Transfer Agreement is characterized as a pledge and not an
absolute sale, then such Depositor shall be deemed to have transferred to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
as their interests may appear, all of such Depositor's right, title and interest
in, to and under the obligations of such Originator deemed to be secured by said
pledge; and it is the intention of this Agreement that the Depositors shall also
be deemed to have granted and for such purposes the Depositors hereby grant, to
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer, as their interests may appear, a first priority security interest in
all of the Depositors' right, title, and interest in, to and under the
obligations of the Originators to the Depositors deemed to be secured by said
pledge and that the Trustee shall be deemed to be an independent custodian for
purposes of perfection of the security interest granted to the Depositors. If
the transfer of the Mortgage Loans and the other assets of the Trust from the
Depositors to the Trustee for the benefit of the Certificateholders is
characterized as a pledge, it is the intention of this Agreement that this
Agreement shall constitute a security agreement under applicable
<PAGE>
law, and that the Depositors shall be deemed to have granted and for such
purposes the Depositors hereby grant, to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, as their interests may appear, a
first priority security interest in all of the Depositors' right, title and
interest in, to and under the Mortgage Loans, all payments of principal of or
interest on such Mortgage Loans, all other rights relating to and payments made
in respect of the assets of the Trust, and all proceeds of any thereof,
including all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Accounts. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
Section 2.02 Possession of Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File is vested in
the Trustee for the benefit of the Certificateholders.
(b) Pursuant to Section 2.04, the Depositors have delivered or caused to be
delivered each Mortgage File to the Custodian.
Section 2.03 Books and Records.
The sale of each Mortgage Loan shall be reflected on the applicable
Depositor's balance sheets and other financial statements prepared in accordance
with generally accepted accounting principles as a sale of assets by each
Depositor. The applicable Depositor shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by the
Trustee for the benefit of the Certificateholders.
Section 2.04 Delivery of Mortgage Loan Documents.
Contemporaneously with the delivery of this Agreement, the Depositors
delivered or caused to be delivered hereunder to the Trustee the Certificate
Insurance Policy, and each Depositor has delivered to the Trustee (which may be
by delivery to the Custodian on behalf of the Trustee) each of the following
documents for each Mortgage Loan:
(a) (i) (A) The original Mortgage Note, with any intervening endorsements,
endorsed "Pay to the order of BankBoston, N.A., as Custodian under the Custodial
Agreement dated as of April 1, 1998, without recourse" and signed, by facsimile
or manual signature, in the name of the Originator transferring such Mortgage
Loan to the applicable Depositor pursuant to the Transfer Agreement by a
Responsible Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to such Originator, if the
Originator from whom the Depositor acquired such Mortgage Loan was not the
originator or (B) if such Mortgage Note is a Destroyed Mortgage Note, an
original
<PAGE>
Destroyed Mortgage Note Affidavit together with a copy of such Mortgage Note
attached thereto and, (ii) with respect to manufactured housing units, the
certificate of title, if any;
(b) Either: (i) the original Mortgage, with evidence of recording thereon
(and, in the case of a Mortgage Loan secured by a Mortgaged Property held in an
Illinois Land Trust, signed by the trustee of such Illinois Land Trust), (ii) a
copy of the Mortgage certified as a true copy by a Responsible Officer of the
Originator transferring such Mortgage Loan to the applicable Depositor pursuant
to the Transfer Agreement (provided, however, that such Responsible Officer may
complete one or more blanket certificates attaching copies of one or more
Mortgages relating thereto) or by the closing attorney, or by an officer of the
title insurer or agent of the title insurer which issued the related title
insurance policy, or commitment therefor, if the original has been transmitted
for recording until such time as the original is returned by the public
recording office or (iii) a copy of the Mortgage certified by the public
recording office in those instances where the original recorded Mortgage has
been lost or not yet returned;
(c) The original Assignment of Mortgage from the Originator transferring
such Mortgage Loan to the applicable Depositor pursuant to the Transfer
Agreement by assignment to "BankBoston, N.A., as Custodian under the Custodial
Agreement dated as of April 1, 1998, without recourse" or in blank; any such
Assignments of Mortgage may be made by blanket assignments for Mortgage Loans
secured by the Mortgaged Properties located in the same county if permitted by
applicable local law;
(d) Except with respect to any Mortgage Loan secured by a second priority
lien and having a Principal Balance not in excess of $50,000 and listed in
Exhibit V, the original policy of title insurance or a true copy thereof or, if
such policy has not yet been delivered by the insurer, the commitment or binder
to issue same, or original documents of assurance of title;
(e) All intervening assignments, if any, showing a complete chain of
assignment from the originator to the applicable Originator, including any
recorded warehousing assignments, with evidence of recording thereon, certified
by a Responsible Officer of the applicable Originator as a true copy of the
original of such intervening assignments;
(f) A copy of all assumption and modification agreements, if any, certified
as a true copy by a Responsible Officer of the applicable Originator;
(g) If the Mortgaged Property is held in an Illinois Land Trust, the
original Assignment of Beneficial Interest, or, if the trustee of such Illinois
Land Trust retains such original Assignment of Beneficial Interest, a certified
true copy of such Assignment of Beneficial Interest so certified by such
trustee;
(h) If the Mortgaged Property is held in an Illinois Land Trust, an
original Reassignment of Assignment of Beneficial Interest from the applicable
Originator to "BankBoston, N.A., as Custodian under the Custodial Agreement
dated as of April 1, 1998,
<PAGE>
Series 1998-1" or in blank. In the event that the Mortgage Loan was acquired by
the applicable Originator in a merger, the Reassignment of the Assignment of
Beneficial Interest must be by "Originator, successor by merger to [name of
predecessor]"; and in the event that the Mortgage Loan was acquired or
originated by the applicable Originator while doing business under another name,
the Reassignment of Assignment of Beneficial Interest must be by "Originator,
formerly known as [previous name]";
(i) If the Mortgaged Property is held in an Illinois Land Trust, originals
of all intervening Reassignments of Assignment of Beneficial Interest, showing a
complete chain of assignment from the beneficiaries of such Illinois Land Trust
to the applicable Originator of all of such beneficiaries' right, title, and
interest in, to, and under the trust agreement with respect to such Illinois
Land Trust; and
(j) If the Mortgaged Property is held in an Illinois Land Trust, (A) a
certified copy of the instrument creating the Illinois Land Trust, (B) a copy of
the UCC-1 Financing Statement evidencing the assignment of the Mortgagor's
beneficial interest in the Illinois Land Trust, with evidence of filing thereon,
and (C) the original personal guaranty of the Mortgage Note, executed by each
beneficiary of the Illinois Land Trust.
The applicable Depositor shall use its reasonable efforts to promptly
deliver or cause to be delivered to the Trustee or the Custodian: (a) the
original recorded Mortgage in those instances where a copy thereof was delivered
hereunder; (b) the original recorded Assignment of Mortgage to the applicable
Originator, which, together with any intervening assignments of Mortgage,
evidences a complete chain of assignment from the originator to the applicable
Originator in those instances where copies of such Assignments were delivered;
and (c) the title insurance policy or assurance required in paragraph (d) above.
The applicable Depositor shall, within five (5) Business Days after the receipt
thereof, and in any event, within twelve months after the Closing Date, deliver
or cause to be delivered to the Trustee or the Custodian each document described
in any of the preceding clauses (a), (b) and (c); provided, however, that if a
document described in the preceding clause (a) or clause (b) has not been
returned from the appropriate public recording office, the applicable Depositor
shall deliver a certified copy of the Mortgage and a receipted copy of the
Assignment from the appropriate recording office prior to the expiration of such
twelve-month period. Notwithstanding anything to the contrary contained in this
Section 2.04, the applicable Depositor shall be deemed to have satisfied its
obligations to deliver a Mortgage or Assignment of Mortgage upon delivery to the
Trustee or the Custodian a copy of such Mortgage or Assignment of Mortgage, as
applicable, certified by the public recording office to be a true copy of the
recorded original thereof. From time to time the applicable Depositor may
forward or cause to be forwarded to the Trustee or the Custodian additional
original documents evidencing an assumption or modification of a Mortgage Loan.
All Mortgage Loan documents held by the Trustee or the Custodian as to each
Mortgage Loan are referred to herein as the "Mortgage File".
The Servicer covenants and agrees to take all action necessary or desirable
under applicable state law to transfer the benefits of the lien and security
interest in each
<PAGE>
manufactured or mobile home and the related Mortgaged Property to the Trustee,
including, without limitation, the filing of UCC-3 assignments, notations on the
certificates of title and recordation of the Assignment of Mortgage within the
time periods required by this Section 2.04.
Contemporaneously with the issuance of the Certificates, the Trustee shall
cause the Custodian to (A) endorse each Mortgage Note to the order of the
Trustee for the benefit of the Certificateholders, which endorsement shall be in
substantially the form set forth in Section 2.04(a)(i), with appropriate
alterations to reflect the interest of the Trustee and the limited nature of the
Custodian's interest therein as may be acceptable to the Depositors, the
Servicer, the Certificate Insurer and the Trustee, (B) execute (or complete)
each Assignment of Mortgage to the Trustee, which assignment shall be in
substantially the form set forth in Section 2.04(c), with appropriate
alterations to reflect the interest of the Trustee and (C) with respect to each
Illinois Land Trust, execute a Reassignment of Assignment of Beneficial Interest
to the Trustee for the benefit of the Certificateholders, which reassignment
shall be substantially in the form set forth in Section 2.04(h), with
appropriate alterations to reflect the interest of the Trustee. As promptly as
practicable following the occurrence of the Recordation Trigger, but in no event
more than 90 days following the occurrence of the Recordation Trigger, the
Servicer shall at its own expense either (i) record in favor of the Trustee each
Assignment of Mortgage and each Reassignment of Assignment of Beneficial
Interest referred to in clauses (B) and (C) of the preceding sentence with
respect to all of the Mortgage Loans in the appropriate real property or other
records, or (ii) deliver to the Trustee an Opinion of Counsel satisfactory to
the Rating Agencies and the Certificate Insurer to the effect that recording is
not required and no other action on the part of such Depositor is required
(other than such actions as have been taken) to protect the Trustee's right,
title and interest in and to the related Mortgage and Note.
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer. For purposes of determining whether a
signature is made on an instrument or document, stapling of an attachment shall
be a sufficient affixation to cause the attachment to constitute part of the
instrument or document.
Section 2.05 [Reserved].
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The Trustee hereby acknowledges receipt of, for each Mortgage Loan, the
items listed in Section 2.04 (a), (b), (c), (g) and (h) and declares that it
will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets delivered to it in trust, upon and subject
to the conditions set forth in this Agreement for the benefit of the
Certificateholders, the Trustee as holder of the Lower-Tier Regular Interests,
Middle-Tier Regular Interests and Class X Interest and the Certificate Insurer,
as their interests may appear. The Trustee shall execute and deliver on the
Closing Date an initial certification of receipt by it or by the Custodian on
its behalf, for each Mortgage Loan of the
<PAGE>
items listed in Section 2.04(a), (b), (c), (g) and (h), in the form attached as
Exhibit E hereto, and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
delivered to it in trust, to the extent set forth herein, for the benefit of the
Certificateholders, the Trustee as holder of the Lower-Tier Regular Interests,
Middle-Tier Regular Interests and Class X Interest and the Certificate Insurer,
as their interests may appear. The Trustee agrees to review (or cause to be
reviewed) each Mortgage File within 45 days after the Closing Date (or, with
respect to any Qualified Substitute Mortgage Loan, within 45 days after the
receipt thereof by the Custodian) and to deliver to the Representative, the
Depositors, the Servicer and the Certificate Insurer an interim certification in
the form attached hereto as Exhibit F-1 on or before such date to the effect
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
such certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to this Agreement are in its possession
(other than those described in Section 2.04(a)(ii) and 2.04(f)), (ii) such
documents have been reviewed by it and have not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if properly initialed by the Mortgagor)
and relate to such Mortgage Loan, and (iii) based on its examination and only as
to the foregoing documents, the information set forth on the Mortgage Loan
Schedule (other than items (i), (iv) and (x) of the definition of Mortgage Loan
Schedule) accurately reflects the information set forth in the Mortgage File.
The Trustee shall be 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 are other than what they purport to be on their face. Within 375 days
after the Closing Date, the Trustee shall deliver (or cause to be delivered) to
the Servicer, the Depositors and the Certificate Insurer a final certification
in the form attached hereto as Exhibit F-2 evidencing the completeness of the
Mortgage Files.
(b) If the Certificate Insurer or the Trustee during the process of
reviewing the Mortgage Files finds any document constituting a part of a
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.04 or substantively to the description thereof as
set forth in the Mortgage Loan Schedule, the Trustee, or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the Trustee, the
Representative, the Depositors and the Certificate Insurer. In performing any
such review, such Person may conclusively rely on the related Originator as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of such Person's review of the Mortgage Files is
limited solely to confirming that the documents listed in Section 2.04 (other
than those described in Section 2.04(f)) have been executed and received and
relate to the Mortgage Files identified in the Mortgage Loan Schedule. The
Servicer agrees to use reasonable efforts to cause to be remedied a material
defect in a document constituting part of a Mortgage File of which it is so
notified by the Certificate Insurer or the Trustee. If, however, within 60 days
after receipt by it of the final certification referred to in paragraph (a) of
this Section 2.06, the Servicer has not caused to be remedied any defect
described in such final certification and such defect materially and adversely
affects the interest of the
<PAGE>
Certificateholders in the related Mortgage Loan or the interests of the
Certificate Insurer, the Servicer will on the third Business Day preceding the
Payment Date immediately succeeding the end of such 60 day period (i) if within
2 years of the Closing Date, substitute, or cause the Depositors or the
applicable Originator to substitute, in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan in the manner and subject to the conditions set forth
in Section 3.03 or (ii) purchase, or cause the Depositors or the applicable
Originators to purchase, such Mortgage Loan at a purchase price equal to the
Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance, computed at the Mortgage
Interest Rate, net of the Servicing Fee (computed in the manner described in
paragraph (i) or (ii), as applicable, of the definition thereof) if the
Representative is the Servicer, plus the amount of any unreimbursed Servicing
Advances made by the Servicer with respect to such Mortgage Loan out of funds on
deposit in the Principal and Interest Account pursuant to Section 5.01(f), which
purchase price shall be deposited in the Principal and Interest Account on the
next succeeding Determination Date (after deducting therefrom any amounts
received in respect of such purchased Mortgage Loan or Loans and being held in
the Principal and Interest Account for future distribution); provided that if
such defect caused such Mortgage Loan not to be a "qualified mortgage" within
the meaning of Code Section 860G(a)(3), such repurchase or, if applicable,
substitution shall occur within 90 days of the earlier of the delivery of the
Trustee's interim certification or Servicer's discovery of such defect.
(c) Upon receipt by the Trustee of a certification of a Servicing Officer
of the Servicer of such substitution or acceptance and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit O hereto), the Trustee shall
release to the Servicer for release to the Depositors or the Originators, as
appropriate, the related Mortgage File and shall execute, without recourse, and
deliver such instruments of transfer necessary to transfer such Mortgage Loan to
the Representative or the respective Depositor.
(d) If recordation of any Assignment of Mortgage or Reassignment of
Assignment of Beneficial Interest is required hereunder after the occurrence of
a Recordation Trigger, the original of each such recorded Assignment of Mortgage
and Reassignment of Assignment of Beneficial Interest shall be delivered to the
Trustee or the Custodian within 10 days following the date on which it is
returned to the related Depositor or the Servicer by the office with which such
Assignment of Mortgage or Reassignment of Assignment of Beneficial Interest was
filed for recordation and, within 10 days following receipt by the Trustee or
Custodian, as applicable, of the recorded Assignment of Mortgage or Reassignment
of Assignment of Beneficial Interest, the Trustee shall review or shall cause
the Custodian to review such Assignment of Mortgage or Reassignment of
Assignment of Beneficial Interest to confirm that such Assignment of Mortgage or
Reassignment of Assignment of Beneficial Interest has been recorded. Upon
receipt by the Trustee or the Custodian, as applicable, of the recorded
Assignment of Mortgage or Reassignment of Assignment of Beneficial Interest,
such recorded Assignment of Mortgage or Reassignment of Assignment of Beneficial
Interest shall become part of the Mortgage File. The Trustee shall notify the
related Depositor, the Servicer and the Certificate Insurer of any defect in
such Assignment of Mortgage or Reassignment of Assignment of
<PAGE>
Beneficial Interest if it shall have actual knowledge of any such defect based
on such review. The Servicer or the related Depositor shall have a period of 30
days following such notice to correct or cure such defect. In the event that the
Servicer or the related Depositor fails to record an Assignment of Mortgage or
Reassignment of Assignment of Beneficial Interest as herein provided (which
Assignment of Mortgage or Reassignment of Assignment of Beneficial Interest was
required to be recorded) and the Trustee shall have actual knowledge of such
failure, the Trustee shall prepare and file or shall cause the Custodian to
prepare and file such Assignment of Mortgage or Reassignment of Assignment of
Beneficial Interest for recordation in the appropriate real property or other
records, and the Servicer and the related Depositor hereby appoints the Trustee
and the Custodian as its attorney-in-fact with full power and authority acting
in its stead for the purpose of such preparation, execution and recordation. Any
expense incurred by the Trustee or the Custodian not otherwise paid for by the
related Depositor or the Servicer as required hereunder in connection with the
preparation and recordation of such Assignment of Mortgage and Reassignment of
Assignment of Beneficial Interest shall be reimbursed to the Trustee or
Custodian, as applicable, pursuant to Section 12.05.
Section 2.07 REMIC Administration.
(a) Tax Administration
(1) An election will be made by the Trustee on behalf of the Trust Fund
to treat the assets of the Trust Fund, excluding the Spread Account (which for
the purpose of this Section 2.07 is understood to include amounts on deposit
therein invested in Permitted Instruments and the proceeds of such investments),
as three separate REMICs under the Code (each, a "Trust REMIC"). Such election
will be made 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 assets of the Lower-Tier REMIC will consist of all
of the assets constituting the Trust Fund other than the assets of the
Middle-Tier REMIC and Upper-Tier REMIC and the Spread Account described in this
paragraph. The Lower-Tier REMIC will issue classes of interests which will be
the Lower-Tier Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Lower-Tier REMIC) and the Class LR
Certificates, which will be the sole class of "residual interests" in the
Lower-Tier REMIC. The Trustee will hold the Lower-Tier Regular Interests in
trust for the benefit of the Middle-Tier REMIC. The assets of the Middle-Tier
REMIC will consist of the Lower-Tier Regular Interests and the Middle-Tier
Distribution Account. The Middle-Tier REMIC will issue classes of interests
which will be the Middle-Tier Regular Interests (which will be uncertificated
and will represent the "regular interests" in the Middle-Tier REMIC) and the
Class MR Certificates, which will be the sole class of "residual interests" in
the Middle-Tier REMIC. The assets of the Upper-Tier REMIC will consist of the
Middle-Tier Regular Interests and the Upper-Tier Distribution Account. The
Upper-Tier REMIC will issue the Class A Certificates and the Class X Interest
(which will represent the "regular interest" in the Upper-Tier REMIC represented
by the Class X Certificates) and the Class R Certificates, which will be the
sole class of "residual interests" in the Upper-Tier REMIC. The Owner of the
Class LR, Class MR or Class R Certificates, respectively, representing at any
time the largest Percentage
<PAGE>
Interest in such Class shall be the Tax Matters Person with respect to the
Lower-Tier REMIC, the Middle-Tier REMIC and the Upper-Tier REMIC, as applicable.
Each holder of a Class LR, Class MR and Class R Certificate, as a condition of
ownership thereof, irrevocably appoints the Trustee to act as its agent and
attorney-in-fact to perform all duties of the Tax Matters Person. The "latest
possible maturity date" within the meaning of Treasury Regulation Section
1.860G-1(a)(4) of the Lower-Tier Regular Interests, Middle-Tier Regular
Interests, Class A Certificates shall be the Final Scheduled Payment Date, and
of the Class X Interest shall be January 15, 2028.
(2) The Closing Date is hereby designated as the "Startup Day" of each
Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(3) Except as provided in Section 12.05, the Trustee shall pay (and
shall be entitled to reimbursement thereof by the Servicer or otherwise in
accordance with the terms of this Agreement) the ordinary and usual expenses in
connection with the preparation, filing and mailing of tax information reports
and returns that are incurred by it in the ordinary course of its administration
of its tax-related duties under this Agreement, but extraordinary or unusual
expenses, costs or liabilities incurred in connection with its tax-related
duties under this Agreement, including without limitation any expenses, costs or
liabilities associated with audits, required independent opinions regarding tax
methodology and related matters or any administrative or judicial proceedings
with respect to each Trust REMIC that involve the Internal Revenue Service or
state tax authorities, shall be expenses of the Trust Fund.
(4) The Trustee shall prepare and file all of the Trust REMICs' federal
and state income or franchise tax and information returns. Except as provided in
Section 12.05, the expenses of preparing and filing such returns shall be borne
by the Trustee. The Servicer and the Depositors shall provide on a timely basis
to the Trustee or its designee such information with respect to each Trust REMIC
as is in their possession, which the Servicer or the Depositors has or have
received or prepared by virtue of its activities as Servicer or Depositors
hereunder and reasonably requested by the Trustee to enable it to perform its
obligations under this subsection, and the Trustee shall be entitled to rely on
such information in the performance of its obligations hereunder.
(5) The Trustee shall perform on behalf of the Trust Fund and each
Trust REMIC all tax reporting duties and other tax compliance duties that are
the responsibility of a Trust REMIC under the Code, REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, the Trustee shall provide (i) to the
Internal Revenue Service or other Persons (including, but not limited to, the
transferor of any Residual Certificate to a Disqualified Organization or to an
agent that has acquired any Residual Certificate on behalf of a Disqualified
Organization) such information as is necessary for the application of any tax
relating to the transfer of any Residual Certificate to any Disqualified
Organization pursuant to Section 860E(e) of the Code and the Treasury
Regulations thereunder and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions. Each of the Depositors
and the Servicer shall provide on a timely basis (and in no
<PAGE>
event later than 30 days after the Trustee's request) to the Trustee or its
designee such information with respect to each Trust REMIC as is in its
possession and reasonably requested in writing by the Trustee to enable it to
perform its obligations under this subsection.
(6) [Reserved]
(7) The Trustee and the Servicer shall perform their obligations under
this Agreement and the REMIC Provisions in a manner consistent with the status
of each Trust REMIC as a REMIC or, as appropriate, shall adopt a plan of
complete liquidation.
(8) The Trustee and the Servicer shall not take any action or cause any
Trust REMIC to take any action, within their respective control and the scope of
their specific respective duties under this Agreement that, under the REMIC
Provisions, could (i) endanger the status of any Trust REMIC as a REMIC or (ii)
result in the imposition of a tax upon any Trust 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 as defined in Code Section
860G(d)) unless the Trustee has received a Nondisqualification Opinion (at the
expense of the party seeking to take such action) with respect to such action.
(9) To the extent not paid pursuant to paragraph (d) of this Section
2.07, each Holder of any Residual Certificate shall pay when due its pro rata
share of any and all federal, state and local taxes imposed on the applicable
Trust REMIC or its assets or transactions, including, without limitation,
"prohibited transaction" taxes, as defined in Section 860F of the Code, any tax
on contributions imposed by Section 860G(d) of the Code, and any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code. To
the extent that such Trust REMIC taxes are not paid by the applicable Residual
Certificateholders, the Trustee shall pay any remaining Trust REMIC taxes out of
current or future amounts otherwise distributable to the Holders of any Residual
Certificates.
(10) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to each Trust REMIC on a calendar year and on an
accrual basis. Notwithstanding anything to the contrary contained herein, all
amounts collected on the Mortgage Loans shall, for federal income tax purposes,
be allocated first to interest due and payable on the Mortgage Loans (including
interest on overdue interest) (other than additional interest at a penalty rate
payable following a default). The books and records must be sufficient
concerning the nature and amount of each Trust REMIC's investments to show that
each Trust REMIC has complied with the REMIC Provisions.
(11) Neither the Trustee nor the Servicer shall enter into any
arrangement by which a Trust REMIC will receive a fee or other compensation for
services.
(12) In order to enable the Trustee to perform its duties as set forth
herein, the Depositors shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the Trustee
reasonably determines to be relevant for tax purposes on the valuations and
offering prices of the Certificates, including, without limitation, the yield,
issue prices, pricing prepayment assumption and projected cash
<PAGE>
flows of the Class A Certificates, the Class X Interest and the Residual
Certificates, as applicable, and the projected cash flows on the Mortgage Loans.
Thereafter, the Depositors shall provide to the Trustee, promptly upon request
therefor, any such additional information or data that the Trustee may, from
time to time, reasonably request in order to enable the Trustee to perform its
duties as set forth herein. The Trustee is hereby directed to use any and all
such information or data provided by the Depositors in the preparation of all
federal and state income or franchise tax and information returns and reports
for each Trust REMIC to Certificateholders as required herein. The Depositors
hereby indemnify the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee pursuant to this Section that result from any failure of the Depositors
to provide, or to cause to be provided, accurate information or data to the
Trustee (but not resulting from the methodology employed by the Trustee) on a
timely basis and such indemnifications shall survive the termination of this
Agreement.
(13) The Servicer shall prepare and file with the Internal Revenue
Service, on behalf of each Trust REMIC, an application for a taxpayer
identification number for each Trust REMIC on IRS Form SS-4. The Trustee, upon
receipt from the Internal Revenue Service of the Notice of Taxpayer
Identification Number Assigned, shall promptly forward a copy of such notice to
the Depositors. The Trustee shall prepare and file Form 8811 on behalf of each
Trust REMIC and shall designate from time to time an appropriate Person (the
"REMIC Reporting Agent") to respond to inquiries by or on behalf of
Certificateholders for original issue discount and related information in
accordance with applicable provisions of the Code.
The Trustee agrees that all such information or data so obtained by it are
to be regarded as confidential information and agrees that it shall use its best
reasonable efforts to retain in confidence, and shall ensure that its officers,
employees and representatives retain in confidence, and shall not disclose,
without the prior written consent of the Depositors, any or all of such
information or data, or make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any such information or data without the
prior written consent of the Depositors, unless such information is generally
available to the public (other than as a result of a breach of this Section) or
is required by law or applicable regulations to be disclosed.
(b) Modifications of Mortgage Loans. Notwithstanding anything to the
contrary in this Agreement, neither the Trustee nor the Servicer shall permit
any modification of, or take any action with respect to, the Mortgage Loans
(including the Mortgage Interest Rate or, in the case of a Mortgage Loan in the
Adjustable Rate Group, the method of determining the Mortgage Interest Rate, the
Principal Balance, the amortization schedule, or any other term affecting the
amount or timing of payments on the Mortgage Loans) that would result in an
exchange within the meaning of Treasury Regulations Section 1.860G-2(b) of the
Code unless the Trustee or the Servicer has received a Nondisqualification
Opinion or a ruling from the Internal Revenue Service (at the expense of the
party making the request of the Servicer or the Trustee to modify the Mortgage
Loans) to the same effect as a Nondisqualification Opinion with respect to such
modification.
<PAGE>
(c) Prohibited Transactions and Activities. The Trustee shall not permit
the sale, disposition (except in a disposition pursuant to (i) the bankruptcy or
insolvency of any Trust REMIC or (ii) the termination of any Trust REMIC in a
"qualified liquidation" as defined in Section 860F(a)(4) of the Code) or
substitution of the Mortgage Loans (except a substitution pursuant to Sections
2.06(b) or 3.03) or the substitution of a property for a Mortgaged Property, nor
acquire any assets for a Trust REMIC (other than REO Property or a Qualified
Substitute Mortgage Loan pursuant to Sections 2.06(b) or 3.03), nor accept any
contributions to any Trust REMIC (other than a cash contribution during the
3-month period beginning on the Startup Day), unless it has received an Opinion
of Counsel (at the expense of the Person requesting the Trustee to take such
action) to the effect that such disposition, acquisition, substitution, or
acceptance will not (a) affect adversely the status of a Trust REMIC as a REMIC
or of the Class A Certificates and Class X Interest 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 a Trust REMIC (except pursuant to the provisions of this Agreement)
or (d) cause a Trust REMIC to be subject to an unindemnified tax on "prohibited
transactions" or "prohibited contributions" pursuant to the REMIC Provisions.
(d) In the event that any tax is imposed on "prohibited transactions" of
any Trust REMIC as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of any Trust REMIC as defined in Section 860G(c) of
the Code, on any contribution to any Trust REMIC after the Startup Day pursuant
to Section 860G(c) of the Code, or any other tax is imposed, such tax shall be
paid by (i) the Trustee, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement, which breach
constitutes negligence or willful misconduct of the Trustee or (ii) the Servicer
or the Depositors, if such tax arises out of or results from a breach by the
Servicer or the Depositors of any of their respective obligations under this
Agreement. In no event shall the Trust Fund or a Trust REMIC be liable for any
such taxes.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of a Trust REMIC shall be resolved in a manner that preserves the
validity of the elections to be treated as three separate REMICs.
Section 2.08 Execution of Certificates.
The Trustee acknowledges (i) the assignment to it of Mortgage Loans in
trust for the benefit of the Certificateholders and the Certificate Insurer, as
their interests may appear, and subject to the terms and conditions of this
Agreement and (ii) the delivery of the Mortgage Files as set forth above and,
concurrently with such delivery, in exchange for the Mortgage Loans, the
Mortgage Files and the other assets conveyed by the Depositors pursuant to
Section 2.01 and Section 2.04, the Trustee has executed and caused to be
authenticated and delivered to or upon the order of the Depositors, the
Certificates, each in Authorized Denominations.
Section 2.09 Application of Principal and Interest.
<PAGE>
In the event that Net Liquidation Proceeds on a Liquidated Mortgage Loan
are less than the Principal Balance of such Mortgage Loan plus accrued interest
thereon, or any Mortgagor makes a partial payment of any Monthly Payment due on
a Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied to payment of the related Mortgage Note as provided therein, and if not
so provided or if the related Mortgaged Property has become an REO Property,
first to interest accrued at the Mortgage Interest Rate and then to principal;
provided, however, the Net Liquidation Proceeds with respect to a Bankruptcy
Loan shall be applied first, to unpaid accrued interest with respect to the
period after the date of the related Plan, second, to principal and third, to
Pre-Plan Interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Depositors.
(1) The Servicer hereby represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date:
(a) The Servicer is duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has all licenses necessary
to carry on its business as now being conducted and is licensed, qualified and
in good standing in each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Servicer and perform its obligations as Servicer hereunder; the
Servicer has the power and authority to execute and deliver this Agreement and
the Basic Documents to which it is a party and to perform in accordance
herewith; the execution, delivery and performance of this Agreement and the
Basic Documents to which it is a party (including all instruments of transfer to
be delivered pursuant to this Agreement and the Basic Documents to which it is a
party) by the Servicer and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action; each of
this Agreement and the Basic Documents to which it is a party is the valid,
binding and enforceable obligation of the Servicer; and all requisite action has
been taken by the Servicer to make this Agreement and the Basic Documents to
which it is a party valid, binding and enforceable upon the Servicer in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other, similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary in connection with the performance by the Servicer of its
obligations hereunder or under the Basic Documents to which it is a party or the
purchase and
<PAGE>
sale of the Certificates and the execution and delivery by the Servicer of the
documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the Basic Documents and the other documents
on the part of the Servicer and the performance by the Servicer of its
obligations as the Servicer under this Agreement and such of the other Basic
Documents to which it is a party;
(c) The consummation of the transactions contemplated by this Agreement
and the Basic Documents will not result in the breach of any terms or provisions
of the bylaws of the 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 material agreement, indenture or loan or credit
agreement or other material instrument to which the Servicer or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Servicer or its property is subject;
(d) None of this Agreement, any of the Basic Documents to which it is a
party or the Prospectus nor any statement, report or other document prepared by
the Servicer and furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading;
(e) There is no action, suit, proceeding or investigation pending or,
to the best of the knowledge of the Servicer, threatened against the Servicer
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Servicer or in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer or any Basic
Document to which it is a party or which would draw into question the validity
of this Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement or any Basic Document to which it is a party;
(f) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Servicer or its properties or might have consequences that would
materially and adversely affect its performance hereunder or under the Basic
Documents or under any Subservicing Agreement;
<PAGE>
(g) The collection practices used by the Servicer with respect to each
Mortgage Note and Mortgage have been in and will be all material respects legal,
proper, prudent and customary in the second mortgage origination and servicing
business;
(h) The Servicer is (i) an approved seller/servicer of first and second
mortgage loans for FNMA and FHLMC in good standing, and (ii) a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Section
203 and 211 of the National Housing Act.
(2) Each Depositor hereby represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date:
(a) Such Depositor is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property State if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by such Depositor and perform its obligations as
a Depositor hereunder; such Depositor 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 and the Basic Documents to which it
is a party (including all instruments of transfer to be delivered pursuant to
this Agreement and the Basic Documents to which it is a party) by such Depositor
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action; each of this Agreement and the Basic
Documents to which it is a party is the valid, binding and enforceable
obligation of such Depositor; and all requisite action has been taken by such
Depositor to make this Agreement and the Basic Documents to which it is a party
valid, binding and enforceable upon such Depositor in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium and
other, similar laws relating to or affecting creditors rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which such Depositor makes no such representation or warranty),
that are necessary in connection with the purchase and sale of the Certificates
and the execution and delivery by such Depositor of the Basic Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Basic Documents on the part of such Depositor and the performance
by such
<PAGE>
Depositor of its obligations as a Depositor under this Agreement, the Transfer
Agreement and such of the other Basic Documents to which it is a party;
(c) The consummation of the transactions contemplated by this Agreement
and the Basic Documents will not result in the breach of any terms or provisions
of the bylaws of such Depositor 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 material agreement, indenture or loan or credit
agreement or other material instrument to which such Depositor or its property
is subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Depositor or its property is subject;
(d) None of this Agreement, any of the Basic Documents to which such
Depositor is a party or the Prospectus nor any statement, report or other
document prepared by the Depositor and furnished or to be furnished pursuant to
this Agreement or the Basic Documents or in connection with the transactions
contemplated hereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading;
(e) There is no action, suit, proceeding or investigation pending or,
to the best of such Depositor's knowledge, threatened against such Depositor
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of such Depositor or in any material impairment of the
right or ability of such Depositor to carry on its business substantially as now
conducted, or in any material liability on the part of such Depositor or which
would draw into question the validity of this Agreement or the Basic Documents
or the Mortgage Loans or of any action taken or to be taken in connection with
the obligations of such Depositor contemplated herein, or which would be likely
to impair materially the ability of the Depositor to perform under the terms of
this Agreement or the Basic Documents to which it is a party;
(f) Such Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of such Depositor or its properties or might have consequences that
would materially and adversely affect its performance hereunder, under the Basic
Documents to which it is a party or under any Subservicing Agreement;
(g) Upon the receipt of each Mortgage File under this Agreement, the
Trustee will have good and indefeasible title on behalf of the
Certificateholders to each Mortgage Loan (other than the Representative's Yield
and amounts received after the Cut-off Date in respect of interest accrued on or
prior to the Cut-off Date) and such other items conveyed by the Depositors to
the Trustee hereunder free and clear of any lien (other than liens which will be
simultaneously released);
<PAGE>
(h) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by such Depositor pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
(i) Such Depositor did not transfer any interest in any Mortgage Loan
with any intent to hinder, delay or defraud any of its respective creditors;
(j) Such Depositor is solvent and such Depositor will not be rendered
insolvent as a result of the transfer of the Mortgage Loans to the Trust Fund or
the sale of any of the Certificates;
(k) Such Depositor will not amend Articles THIRD, NINTH, TENTH and
ELEVENTH of its Certificate of Incorporation without the prior written consent
of the Certificate Insurer and the Rating Agencies; and
(l) Such Depositor will not engage in any activity which would result
in a downgrading of the Certificates by any Rating Agency or in a downgrading of
the "shadow rating" (that is, the rating without taking into account the
Certificate Insurance Policy) below investment grade by any Rating Agency.
Section 3.02 Assignment of Transfer Agreement; Representations and
Warranties as to the Individual Mortgage Loans and the Mortgage Pool.
Pursuant to Section 2.01, each Depositor assigns to the Trustee (for the
benefit of the Certificateholders and the Certificate Insurer, as their
interests may appear) all of its right, title and interest in, to and under the
Transfer Agreement including, without limitation, the representations and
warranties of the Originators made to the Depositors pursuant to Section 3.01 of
the Transfer Agreement. The Depositors hereby represent and warrant to the
Trustee that the Depositors have taken no action which would cause such
representations and warranties of the Originators to be false in any material
respect as of the Closing Date, and acknowledge that the Trustee relies on the
representations and warranties of the Depositors under this Agreement and of the
Originators under the Transfer Agreement in accepting the Mortgage Loans and
executing and delivering the Certificates. The foregoing representation and
warranty speaks as of the Closing Date, but shall survive the transfer and
assignment of the Mortgage Loans to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, as their interests may appear.
Each Depositor hereby represents and warrants as follows to the Trustee,
the Certificate Insurer and the Certificateholders, with respect to each
Mortgage Loan as of the Closing Date (except as otherwise indicated); provided,
that all references to percentages of the Mortgage Loans in this Section 3.02
refer in each case to the percentage of the aggregate Principal Balance of the
Mortgage Loans (or of the Mortgage Loans in the Fixed Rate Group or Adjustable
Rate Group, as applicable) as of the Cut-off Date (rounded to two decimal
points):
<PAGE>
(a) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee (or the Custodian on behalf of the Trustee) on the
Closing Date or as otherwise provided in Section 2.04;
(c) (i) Each Mortgage Loan is principally secured by Mortgaged Property.
Each Mortgaged Property is improved by a one- to four-family Residential
Dwelling, which, to the best of such Depositor's knowledge, does not include (A)
cooperatives or (B) mobile homes other than permanently affixed mobile homes
which constitute real property under state law, or (C) manufactured housing
units, as defined in the FNMA Selling Guide, which constitute none of the
Mortgage Loans in the Adjustable Rate Group and not more than approximately
0.90% of the Mortgage Loans in the Fixed Rate Group, and which constitute other
than real property under state law; and
(ii) With respect to each Mortgage Loan involving property improved by a
manufactured or mobile home, the Originator has taken all action necessary to
create a valid and perfected first or second priority (as reflected in the
Mortgage Loan Schedule) lien and security interest in such manufactured or
mobile home and the related Mortgaged Property, including, without limitation,
the filing of UCC financing statements or notations on certificates of title if
necessary, under applicable state law;
(d) Each Mortgage Loan is being serviced by the Servicer or one or more
Subservicers;
(e) The Mortgage Note related to each Mortgage Loan in the Fixed Rate Group
bears a fixed Mortgage Interest Rate; the Mortgage Note related to each Mortgage
Loan in the Adjustable Rate Group bears a Mortgage Interest Rate that adjusts
semi-annually, based on the London interbank offered rate for six-month United
States dollar deposits;
(f) Mortgage Loans constituting approximately 41.77% of the Mortgage Loans
in the Fixed Rate Group, and approximately 92.03% of the Mortgage Loans in the
Adjustable Rate Group, are balloon loans which will provide for a final Monthly
Payment substantially greater than the preceding Monthly Payments. Approximately
0.01%, 12.59%, 19.95%, 8.84% and 0.02% of the Mortgage Loans in the Fixed Rate
Group (and approximately 54.32%, 33.95%, 3.60% and 0.15% of the Mortgage Loans
in the Adjustable Rate Group) are balloon loans based on a 30-year amortization
schedule and a single payment of the remaining loan balances 5, 7, 10, 15 and 20
years (or 7, 10, 15 and 20 years, with respect to the Mortgage Loans in the
Adjustable Rate Group) after origination, respectively. All of such balloon
loans provide for Monthly Payments based on an amortization schedule specified
in the related Mortgage Note and have a final balloon payment no earlier than 60
months following origination and no later than 240 months following origination.
Each other Mortgage Note will provide for a schedule of substantially equal
Monthly Payments which are,
<PAGE>
if timely paid, sufficient to fully amortize the principal balance of such
Mortgage Note on or before its maturity date;
(g) Each Mortgage relating to a Mortgage Loan in the Fixed Rate Group is a
valid and subsisting first or more junior lien on the Mortgaged Property
subject, in the case of any second Mortgage Loan, only to a First Lien on such
Mortgaged Property, and each Mortgage relating to a Mortgage Loan in the
Adjustable Rate Group is a valid and subsisting First Lien on the Mortgaged
Property, and subject in all cases to the exceptions to title set forth in the
title insurance policy or the other evidence of title enumerated in Section
2.04(d), with respect to the related Mortgage Loan, which exceptions are
generally acceptable to second mortgage lending companies, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage. If the Mortgaged
Property is held in an Illinois Land Trust (a "Land Trust Mortgage"), (i) a
natural person is the beneficiary of such Illinois Land Trust, and either is a
party to the Mortgage Note or is a guarantor thereof, in either case, in an
individual capacity, and not in the capacity of trustee or otherwise, and, if a
party to the Mortgage Note, is jointly and severally liable under the Mortgage
Note; (ii) the Mortgagor is the trustee of such Illinois Land Trust, is a party
to the Mortgage Note and is the mortgagor under the Mortgage in its capacity as
such trustee and not otherwise; (iii) a land trust trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named as such in the land trust agreement and such trustee is
named in the Land Trust Mortgage as Mortgagor; (iv) all fees and expenses of the
land trust trustee which have previously become due or owing have been paid and
no such fees or expenses are or will become payable by the Certificateholders or
the Trust Fund; (v) the beneficiary is solely obligated to pay any fees and
expenses of the land trust trustee and the priority of the lien of the Land
Trust Mortgage is not and will not be subject or subordinate to any amounts
owing to the land trust trustee; (vi) the Mortgaged Property is occupied by the
beneficiary under the land trust agreement (if indicated to be owner occupied on
the Mortgage Loan Schedule) and, if such land trust agreement terminates, the
beneficiary will become the owner of the Mortgaged Property; (vii) the
beneficiary is obligated to make payments under the related Mortgage Note and
(subject to applicable law) will have personal liability for deficiency
judgments; (viii) the Land Trust Mortgages and assignments of beneficial
interest relating to land trusts in the Mortgage Pool were made in compliance
with their respective land trust agreements, were validly entered into by their
respective land trust trustee or beneficiary and did not, do not currently, and
will not in the future, violate any provision of their respective land trust
agreement; (ix) a UCC financing statement has been filed, continued, and will be
continued, without intervening liens, as the first lien upon the beneficial
interest in the Land Trust Mortgage; (x) each assignment of beneficial interest
with respect to Land Trust Mortgages in the Mortgage Pool was at the time of
respective assignment the only assignment of such beneficial interest in the
land trust, such assignment was accepted by the respective land trust trustee,
to the best of the Depositors' knowledge, subsequent assignments of the
beneficial interest in whole or in part have not been made, and such subsequent
assignments of the beneficial interest or any part thereof are not permitted
pursuant to a written agreement between the respective beneficiary and the
Mortgagee, until the expiration of the Mortgage Note in each respective land
trust; (xi) the
<PAGE>
Land Trust Mortgages are the first or second liens on the Mortgaged Properties;
no liens are in place against the beneficial interests, or any part thereof, of
any Land Trust Mortgage or collateral assignment of beneficial interest, which
liens are superior to the interest held by the related Depositor; and the
beneficiary or land trust trustee is forbidden, pursuant to a written agreement
between the beneficiary or the land trust trustee (as applicable) and the
Mortgagee, from using the land trust property or beneficial interest, or any
part of either, as security for any other debt of the same priority as or senior
to such Land Trust Mortgage until the expiration date of its respective Mortgage
Note; and (xii) the terms and conditions of the land trust agreement do not
prevent the free and absolute marketability of the Mortgaged Property. As of the
Cut-off Date, approximately 0.0096% of the Mortgage Loans in the Fixed Rate
Group and approximately 0.0912% of the Mortgage Loans in the Adjustable Rate
Group were related to Land Trust Mortgages;
(h) Except with respect to liens released immediately prior to the transfer
herein contemplated, immediately prior to the transfer and assignment herein
contemplated, the applicable Depositor held good and indefeasible title to, and
was the sole owner of, each Mortgage Loan conveyed by such Depositor subject to
no liens, charges, mortgages, encumbrances or rights of others; and immediately
upon the transfer and assignment herein contemplated, the Trustee for the
benefit of the Certificateholders will hold good and indefeasible title, to, and
be the sole owner of, each Mortgage Loan (other than the Representative's Yield
and amounts received on or after the Cut-off Date) in respect of interest
accrued prior to the Cut-off Date subject to no liens, charges, mortgages,
encumbrances or rights of others;
(i) Approximately 0.53% of the Mortgage Loans in the Fixed Rate Group and
approximately 0.11% of the Mortgage Loans in the Adjustable Rate Group
(excluding Bankruptcy Loans) are 30 or more days contractually delinquent; none
of the Mortgage Loans in the Mortgage Pool are 60 to 89 days contractually
delinquent or more than 89 days contractually delinquent; and none of the
Mortgage Loans in the Mortgage Pool (excluding Bankruptcy Loans) have been 30 or
more days contractually delinquent more than once in the 12 months preceding the
Cut-off Date. For purposes of this representation and warranty "30 to or more
days contractually delinquent" means that a Monthly Payment due on a Due Date
was unpaid as of the end of the month of the next succeeding Due Date or
following Due Dates. Approximately 0.06% of the Mortgage Loans in the Fixed Rate
Group, and none of the Mortgage Loans in the Adjustable Rate Group are
Bankruptcy Loans. None of the Mortgage Loans in the Fixed Rate Group and none of
the Mortgage Loans in the Adjustable Rate Group are Bankruptcy Loans which are
30 days or more contractually delinquent. Except for the Mortgage Loans listed
on Exhibit G, to the best of such Depositor's knowledge, none of the Mortgage
Loans is subject to a Plan.
(j) To the best of such Depositor's knowledge, (i) there is no delinquent
tax or assessment lien on any Mortgaged Property and (ii) each Mortgaged
Property is free of material damage and is in average repair;
<PAGE>
(k) No Mortgage Loan is subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(l) To the best of such Depositor's knowledge, there is no mechanics' lien
or claim for work, labor or material affecting any Mortgaged Property which is
or may be a lien prior to, or equal with, the lien of such Mortgage except those
which are insured against by the title insurance policy referred to in Section
3.02(n) below;
(m) Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity and disclosure laws;
(n) With respect to each Mortgage Loan, other than any Mortgage Loan
secured by a second priority lien and having a Principal Balance not in excess
of $50,000 and listed on Exhibit V hereto, a written commitment for a lender's
title insurance policy, issued in standard American Land Title Association or
California Land Title Association form, or other form customary and acceptable
in a particular jurisdiction, by a title insurance company acceptable to FNMA
and FHLMC and authorized to transact business in the state in which the related
Mortgaged Property is situated, together with a condominium endorsement, if
applicable, in an amount at least equal to the original Principal Balance of
such Mortgage Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first or second mortgage lien of record on the
real property described in the Mortgage, subject only to exceptions of the
character referred to in Section 3.02(g) above, was effective on the date of the
origination of such Mortgage Loan, and, as of the Closing Date, such commitment
will be valid and thereafter the policy issued pursuant to such commitment shall
continue in full force and effect or, with respect to Mortgage Properties
located in jurisdictions in which it is customary and acceptable to obtain an
assurance of title in lieu of a title insurance policy, such assurance of title
has been obtained;
(o) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(p) A flood insurance policy is in effect with respect to each Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 or 5.08, if and to the extent required by Section
5.07 or 5.08;
(q) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general
<PAGE>
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each Mortgage Loan had full legal capacity to
execute all Mortgage Loan documents and convey the estate therein purported to
be conveyed;
(r) The applicable Depositor has directed the Servicer to perform any and
all acts required to be performed to preserve the rights and remedies of the
Trustee in any insurance policies applicable to the Mortgage Loans including,
without limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint loss
payee and mortgagee rights in favor of the Trustee;
(s) No more than approximately 0.05% of the Mortgage Loans in the Fixed
Rate Group, and no more than approximately 0.29% of the Mortgage Loans in the
Adjustable Rate Group, are secured by Mortgaged Properties located within any
single zip code area within the State of California. No more than approximately
0.37% of the Mortgage Loans in the Fixed Rate Group, and no more than
approximately 2.66% of the Mortgage Loans in the Adjustable Rate Group, are
secured by Mortgaged Properties located within any single zip code area outside
the State of California;
(t) At least approximately 94.15% of the Mortgage Loans in the Fixed Rate
Group, and all of the Mortgage Loans in the Adjustable Rate Group, are secured
by Owner Occupied Mortgaged Property;
(u) The terms of the Mortgage Note and the Mortgage have not been impaired,
altered or modified in any material respect, except by a written instrument
which has been recorded or is in the process of being recorded, if necessary, to
protect the interests of the Trustee and which has been or will be delivered to
the Trustee. The substance of any such alteration or modification is reflected
on the Mortgage Loan Schedule. Each original Mortgage was recorded, and all
subsequent assignments of the original Mortgage (other than the Assignment to
the Trustee) have been recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors of the
Depositor (or, subject to Section 2.04 hereof, are in the process of being
recorded);
(v) No instrument of release or waiver has been executed in connection with
the Mortgage Loan, and no Mortgagor has been released, in whole or in part;
(w) To the best of such Depositor's knowledge, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. Except for payments in the nature of escrow payments, including
without limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage proceeds, whichever is
greater, to the day which precedes by one month the Due Date of the first
installment of principal and interest. With respect to
<PAGE>
Mortgaged Properties that are the subject of a ground lease, to the best of such
Depositor's knowledge, all lease rents, other payments or assessments that have
become due have been paid and the Mortgagor is not in material default under any
other provisions of the lease and the lease is valid, in good standing and in
full force and effect;
(x) To the best of such Depositor's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation of the Mortgaged
Property, nor is such a proceeding currently occurring, and such property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended;
(y) To the best of such Depositor's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(z) To the best of such Depositor's knowledge, no improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. To the best of such Depositor's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(aa) The proceeds of the Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(bb) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(cc) No Mortgage Loan was originated under a buydown plan;
(dd) There is no obligation on the part of the applicable Depositor or any
other party to make payments in addition to those made by the Mortgagor;
(ee) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Trustee to the trustee under such
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor. If the Mortgaged Property is held in an Illinois Land Trust, the
trustee thereof is duly qualified under applicable law to serve as such,
<PAGE>
and has been properly designated and currently so serves, and no fees or
expenses are or will become payable by the Trustee to such trustee;
(ff) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(gg) With respect to each Mortgage Loan secured by a second priority lien,
the related First Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related First Lien may be
adjusted not more frequently than once every six months;
(hh) With respect to each Mortgage Loan secured by a second priority lien,
either (i) no consent for the Mortgage Loan is required by the holder of the
related First Lien or (ii) such consent has been obtained and is contained in
the Mortgage File;
(ii) The maturity date of each Mortgage Loan secured by a second priority
lien is prior to the maturity date of the related First Lien if such First Lien
provides for a balloon payment; and with respect to any First Lien that provides
for negative amortization or deferred interest, the balance of such First Lien
used to calculate the Combined Loan-to-Value Ratio for the Mortgage Loan is
based on the maximum amount of negative amortization possible under such First
Lien;
(jj) All parties which have had any interest in the Mortgage Loan, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing;
(kk) The Mortgage contains a customary provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related security for the Mortgage Loan is sold without the prior consent of
the mortgagee thereunder;
(ll) Any future advances made prior to (and excluding) the Cut-off Date
have been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan Schedule
(or single method of determining the Mortgage Interest Rate if such Mortgage
Loan is in the Adjustable Rate Group). The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. The Mortgage Note
does not permit or obligate the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor;
(mm) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage
<PAGE>
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
or non-judicial foreclosure. There is no homestead or other exemption available
to the Mortgagor which would materially interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage
except as set forth in the Prospectus;
(nn) Except for bankruptcy-related defaults under the Bankruptcy Loans, to
the best of such Depositor's knowledge, there is no default, breach, violation
or event of acceleration existing under the Mortgage or the related Mortgage
Note and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and neither the Servicer nor the applicable
Depositor has waived any default, breach, violation or event of acceleration;
(oo) All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage have been duly and properly executed by such parties;
(pp) All amounts received on and after the Cut-off Date with respect to the
Mortgage Loans that are required to be deposited into the Principal and Interest
Account pursuant to Section 5.03 have been so deposited;
(qq) Each Mortgage Loan in the Fixed Rate Group, and each Mortgage Loan in
the Adjustable Rate Group, was originated and underwritten by the Representative
or by a wholly-owned subsidiary of the Representative;
(rr) As of the Cut-off Date, each Mortgage Loan conforms, and all Mortgage
Loans in the aggregate conform, in all material respects, to the description
thereof set forth in the Prospectus dated April 16, 1998, including all
statistical data provided therein in tabular format or otherwise;
(ss) The Mortgage Loans were not selected by the Originators or the
Depositors for transfer to the Trustee (for the benefit of the
Certificateholders) hereunder on any basis intended to adversely affect the
assets of the Trust;
(tt) A full interior inspection appraisal was performed in connection with
each Mortgaged Property;
(uu) The Mortgage Interest Rate for each Mortgage Loan in the Fixed Rate
Group is not less than 7.00% per annum, and the Mortgage Interest Rate for each
Mortgage Loan in the Fixed Rate Group is not more than 17.00% per annum; none of
the Mortgage Loans in the Adjustable Rate Group have current Mortgage Interest
Rates less than 6.75%;
(vv) The gross margin for each Mortgage Loan in the Adjustable Rate Group
is not less than 4.00% per annum and not more than 7.55% per annum. All of
Mortgage Loans in the Adjustable Rate Group have periodic adjustment caps of
1.00%;
<PAGE>
(ww) Each hazard insurance policy required to be maintained under Section
5.07 of this Agreement with respect to such Mortgage Loan is a valid, binding,
enforceable and subsisting insurance policy of its respective kind and is in
full force and effect;
(xx) If the Mortgaged Property consists of a leasehold estate, the Mortgage
covers property improvements and the Mortgagor's leasehold interest in the land
upon which such improvements are situated; at origination of the Mortgage Loan
the term of the leasehold estate was scheduled to last for at least ten years
beyond the maturity date of the Mortgage or provided for perpetual renewal
covenants; the leasehold estate is assignable by the Mortgagee; and the lease is
valid and in full force and effect;
(yy) To the best of such Depositors' knowledge, no Mortgaged Property was,
at origination, located within a 1 mile radius of any site with material
environmental or hazardous waste risks;
(zz) With respect to each Bankruptcy Loan as of the Cut-off Date, (a)
except for the Bankruptcy Loans specified on Exhibit G, the Mortgagor is not
contractually delinquent more than 30 days with respect to any payment due under
the related Plan, (b) the Current CLTV is less than or equal to 85%, and (c)
either (i) if the Current CLTV is between 60% and 85%, as of the Cut-off Date,
the Mortgagor has made at least six consecutive payments under the related Plan
or (ii) if the Current CLTV is less than 60%, as of the Cut-off Date, the
Mortgagor has made at least three consecutive payments under the related Plan;
(aaa) With respect to each Mortgage Loan which was originated in the State
of Alabama (each, an "Alabama Loan"), (i) each such Alabama Loan was (A)
originated and underwritten by EquiCredit Corporation/Ala.& Miss. ("EQCC/Ala.&
Miss.") or (B) purchased and re-underwritten by EQCC/Ala.& Miss. from another
lender (each originating entity, an "Alabama Originator"), (ii) with respect
each such Alabama Loan secured by second mortgages, (A) the total "prepaid
finance charge" (as defined in Regulation Z promulgated under the Federal
Truth-in-Lending Act) paid by the related Mortgagor to the related Alabama
Originator plus (B) any yield spread premium ("rate participation") paid by the
Alabama Originator did not exceed 5% of the original Principal Balance of such
Alabama Loan, (iii) the original Principal Balance of such Alabama Loan exceeded
$2,000, (iv) the aggregate of all points and broker's fees did not exceed 10% of
the original principal balance of the Mortgage Loan, (v) no "referral fee" (as
defined in Regulation X promulgated under the Real Estate Settlement and
Procedures Act) was paid to any third party by the related Alabama Originator
with respect to such Alabama Loan, (vi) such Alabama Loan and the manner in
which it was originated fully complied with Alabama law, and (vii) such Alabama
Loan was not originated in such a manner, and neither the related Mortgage Note
nor Mortgage contain any provisions, that would cause such Alabama Loan to be
deemed unconscionable under Alabama law; the aggregate of all such Alabama
Mortgage Loans does not exceed approximately 0.11% of the Mortgage Loans in the
Fixed Rate Group. None of the Mortgage Loans in the Adjustable Rate Group are
Alabama Mortgage Loans;
<PAGE>
(bbb) None of the Mortgage Loans in the Fixed Rate Group and none of the
Mortgage Loans in the Adjustable Rate Group were originated in connection with
the sale of properties acquired by the Originators through foreclosure;
(ccc) With respect to each Mortgage Loan in the Adjustable Rate Group, the
CLTV does not exceed 100% and with respect to each Mortgage Loan in the Fixed
Rate Group, the CLTV does not exceed 100%;
(ddd) Except for the Mortgage Loans listed on Exhibit T, as of the Cut-off
Date none of the Mortgage Loans are subject to the Home Ownership and Equity
Protection Act of 1994; all notices required to be delivered to the related
Mortgagor pursuant to the Home Ownership and Equity Protection Act of 1994 have
been delivered with respect to each Mortgage Loan listed on Exhibit T and all
other requirements of that Act have been complied with for each such Mortgage
Loan;
(eee) Each Mortgage Loan in the Adjustable Rate Group was originated by a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the National Housing Act;
(fff) Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code. For this purpose, Section 860G(a)(3)
of the Code shall be applied without regard to the rule contained in Treasury
Regulations Section 1.860G-2(f)(2) which treats a defective mortgage loan as a
"qualified mortgage" under certain circumstances. Accordingly, the Transferors
represent and warrant that each Mortgage Loan is directly secured by a Mortgage
on residential real property, and either (1) substantially all of the proceeds
of such Mortgage Loan were used to acquire, improve or protect such residential
real property and such interest in residential real property was the sole
security for such Mortgage Loan as of the Testing Date (as defined below), or
(2) the fair market value of the interest in real property which secures such
Mortgage Loan was at least equal to 80% of the principal amount of the Mortgage
Loan (a) as of the Testing Date or (b) as of the Closing Date. For purposes of
the previous sentence, (1) the fair market value of the referenced interest in
real property shall first be reduced by (a) the amount of any lien on such
interest in real property that is senior to the lien of the Mortgage Loan, and
(b) a proportionate amount of any lien on such interest in real property that is
on a parity with the Mortgage Loan, and (2) the "Testing Date" shall be the date
on which the referenced Mortgage Loan was originated unless (a) such Mortgage
Loan was modified after the date of its origination in a manner that would cause
a "significant modification" of such Mortgage Loan within the meaning of
Treasury Regulations Section 1.1001 - 3(b), and (b) such "significant
modification" did not occur at a time when such Mortgage Loan was in default or
when default with respect to such Mortgage Loan was reasonably foreseeable.
However, if the referenced Mortgage Loan has been subjected to a "significant
modification" after the date of its origination and at a time when such Mortgage
Loan was not in default or when default with respect to such Mortgage Loan was
not reasonably foreseeable, the "Testing Date" shall be the date upon which the
latest such "significant modification" occurred; and
<PAGE>
(ggg) The representations and warranties with respect to the Mortgage Loans
and Mortgage Pool set forth in Section 3.02(a) through (fff), inclusive, have
been made to the Depositors by the Originators and the Representative pursuant
to Section 3.02(a) through (fff), inclusive, of the Transfer Agreement with
respect to the Mortgage Loans and the Mortgage Pool, and the Certificate Insurer
is entitled to rely thereon.
Section 3.03 Purchase and Substitution.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive transfer of the Mortgage Loans and
delivery of the Certificates hereunder. Upon discovery by any Depositor, the
Servicer, any Subservicer, any Custodian, a Responsible Officer of the Trustee
or the Certificate Insurer of a breach of any of such representations and
warranties which materially and adversely affects the value of Mortgage Loans or
the interest of the Trustee, the Certificateholders or the Certificate Insurer,
or which materially and adversely affects the interests of the Trustee, the
Certificate Insurer, or the Certificateholders in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Depositors' best knowledge), the party discovering such breach shall give prompt
written notice to the others. Within 60 days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, the
Servicer shall (a) promptly cure, or cause the applicable Depositor or the
applicable Originator to cure, such breach in all material respects, or (b)
purchase, or cause the applicable Depositor or applicable Originator to
purchase, such Mortgage Loan by depositing in the Principal and Interest
Account, on the next succeeding Determination Date, in the manner and at the
price specified in Section 2.06(b), or by causing the applicable Depositor or
the applicable Originator to substitute, one or more Qualified Substitute
Mortgage Loans, provided such substitution is effected not later than the date
which is two years after the Closing Date. Any such substitution shall be
accompanied by payment of the Substitution Adjustment, if any, to be deposited
in the Principal and Interest Account.
As to any Deleted Mortgage Loan for which a Qualified Substitute Mortgage
Loan or Loans is substituted, the Servicer shall effect such substitution by
delivering to the Trustee or the Custodian on behalf of the Trustee, a
certification in the form of Exhibit B attached to the Custodial Agreement,
executed by a Servicing Officer and delivering to the Trustee (or the Custodian
on behalf of the Trustee, with a copy of such certification to the Trustee) a
copy of such certification, the documents constituting the Mortgage File for
such Qualified Substitute Mortgage Loan or Loans and a trust receipt of the
Custodian as to the Substitute Mortgage Loan or Loans.
The Servicer shall deposit in the Principal and Interest Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution; provided, however, that any amounts
received after the date of substitution in respect of interest accrued on or
prior to the date of substitution on such Qualified Substitute Mortgage Loan
will constitute the property of the related Depositor or Originator, as the case
may be. Monthly Payments received with respect to Qualified
<PAGE>
Substitute Mortgage Loans on or before the date of substitution will be retained
by the Servicer on behalf of the related Depositor or related Originator, as the
case may be. The Trustee will own, for the benefit of the Certificateholders,
all payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Servicer on behalf of the Depositors or Originator, as the
case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Servicer shall give
written notice to the Trustee, the Representative and the Certificate Insurer
that such substitution has taken place and 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.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of this Agreement in all respects, and the Depositors
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Loan or Loans, as of the date of substitution, the covenants, representations
and warranties set forth in Sections 3.01 and 3.02. On the date of such
substitution, the applicable Depositor or the applicable Originator, as the case
may be, will remit to the Servicer, and the Servicer will deposit into the
Principal and Interest Account, an amount equal to the Substitution Adjustment,
if any.
It is understood and agreed that the obligations of the Servicer set forth
in Sections 2.06 and 3.03 to cure, purchase or substitute or cause to be cured,
purchased or substituted for a defective Mortgage Loan as provided in Sections
2.06 and 3.03 constitute the sole remedies of the Trustee, the Certificate
Insurer and the Certificateholders respecting a breach of the foregoing
representations and warranties.
Any cause of action against either of the Depositors or the Servicer
relating to or arising out of a defect in a Mortgage File as contemplated by
Section 2.06 or the breach of any representations and warranties made in
Sections 3.01 or 3.02 shall arise as to any Mortgage Loan upon the occurrence of
not less than all of the following events: (i) discovery of such defect or
breach by any party and notice thereof to the Servicer or notice thereof by the
Servicer to the Trustee and the Certificate Insurer, (ii) failure by the
Servicer to cure or cause to be cured such defect or breach or purchase or
substitute or cause to be purchased or substituted such Mortgage Loan as
specified above, and (iii) demand upon the Servicer by the Trustee or the
Certificate Insurer for all amounts payable in respect of such Mortgage Loan.
The party delivering such notice shall also deliver a copy thereof to the
Certificate Insurer.
The Trustee shall give prompt written notice to Moody's, S&P, the
Certificate Insurer and to each Certificateholder of any repurchase or
substitution made pursuant to this Section 3.03 or Section 2.06(b).
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
<PAGE>
(a) The Class A-1F, the Class A-2F, the Class A-3F, the Class A-4F, the
Class A-5F, the Class A-6F, the Class A-7F, the Class A-IO, the Class A-1A, the
Class X, the Class R, the Class MR and the Class LR Certificates shall be
substantially in the forms annexed hereto as Exhibits B-1, B-2, B-3, B-4, B-5,
B-6, B-7, B-8, B-9, B-10, B-11, B-12 and B-13, respectively. The Class A
Certificates shall be issued in minimum denominations of $1,000 and in integral
multiples of $1 in excess thereof. The Class X Certificates shall be issued in
minimum denominations of 25% Percentage Interest and in integral multiples of 1%
Percentage Interest in excess thereof. The Class R, Class MR and Class LR
Certificates shall be issued in a minimum denomination of 100% Percentage
Interest. All Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by at least one authorized officer and authenticated by
the manual signature of an authorized officer. Certificates bearing the
signatures of individuals who were at the time of the execution of the
Certificates the authorized officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
(b) The Class A Certificates, upon original issuance, shall be issued in
the form of a typewritten Certificate or Certificates representing Book-Entry
Certificates, to be delivered to the Depository or, pursuant to the Depository's
instructions on behalf of the Depository to, and deposited with, the Certificate
Custodian. Such Class A Certificate or Certificates shall initially be
registered on the Certificate Register in the name of Cede & Co., the nominee of
the initial Depository, and no Certificate Owner of a Class A Certificate or
Certificates shall receive a definitive Class A Certificate representing such
Certificate Owner's interest in such Class A Certificate, except as provided in
Section 4.01(c). Unless and until definitive fully registered Class A
Certificates (the "Definitive Certificates") shall have been issued to
Certificate Owners pursuant to Section 4.01(c):
(i) the provisions of this Section 4.01(b) shall be in full force and
effect;
(ii) the Certificate Registrar and the Trustee shall be entitled to
deal with the Depository for all purposes of this Agreement (including the
payment of principal of and interest on the Certificates and the giving of
instructions or directions hereunder) as the sole Holder of the Class A
Certificates, and shall have no obligation to the Certificate Owners with
respect thereto;
(iii) to the extent that the provisions of this Section 4.01(b)
conflict with any other provisions of this Agreement, the provisions of
this Section 4.01(b) shall control;
(iv) the rights of the Certificate Owners with respect to the Class A
Certificates shall be exercised only through the Depository and shall be
limited to those established by law and agreements between such Certificate
Owners and the Depository and/or the Depository Participants. Unless and
until
<PAGE>
Definitive Certificates are issued pursuant to Section 4.01(c), the initial
Depository will make book-entry transfers among the Depository Participants
and receive and transmit payments of principal of and interest on the Class
A Certificates to such Depository Participants;
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Certificates evidencing
a specified aggregate Percentage Interest, the Depository shall be deemed
to represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Depository
Participants owning or representing, respectively, such required aggregate
Percentage Interest of Class A Certificates (taking into account the
proviso contained in the definition of "Certificateholder" contained
herein) and has delivered such instructions to the Trustee; and
(vi) whenever a notice or other communication to the Class A
Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 4.01(c), the Trustee shall give all such notices and
communications specified herein to be given to Class A Certificateholders
to the Depository and shall have no further obligation to the Certificate
Owners of the Class A Certificates.
provided, however, that the provisions of this Section 4.01(b) shall not be
applicable in respect of Class A Certificates issued to the Depositors. The
Depositors or the Trustee may set a record date for the purpose of determining
the identity of Holders of Class A Certificates entitled to vote or to consent
to any action by vote as provided in this Agreement;
(c) The Class X, Class R, Class MR and Class LR Certificates shall be
issued in the form of Definitive Certificates. With respect to the Class A
Certificates, if (i) the Servicer advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Class A Certificates, and the Servicer is
unable to locate a qualified successor; (ii) the Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository; or (iii) after the occurrence of a Servicer Default, a Majority
in Aggregate Voting Interest advise the Depository in writing that the
continuation of a book-entry system through the Depository is no longer in the
best interests of the Certificate Owners of the Class A Certificates, then the
Depository shall notify all Certificate Owners and the Trustee of the occurrence
of any such event and of the availability of Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
typewritten Certificate or Certificates representing the Book-Entry Certificates
by the Depository, accompanied by registration instructions, the Trustee shall
execute and authenticate the Definitive Certificates in accordance with the
instructions of the Depository. Neither the Certificate Registrar nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be
<PAGE>
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders.
Section 4.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its office or agency in Chicago,
Illinois, or at its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series.
(b) Except as provided in Section 4.02(c), no transfer, sale, pledge or
other disposition of a Class X, Class R, Class MR or Class LR Certificate shall
be made unless such transfer, sale, pledge or other disposition is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), and any applicable state securities laws or is made in accordance with
said Act and laws. In the event that a transfer of a Class X, Class R, Class MR
or Class LR Certificate is to be made under this Section 4.02(b), the Depositors
may direct the Trustee to require an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositors that such
transfer shall be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Depositors or the Servicer and (ii) the Trustee shall
require the transferee to execute a representation letter, substantially in the
form of Exhibit M-2 hereto, and the Trustee shall require the transferor to
execute a representation letter, substantially in the form of Exhibit M-3
hereto, each acceptable to and in form and substance satisfactory to the
Depositors and the Trustee certifying to the Depositors and the Trustee the
facts surrounding such transfer, which representation letters shall not be an
expense of the Trustee, the Depositors or the Servicer, provided that such
representation letter will not be required in connection with any transfer of
any such Certificate by the Depositors to an affiliate of the Depositors. Any
such Certificateholder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositors, the Certificate Insurer and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such applicable federal and state laws.
(c) Transfers of Class X, Class R, Class MR and Class LR Certificates may
be made in accordance with this Section 4.02(c) if the prospective transferee of
a Certificate provides the Trustee and the Depositors with an investment letter
substantially in the form of Exhibit M-4 attached hereto, which investment
letter shall not be an expense of the Trustee, the Depositors or the Servicer,
and which investment letter states that, among other things, such transferee is
a "qualified institutional buyer" as defined under Rule 144A. Such transfers
shall be deemed to have complied with the requirements of Section 4.02(b)
hereof; provided, however, that no Transfer of any of the Certificates may be
made pursuant to this Section 4.02(c) by the Depositors. Any such
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Depositors and the Servicer against any
<PAGE>
liability that may result if the transfer is not so exempt or is not made in
accordance with such applicable federal and state laws.
(d) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
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 Residual Certificate are expressly subject to the
following provisions:
(1) Each Person holding or acquiring any Ownership Interest in a Residual
Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(2) In connection with any proposed Transfer of any Ownership Interest in a
Residual Certificate, the Trustee shall require delivery to it, and shall not
register the Transfer of any such Residual Certificate until its receipt of, an
affidavit and agreement (a "Transfer Affidavit and Agreement") attached hereto
as Exhibit M-1 from the proposed Transferee, in form and substance satisfactory
to the Trustee, representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring its Ownership
Interest in such Residual Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in such
Residual Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 4.02(d) and agrees to be
bound by them.
(3) Notwithstanding the delivery of a Transfer Affidavit and Agreement by a
proposed Transferee under clause (2) above, if the Trustee has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Residual Certificate to such proposed Transferee shall
be effected.
(4) Each Person holding or acquiring any Ownership Interest in a Residual
Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in such Residual Certificate and (y) not to transfer its Ownership Interest
unless it provides a certificate (attached hereto as Exhibit J) to the Trustee
stating that, among other things, it has no actual knowledge that such other
Person is not a Permitted Transferee.
(5) The Trustee will register the Transfer of any Residual Certificate only
if it shall have received the Transfer Affidavit and Agreement and all of such
other documents as shall have been reasonably required by the Trustee as a
condition to such registration. In addition, no Transfer of a Residual
Certificate shall be made unless the Trustee shall have received a
representation letter from the Transferee of such Certificate to the effect that
such Transferee is not a Disqualified Non-United States Person and is not a
Disqualified Organization or an agent of either. Transfers of the Residual
Certificates to Disqualified Non-United States Persons and Disqualified
Organizations or their agents are prohibited.
<PAGE>
(6) Any attempted or purported transfer of any Ownership Interest in a
Residual Certificate in violation of the provisions of this Section 4.02 shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall become a Holder of a Residual
Certificate in violation of the provisions of this Section 4.02, then the last
preceding Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Residual
Certificate. The Trustee shall notify the Depositors upon receipt of written
notice or discovery by a Responsible Officer that the registration of transfer
of a Residual Certificate was not in fact permitted by this Section 4.02.
Knowledge shall not be imputed to the Trustee with respect to an impermissible
transfer in the absence of such a written notice or discovery by a Responsible
Officer. The Trustee shall be under no liability to any Person for any
registration of transfer of a Residual Certificate that is in fact not permitted
by this Section 4.02 or for making any payments due on such 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 transfer was registered after
receipt of the related Transfer Affidavit and Transfer Certificate. The Trustee
shall be entitled, but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Residual Certificate at and after either
such time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Holder of such Certificate.
(e) The Trustee shall make available to the Internal Revenue Service and
those Persons specified by the REMIC Provisions, all information necessary to
compute any tax imposed as a result of the transfer of an ownership interest in
a Residual Certificate to any Person who is a Disqualified Organization or an
agent thereof, including the information regarding "excess inclusions" of such
Residual Certificates required to be provided to the Internal Revenue Service
and certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5)
and 1.860E-2(a)(5). The Trustee may charge and shall be entitled to reasonable
compensation for providing such information as may be required from those
Persons which may have had a tax imposed upon them as specified in this
paragraph for providing such information.
(f) No transfer of a Class X, Class R, Class MR or Class LR Certificate or
any interest therein shall be made to any employee benefit plan or other
retirement arrangement, including individual retirement accounts and annuities,
Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code (each,
an "ERISA Plan"), unless the prospective transferee of such Certificate provides
the Servicer and the Trustee with a certification of facts and, at the
prospective transferee's expense, an Opinion of Counsel which establish to the
satisfaction of the Servicer and the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or the Trustee to be deemed a fiduciary of such ERISA Plan or result in
the imposition of an excise tax under Section 4975 of the Code. In the absence
of their having received the certification of facts or Opinion of Counsel
contemplated by the preceding sentence, the Trustee and the Servicer shall
require the prospective transferee
<PAGE>
of any Class X, Class R, Class MR or Class LR Certificate to certify in the form
of Exhibit M-2 or Exhibit M-4 that (A) it is neither (i) an ERISA Plan nor (ii)
a Person who is directly or indirectly purchasing such Certificate on behalf of,
as named fiduciary of, as trustee of, or with assets, of a Plan or (B) in the
case of the Class X Certificates, if the prospective transferee is an insurance
company, all funds used by such transferee to purchase such Certificates will be
funds held by it in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTE
95-60"), 60 Fed. Reg. 35925 (July 12, 1995) and there is no Plan with respect to
which the amount of such general account's reserves and liabilities for the
contract(s) held by or on behalf of such Plan and all other Plans maintained by
the same employer (or affiliate thereof as defined in Section V(a)(1) of PTE
95-60) or by the same employee organization exceeds 10% of the total of all
reserves and liabilities of such general account (as such amounts are determined
under Section I(a) of PTE 95-60) at the date of acquisition.
(g) Subject to the restrictions set forth in this Agreement, upon surrender
for registration of transfer of any Certificate at the office or agency of the
Trustee located in New York, New York or Chicago Illinois, the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. The Trustee shall notify the
Servicer of any such transfer. At the option of the Certificateholders,
Certificates may be exchanged for other Certificates of Authorized Denominations
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. No
service charge shall be made for any transfer or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. All Certificates surrendered for transfer and exchange
shall be canceled by the Trustee.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Servicer and the Trustee
such security or indemnity, which may include a letter of indemnity delivered by
an insurance company reasonably acceptable to the Trustee and the Servicer, as
may be required by each of them to save each of them harmless, then, in the
absence of notice to the Servicer and the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.03, the Servicer and the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.03 shall
constitute
<PAGE>
complete and indefeasible evidence of ownership in the Upper-Tier REMIC, as if
originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Depositors and the Trustee may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving remittances pursuant to Section 6.05 and for all other purposes
whatsoever, and the Servicer, the Depositors and the Trustee shall not be
affected by notice to the contrary.
Section 4.05 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR on
the basis of the British Bankers' Association "Interest Settlement Rate" for
one-month deposits in U.S. dollars as found on Telerate page 3750 as of 11:00
A.M. London time on such LIBOR Determination Date. As used herein, "Telerate
page 3750" means the display designated as page 3750 on the Dow Jones Telerate
Service. If such rate does not appear on Telerate Page 3750, the rate for that
date will be determined on the basis of the rates at which one-month United
States dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on that day to prime banks in the London interbank market. The
Trustee will request the principal London office of each of the Reference Banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that date
will be the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Servicer, at approximately 11:00 a.m., New York City time, on
that day for one-month loans in United States dollars to leading European banks.
(b) The Class A-1A Pass-Through Rate applicable to the then current and the
immediately preceding Accrual Period may be obtained by any Class A-1A
Certificateholder by telephoning the Trustee at its Corporate Trust Office at
612-973-5800.
(c) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for the following Accrual Period.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 Duties of the Servicer.
(a) It is intended that each Trust REMIC formed hereunder shall constitute,
and that the affairs of each Trust REMIC shall be conducted so as to qualify it
as, REMICs as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the
<PAGE>
Servicer covenants and agrees that it shall not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
REMIC status of any Trust REMIC.
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
entity which is in compliance with the laws of each state necessary to enable it
to perform its obligations under such Subservicing Agreement and (x) has been
designated an approved Seller-Servicer by FHLMC or FNMA for first and second
mortgage loans, or (y) is an affiliate or wholly owned subsidiary of the
Servicer. The Servicer shall give notice to the Depositors, the Trustee and the
Certificate Insurer of the appointment of any Subservicer other than a
Subservicer which is an affiliate or wholly-owned subsidiary of the Servicer.
Any such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor subservicer which
qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Depositors, the
Trustee, the Certificate Insurer and the Certificateholders for the servicing
and administering of the Mortgage Loans in accordance with the provisions of
this Agreement without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the Subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Mortgage Loans when the Subservicer has received such
payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification or limit or modify indemnification provided by the Servicer
herein.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an Originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Depositors, the Trustee, the
Certificate Insurer and Certificateholders shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of a Servicer Default), the Trustee or its
designee shall, subject to Section
<PAGE>
10.02 hereof, thereupon assume all of the rights and obligations of the Servicer
under each Subservicing Agreement that the Servicer may have entered into,
unless the Trustee elects to terminate any Subservicing Agreement. If the
Trustee does not terminate a Subservicing Agreement, the Trustee, its designee
or the successor servicer for the Trustee shall be deemed to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party to
each Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that the Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreements. The Servicer at its expense and without right of reimbursement
therefor, shall, upon request of the Trustee, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Depositors, the Certificateholders and the Certificate Insurer; provided,
however, that (unless (x) the Mortgagor is in default with respect to the
Mortgage Loan, or such default is, in the judgment of the Servicer, imminent and
(y) with respect to any modification lowering the Mortgage Interest Rate (or,
with respect to any Mortgage Loan in the Adjustable Rate Group, a modification
to the method of determination which may result a lower Mortgage Interest Rate)
or effecting the forgiveness of any amount owed under the Mortgage Note, or
extending the final maturity date on such Mortgage Loan, the Certificate Insurer
has consented to such modification and notice of such modification has been
delivered to the Rating Agencies) the Servicer may not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer (except as permitted by Section 5.11) or forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan), extend the final maturity date or modify any other material term
of the Mortgage Loan, unless such waiver, modification, postponement or
indulgence would not be considered to constitute the acquisition by the
Lower-Tier REMIC of a new mortgage loan under Treasury Regulations Section
1.860G-2(b). No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall, for the purposes of distributions to
Certificateholders, be added to the Principal Balance of the related Mortgage
Loan for purposes of this Agreement. Without limiting the generality of the
foregoing, and subject to the consent of the Certificate Insurer, the Servicer
shall continue, and is hereby authorized and empowered to execute and deliver on
behalf of the Trustee, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer (as evidenced by an Officer's Certificate of
the Servicer to such effect delivered to the Trustee), the Trustee shall furnish
the Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
<PAGE>
Notwithstanding anything to the contrary contained herein, the Servicer, in
servicing and administering the Mortgage Loans, shall employ or cause to be
employed procedures (including collection, foreclosure and REO Property
management procedures) and exercise the same care that it customarily employs
and exercises in servicing and administering mortgage loans for its own account,
in accordance with accepted second mortgage servicing practices of prudent
lending institutions and giving due consideration to the Depositor's, the
Certificate Insurer's and Certificateholders' reliance on the Servicer.
Notwithstanding anything to the contrary contained herein, the Servicer may
reimburse itself for Servicing Advances pursuant to Section 5.04 and may pay all
or a portion of any Servicing Advance out of excess amounts on deposit in the
Principal and Interest Account and held for future distribution on the date such
Servicing Advance is made; any excess amounts so used shall be replaced by the
Servicer by deposit to the Principal and Interest Account on or before the next
succeeding Determination Date.
(g) On and after such time as the Trustee receives the resignation of, or
notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to any resignation pursuant to Section 9.04,
after receipt of the Opinion of Counsel required pursuant to Section 9.04, the
Trustee or its designee shall assume all of the rights and obligations of the
Servicer, subject to Section 9.02 hereof. The Servicer shall, upon request of
the Trustee but at the expense of the Servicer, deliver to the Trustee all
documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party.
(h) The Servicer shall take all actions required to be taken under sections
6050H, 6050J and 6050P of Code in respect of the Mortgage Loans, the Mortgaged
Property and the REO Property.
Section 5.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 5.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem in its good faith
business judgment to be in the best interest of the Depositors, the Certificate
Insurer and the Certificateholders and otherwise in accordance with the accepted
second mortgage servicing practices of prudent lending institutions. The
Servicer in accordance with the provisions of Section 5.10 shall foreclose upon
or otherwise comparably effect the ownership in the name of the Trustee for the
benefit of the Certificateholders of Mortgaged Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of delinquent payments; provided, however, that the Servicer shall
not be obligated to foreclose in the event that the Servicer, in its good faith
reasonable business judgment, determines that it would not be in the best
interests of the Depositors, the Certificateholders or the Certificate Insurer,
which judgment shall be
<PAGE>
evidenced by an Officer's Certificate delivered to the Trustee and the
Certificate Insurer. In connection with such foreclosure or other conversion,
the Servicer shall exercise and use collection and foreclosure procedures with
the same degree of care and skill as it would exercise or use under the
circumstances in the conduct of its own affairs. Any amounts advanced in
connection with such foreclosure or other action shall constitute "Servicing
Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the Servicer
shall promptly prepare and forward to the Depositors, the Trustee and the
Certificate Insurer a Liquidation Report, in the form attached hereto as Exhibit
O, detailing the Liquidation Proceeds received from the Liquidated Mortgage
Loan, expenses incurred with respect thereto, and any loss incurred in
connection therewith.
Section 5.03 Establishment of Principal and Interest Accounts; Deposits in
Principal and Interest Accounts.
The Servicer, for the benefit of the Certificateholders and the Certificate
Insurer, as their interests may appear, shall cause to be established and
maintained one or more Principal and Interest Accounts in the name of the
Trustee, which shall be Eligible Accounts, which may be interest-bearing, titled
"EQCC Home Equity Loan Trust 1998-1 Principal and Interest Account", bearing an
additional designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders. Such Principal and Interest
Accounts shall be insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be, to the maximum extent provided
by law. The creation of any Principal and Interest Account shall be evidenced by
a letter agreement in the form of Exhibit P hereto. A copy of such letter
agreement shall be furnished by the Servicer to the Depositors, the Trustee and
the Certificate Insurer. The Servicer shall use reasonable efforts to deposit
(without duplication) within one Business Day, and shall in any event deposit
within two Business Days of receipt thereof, in the Principal and Interest
Account and retain therein:
(i) all payments received on or after the Cut-off Date on account of
principal on the Mortgage Loans and all Principal Prepayments and
Curtailments collected on or after the Cut-off Date;
(ii) (a) all payments received on or after the Cut-off Date on account
of interest accrued on the Mortgage Loans on or after the Cut-off Date and
(b) Pre-Plan Interest Payments;
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
<PAGE>
(vi) any amounts payable in connection with the purchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.06 and 3.03;
(vii) any amount required to be deposited in the Principal and
Interest Account pursuant to Section 5.04, 5.07, 5.08 or 5.10; and
(viii) all payments made by the Servicer pursuant to the final
paragraph of Section 5.01(f) to replace any amount withdrawn from the
Principal and Interest Account to make Servicing Advances.
In making the deposits set forth in clauses (i) through (viii) (inclusive)
above, the Servicer shall note in its records the respective amounts deposited
with respect to the Fixed Rate Group and the Adjustable Rate Group. The
foregoing requirements for deposit in the Principal and Interest Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, with respect to each Mortgage Loan, the
Representative's Yield, amounts received on and after the Cut-off Date in
respect of interest accrued on the Mortgage Loans prior to the Cut-off Date
(other than amounts referred to in Section 5.03(ii)(b)), the Servicing Fee, late
payment charges and assumption fees, to the extent permitted by Sections 7.01
and 7.03, Excess Proceeds, and any amounts received after the date of
substitution of a Qualified Substitute Mortgage Loan pursuant to Section 2.06 or
3.03 in respect of interest accrued on such Qualified Substitute Mortgage Loan
on or prior to the date of substitution (except to the extent taken into account
in calculating the Substitution Adjustment with respect thereto), need not be
deposited by the Servicer in the Principal and Interest Account. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer. Any reference herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
Section 5.04 Permitted Withdrawals from the Principal and Interest Account.
The Servicer shall withdraw or cause to be withdrawn funds from the
Principal and Interest Account for the following purposes:
(i) to remit to the Trustee for deposit into the Lower-Tier
Distribution Account on the third Business Day prior to the Payment Date,
the sum of the amounts set forth in Section 5.03 deposited in the Principal
and Interest Account during the related Due Period (excluding any amounts
not required to be deposited in the Principal and Interest Account pursuant
to Section 5.03 and excluding any amounts withdrawn by the Servicer
pursuant to clauses (ii), (iii), (v), (vi), (vii) and (x) below as of the
related Determination Date);
(ii) to reimburse itself for any accrued unpaid Servicing Fees, for
unreimbursed Servicing Advances and, with respect to any Advance made by
the Servicer from its own funds, any unreimbursed Advance; provided, that
any withdrawal of accrued unpaid Servicing Fees pursuant to this Section
5.04(ii)
<PAGE>
shall be used first by the Servicer to pay any amounts due to the Trustee
pursuant to this Agreement. The Servicer's right to reimbursement for
unpaid Servicing Fees and unreimbursed Servicing Advances shall be limited
to late collections on the related Mortgage Loan, including Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the related
Mortgagor or otherwise relating to the Mortgage Loan in respect of which
such unreimbursed Advances are owed. The Servicer's rights to reimbursement
for any unreimbursed Advances shall be limited to collections of interest
on any Mortgage Loan with respect to which an Advance was made or from late
collections on such Mortgage Loans, including Liquidation Proceeds,
Released Mortgaged Property Proceeds, Insurance Proceeds and such other
amounts as may be collected by the Servicer from the related Mortgagors or
otherwise relating to the Mortgage Loans in respect of which such
unreimbursed amounts are owed. It is understood that the Servicer's right
to reimbursement pursuant hereto shall be prior to the rights of
Certificateholders unless the Representative is the Servicer and the
Servicer or any Depositor or Originator is required to purchase or
substitute (or cause to be purchased or substituted) a Mortgage Loan
pursuant to Sections 2.06 and 3.03, in which case the Servicer's right to
such reimbursement shall be subsequent to the deposit into the Principal
and Interest Account of the purchase price or Substitution Adjustment
pursuant to such Sections 2.06 and 3.03;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) (a) to make investments in Permitted Instruments and (b) after
effecting the remittance to the Trustee as provided in Section 5.04(i), to
pay to itself interest earned in respect of Permitted Instruments or on
funds deposited in the Principal and Interest Account;
(v) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error;
(vi) to pay itself Servicing Compensation pursuant to Section 7.03
hereof to the extent not retained or paid pursuant to Section 5.03;
(vii) to withdraw funds necessary for the conservation and disposition
of REO Property pursuant to the third paragraph of Section 5.10 hereof to
the extent such funds were deposited in the Principal and Interest Account;
<PAGE>
(viii) to utilize any excess funds on deposit to make any Advance
pursuant to Section 6.08 or any Servicing Advance pursuant to the final
paragraph of Section 5.01(f);
(ix) to clear and terminate the Principal and Interest Account upon
the termination of this Agreement and allocate the amounts therein pursuant
to the priority set forth in Section 6.05(d); and
(x) to effect, with respect to a Bankruptcy Loan, the remittance to
the Depositor transferring such Bankruptcy Loan, of an amount equal to the
excess, if any, of (a) Pre-Plan Interest Payments collected in the
preceding Due Period with respect to such Bankruptcy Loan over (b) the
interest accrued in such preceding Due Period, but uncollected as of the
last day of such Due Period, with respect to such Bankruptcy Loan.
In making the withdrawals set forth in clauses (i) through (x) (inclusive)
above, the Servicer shall note (when applicable) in its records the respective
amounts withdrawn with respect to the Fixed Rate Group and the Adjustable Rate
Group. So long as no Servicer Default shall have occurred and be continuing, the
funds held in the Principal and Interest Account may be invested by the Servicer
(to the extent practicable) in Permitted Instruments, as directed in writing to
the Trustee by the Servicer. In either case, funds in the Principal and Interest
Account must be available for withdrawal without penalty, and any Permitted
Instruments must mature not later than the Business Day immediately preceding
the day on which such funds are to be remitted to the Trustee for deposit in the
Collection Account, but in no event later than the Business Day immediately
preceding the Determination Date next following the date of such investment
(except, in each case, that if such Permitted Instrument is an obligation of the
institution that maintains the Principal and Interest Account, then such
Permitted Instrument shall mature not later than such Determination Date) and
shall not be sold or disposed of prior to its maturity. All Permitted
Instruments in which funds in the Principal and Interest Account are invested
must be held by or registered in the name of the Trustee. All interest or other
earnings from funds on deposit in the Principal and Interest Account (or any
Permitted Instruments thereof) shall be the exclusive property of the Servicer,
and may be withdrawn from the Principal and Interest Account pursuant to clause
(iv) above. The amount of any losses incurred in connection with the investment
of funds in the Principal and Interest Account in Permitted Instruments shall be
deposited in the Principal and Interest Account by the Servicer from its own
funds immediately as realized without reimbursement therefor.
Section 5.05 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, property taxes and assessments, water rates and other
charges which are or may become a lien
<PAGE>
upon the Mortgaged Property and the status of primary mortgage guaranty
insurance premiums, if any, and fire and hazard insurance coverage and shall
obtain, from time to time, all bills for the payment of such charges (including
renewal premiums) and shall effect payment thereof prior to the applicable
penalty or termination date and at a time appropriate for securing maximum
discounts allowable, employing for such purpose deposits of the Mortgagor in any
escrow account which shall have been estimated and accumulated by the Servicer
in amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. To the extent that a Mortgage does not provide for escrow payments,
the Servicer shall monitor such payments to determine if they are made by the
Mortgagor at the time they become due and, if not paid by the Mortgagor, shall
advance such amounts as Servicing Advances. To the extent ground lease payments
are not made by the Mortgagor, and the Servicer has notice of such failure to
pay, the Servicer shall advance such delinquent payments. Any out-of-pocket
expenses incurred by the Servicer pursuant to this Section 5.05 shall constitute
Servicing Advances.
Section 5.06 Transfer of Accounts; Monthly Statements.
The Accounts (other than the Principal and Interest Account, which shall be
established pursuant to Section 5.03 hereof) shall be established, as of the
Closing Date, in the name of the Trustee as Eligible Accounts pursuant to clause
(B) of the definition thereof. Any Account may, upon written notice from the
Servicer to the Trustee, be transferred to a different depository institution so
long as (i) such transfer (A) is to an Eligible Account and the Certificate
Insurer receives notice thereof from the Servicer or (B) is approved in writing
by the Certificate Insurer, which approval shall not be unreasonably withheld
and (ii) written notice of such transfer is sent to Moody's. The Trustee shall
provide to the Certificate Insurer a monthly statement of activity in the
Accounts established by it, and the Servicer shall provide to the Trustee and
the Certificate Insurer a monthly statement of activity in the Principal and
Interest Account from the party holding such account.
Section 5.07 Maintenance of Hazard Insurance.
The Servicer shall cause each Mortgagor to maintain, and if the Mortgagor
does not so maintain, shall itself maintain, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Mortgage Loan (and any prior lien if the related Mortgage Loan is in a junior
lien position), (b) the full insurable value of the Mortgaged Property securing
the Mortgage Loan and (c) the minimum amount required to compensate for damage
or loss on a replacement cost basis. If the Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency Management Agency as
Flood Zone "A", and such flood insurance has been made available, the Servicer
will cause to be purchased a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan (plus the principal
balance of any lien having priority over the Mortgage Loan), (ii) the full
insurable value of the Mortgaged Property, or (iii) the maximum amount of
insurance available under
<PAGE>
the National Flood Insurance Act of 1968, as amended. The Servicer shall also
maintain on REO Property, to the extent reasonably available, on REO Property,
fire and hazard insurance in the amounts described above, liability insurance
and, to the extent required and available under the National Flood Insurance Act
of 1968, as amended, and the Servicer determines that such insurance is
necessary in accordance with accepted second mortgage servicing practices of
prudent lending institutions, flood insurance in an amount equal to that
required above. Any amounts collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the Mortgaged
Property, or to be released to the Mortgagor in accordance with customary second
mortgage servicing procedures) shall be deposited in the Principal and Interest
Account, subject to (X) retention by the Servicer to the extent such amounts
constitute Servicing Compensation or (Y) withdrawal pursuant to Section 5.04. It
is understood and agreed that no earthquake or other additional insurance need
be required by the Servicer of any Mortgagor or maintained on REO Property,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. All policies
required hereunder shall be endorsed with standard mortgagee clauses with losses
payable to the Servicer. Any out-of-pocket expenses incurred by the Servicer
pursuant to this Section 5.07, including, without limitation, any advances of
premiums on insurance policies required by this Section 5.07, shall constitute
Servicing Advances.
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against fire and hazards of extended coverage on all of the Mortgage
Loans as to which the Mortgagor does not maintain the insurance described in
Section 5.07, then, to the extent such policy names the Servicer as loss payee
and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance, and otherwise complies with
the requirements of Section 5.07, the Servicer shall be deemed conclusively to
have satisfied its obligations with respect to fire and hazard insurance
coverage under Section 5.07, it being understood and agreed that such blanket
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 5.07, and there shall have been a loss
which would have been covered by such policy, deposit in the Principal and
Interest Account from the Servicer's own funds the difference, if any, between
the amount that would have been payable under a policy complying with Section
5.07 and the amount paid under such blanket policy. Upon the request of the
Certificate Insurer or the Trustee, the Servicer shall cause to be delivered to
such requesting Person a certified true copy of such policy.
Section 5.09 Fidelity Bond.
The Servicer shall maintain with a responsible company, at its own expense,
a blanket fidelity bond and an errors and omissions insurance policy in a
minimum amount acceptable to FNMA or FHLMC or otherwise as is commercially
available at a cost that is not generally regarded as excessive by industry
standards, with broad coverage on all officers,
<PAGE>
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans
("Servicer Employees"). Any such fidelity bond and errors and omissions
insurance shall protect and insure the Servicer against losses, including losses
resulting from forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. Such fidelity bond shall also protect
and insure the Servicer against losses in connection with the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 5.09 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
the request of the Trustee or the Certificate Insurer, the Servicer shall cause
to be delivered to such requesting Person a certified true copy of such fidelity
bond and errors and omissions insurance policy. On the Closing Date, such
fidelity bond and errors and omissions insurance policy is maintained with
certain underwriters at National Union Fire Insurance Company of Pittsburgh, Pa.
Section 5.10 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee for the benefit of
the Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Certificate Insurer solely for the purpose of
its prudent and prompt disposition and sale. The Servicer shall, either itself
or through an agent selected by the Servicer, manage, conserve, protect and
operate the REO Property in the same manner that it manages, conserves, protects
and operates for its own account similar property in the same locality as the
REO Property is managed. The Servicer shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as the Servicer deems to
be in the best interests of the Certificate Insurer and the Certificateholders.
Any out-of-pocket expenses incurred by the Servicer pursuant to this Section
5.10 shall constitute Servicing Advances. The Servicer shall cause the Trustee
to be named as a beneficiary and loss payee under the REO liability provisions
of the Servicer's general comprehensive liability insurance policy.
The Servicer shall cause to be deposited in the Principal and Interest
Account all revenues received with respect to the conservation and disposition
of the related REO Property and shall retain or withdraw therefrom funds
necessary for the proper operation, management and maintenance of the REO
Property and the fees of any managing agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Certificateholders and the Certificate Insurer and, as
soon as practicable thereafter, the expenses of such sale shall be paid. The
proceeds of sale of the REO Property and other proceeds of any REO Disposition
shall be deposited in the Principal and Interest Account, net
<PAGE>
of related liquidation expenses, Excess Proceeds, any related unreimbursed
Servicing Advances, accrued and unpaid Servicing Fees and unreimbursed Advances
payable to the Servicer in accordance with Section 5.04(ii).
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall dispose of such Mortgaged Property prior to the close of the
third calender year following the year of its acquisition (the "Disposition
Period") unless (i) the Servicer shall have received an Opinion of Counsel to
the effect that the holding of such Mortgaged Property subsequent to the
Disposition Period will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code or cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Class A or Class X Certificates
are outstanding or (ii) the Servicer shall have applied for, at least 60 days
prior to the expiration of such period, an extension of such period in the
manner contemplated by Section 856(e)(3) of the Code, in which case the original
period shall be extended by the applicable period. Notwithstanding any other
provision of this Agreement, (i) no Mortgaged Property acquired by the Servicer
pursuant to this Section shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income or by or on behalf of the Trust
Fund, and (ii) no construction shall take place on such Mortgaged Property if
such activity as described in the preceding clause (i) or clause (ii) is
conducted or otherwise undertaken in such a manner or pursuant to any terms that
would cause such Mortgaged 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 Trust REMIC of any "net income from foreclosure property" which is subject
to taxation within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code.
If a period greater than the Disposition Period is permitted under this
Agreement and is necessary to sell any REO Property, the Servicer shall give
appropriate notice to the Trustee, the Certificate Insurer and the
Certificateholders and shall report monthly to the Trustee as to the progress
being made in selling such REO Property.
If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a 1 mile radius of any site with material
environmental or hazardous waste risks known to the Servicer, the Servicer will
notify the Certificate Insurer and the Trustee prior to acquiring the Mortgaged
Property and shall not take any action without the prior written approval of the
Certificate Insurer and the Trustee.
Nothing in this Section shall affect the Servicer's right to deem certain
advances proposed to be made Nonrecoverable Advances. For the purpose of this
Section 5.10, actual knowledge of the Servicer means actual knowledge of a
Responsible Officer of the Servicer involved in the servicing of the relevant
Mortgage Loan. Actual knowledge of the Servicer does not include knowledge
imputable by virtue of the availability of or accessibility to information
relating to environmental or hazardous waste sites or the locations thereof.
<PAGE>
Section 5.11 Collection of Certain Mortgage Loan Payments.
The 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, comply with the
terms and provisions of any applicable hazard insurance policy. Consistent with
the foregoing, the Servicer may in its discretion waive or permit to be waived
any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as Servicing
Compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment,
provided that such extension may only be made once in any twelve month period
without the prior written consent of the Certificate Insurer, which consent
shall not be unreasonably withheld. In the event the Servicer shall consent to
the deferment of the Due Dates for payments due on a Mortgage Note, the Servicer
shall nonetheless remit any required Advance in accordance with Section 6.08
hereof with respect to the payments so extended to the same extent as if such
installment were due, owing and delinquent and had not been deferred.
Section 5.12 Access to Certain Documentation and Information Regarding the
Mortgage Loans.
The Servicer and the Depositors shall provide to the Trustee, the
Certificateholders, the Certificate Insurer, the Federal Reserve and to the
supervisory agents and examiners of each of the foregoing, access to the
documentation regarding the Mortgage Loans (such access in the case of the
supervisory agents and examiners shall be limited to that required by applicable
state and federal regulations), such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Servicer designated by it.
Section 5.13 Superior Liens.
The Servicer shall file (or cause to be filed) of record a request for
notice of any action by a superior lienholder under a First Lien for the
protection of the Depositor's and the Trustee's interest, where permitted by
local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceedings in order to
foreclose such junior lienholder's equity of redemption. The Servicer must also
notify any superior lienholder in writing of the existence of the Mortgage Loan
and request notification of any action (as described below) to be taken against
the Mortgagor or the Mortgaged Property by the superior lienholder.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by the First Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall advance the necessary
funds to cure the default or reinstate the superior lien, if such advance is in
the
<PAGE>
best interests of the Depositors, the Certificate Insurer and the
Certificateholders. The Servicer shall not make such an advance except to the
extent that it determines in its reasonable good faith judgment that the advance
would be recoverable from Liquidation Proceeds on the related Mortgage Loan. The
Servicer shall thereafter take such action as is necessary to recover the amount
so advanced.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Collection Accounts; Deposit in Accounts.
(a) No later than the Closing Date, the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, as their interests may appear,
will establish and maintain (i) the Lower-Tier Distribution Account in the name
of the Trustee, in trust for the benefit of Certificateholders and the Trustee
as the Holder of the Lower-Tier Regular Interests; (ii) the Middle-Tier
Distribution Account in the name of the Trustee, in trust for the benefit of
Certificateholders and the Trustee as the Holder of the Middle-Tier Regular
Interests; and (iii) the Upper-Tier Distribution Account in the name of the
Trustee, in trust for the benefit of Certificateholders. Notwithstanding the
foregoing, however, the Trustee may establish a single account (the "Collection
Account"), of which the Lower-Tier Distribution Account, Middle-Tier
Distribution Account and Upper-Tier Distribution Account will be deemed to be
subaccounts, provided that: (i) the Collection Account shall be established and
maintained in the name of the Trustee, in trust for the benefit of
Certificateholders, (ii) the Collection Account shall be established and
maintained as an Eligible Account and (iii) the Trustee shall for all other
purposes hereunder treat the Lower-Tier Distribution Account, Middle-Tier
Distribution Account and Upper-Tier Distribution Account as separate accounts,
and shall keep accurate records with respect thereto.
The Trustee shall, promptly upon receipt, deposit in the Lower-Tier
Distribution Account and retain therein:
(i) the amounts remitted by the Servicer pursuant to Section 5.04(i);
(ii) the Advances pursuant to Section 6.08 remitted to the Trustee by
the Servicer;
(iii) amounts transferred from the Spread Account pursuant to Section
6.09(b)(ii) and Insured Payments pursuant to Section 6.05(c); and
(iv) amounts required to be paid by the Servicer pursuant to Section
6.04(e) in connection with losses on investments of amounts in the
Collection Account.
<PAGE>
In making the deposits set forth in clauses (i) through (iv) (inclusive)
above, the Trustee shall note in its records (if applicable) the respective
amounts deposited with respect to the Fixed Rate Group and the Adjustable Rate
Group.
With respect to each Payment Date, on or before such date the Trustee shall
make the withdrawals from the Lower-Tier Distribution Account and Middle-Tier
Distribution Account, as set forth in Section 6.05 hereof, shall make the
deposits into the Middle-Tier Distribution Account and the Upper-Tier
Distribution Account, as set forth in Section 6.05 hereof, and shall cause the
amount of Available Funds and Insured Payments to be distributed in respect of
the Certificates pursuant to Section 6.05 hereof on such date.
Section 6.02 Permitted Withdrawals from Lower-Tier Distribution Account,
Middle-Tier Distribution Account and Upper-Tier Distribution Account.
The Trustee shall withdraw amounts on deposit in the Lower-Tier
Distribution Account, Middle-Tier Distribution Account and Upper-Tier
Distribution Account on each Payment Date (except as set forth in clause (iv)
below) in the following order of priority:
(i) to make deposits in the Insurance Account pursuant to Section
6.03(a) from amounts in the Lower-Tier Distribution Account (in accordance
with Section 6.05(d)(i);
(ii) to make deposits in the Spread Account from the Upper-Tier
Distribution Account pursuant to Section 6.09(a)(i) (in accordance with
Section 6.05(d)(ii) and Section 6.05(e)) (which for federal income tax
purposes will be treated in the manner described in Section 6.09);
(iii) to make the distributions pursuant to Section
6.05(d)(iii)-(viii) from the Accounts set forth in Section 6.05(d)(viii)
and 6.05(e); and
(iv) on any day during the related Accrual Period, and in no
particular order of priority:
(A) to invest amounts on deposit in the Lower-Tier Distribution
Account in Permitted Instruments or such other instruments as may be
approved in writing by the Certificate Insurer (with written notice to
Moody's) pursuant to Section 6.04;
(B) to pay to the Servicer interest paid and earnings realized on
Permitted Instruments with respect to funds in the Lower-Tier
Distribution Account;
(C) to withdraw any amount deposited in the Lower-Tier
Distribution Account, Middle-Tier Distribution Account or Upper-Tier
Distribution Account not required to be deposited therein or deposited
therein in error;
<PAGE>
(D) to withdraw any amount that constitutes an Advance by
Servicer of its own funds or a Mortgagor payment previously deposited
into the Lower-Tier Distribution Account, Middle-Tier Distribution
Account or Upper-Tier Distribution Account that is held to constitute
a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction; and
(E) to clear and terminate the Lower-Tier Distribution Account,
the Middle-Tier Distribution Account and the Upper-Tier Distribution
Account upon the termination of this Agreement and allocate amounts
therein pursuant to Section 6.05(d).
In making the withdrawals set forth in clauses (i) through (iv) (inclusive)
above, the Trustee shall note in its records (if applicable) the respective
amounts withdrawn with respect to the Fixed Rate Group and the Adjustable Rate
Group. In addition, the Trustee shall keep and maintain a separate accounting
for withdrawals from each of the Lower-Tier Distribution Account, Middle-Tier
Distribution Account and Upper-Tier Distribution Account pursuant to each
subclause listed above.
Section 6.03 Establishment of Insurance Account: Deposits in Insurance
Account: Permitted Withdrawals from Insurance Account.
(a) No later than the Closing Date, the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, will establish and maintain one
or more Eligible Accounts as trust accounts with itself which shall not be
interest-bearing, titled "EQCC Home Equity Loan Trust 1998-1 Insurance Account".
The Insurance Account shall bear an additional designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders and the Certificate Insurer. On each Payment Date, the
Trustee, upon receipt (and to the extent received), promptly shall deposit into
the Insurance Account in accordance with Section 6.02: an amount equal to the
aggregate Monthly Premium with respect to the Fixed Rate Certificates and
Adjustable Rate Certificates (in each case based on the respective principal
balances of the related Certificates) due on such Payment Date in accordance
with Section 6.05(d); and
If at any time the amount then on deposit in the Insurance Account shall be
insufficient to pay in full the fees and expenses of the Certificate Insurer
then due, the Trustee shall withdraw such amount from the Spread Account.
(b) The Trustee may make withdrawals from the Insurance Account for
applications in the following order:
(i) pay the Certificate Insurer the aggregate Monthly Premium on each
Payment Date;
<PAGE>
(ii) withdraw amounts not required to be deposited in the Insurance
Account or deposited therein in error; and
(iii) reimburse the Spread Account for any amounts withdrawn from it
pursuant to the last paragraph of subclause (a) above on any previous
Payment Dates.
Section 6.04 Investment of Accounts.
(a) So long as no Servicer Default shall have occurred and be continuing,
all or a portion of any Account (other than the Middle-Tier Distribution Account
and the Upper-Tier Distribution Account) held by the Trustee shall be invested
and reinvested by the Trustee (or remain uninvested), as directed in writing by
the Servicer on its own behalf, in one or more Permitted Instruments (or, in the
case of the Lower-Tier Account, in such other instruments approved in writing by
the Certificate Insurer (with written notice to Moody's)) bearing interest or
sold at a discount. If a Servicer Default shall have occurred and be continuing,
the Trustee shall invest all Accounts in Permitted Instruments described in
paragraph (iv) of the definition of Permitted Instruments. At no time shall any
such investment in any Account mature later than the Business Day immediately
preceding the date on which such amounts are required by the terms hereof to be
withdrawn from such Account, which (i) in the case of the Lower-Tier
Distribution Account, shall be the next Payment Date, (ii) in the case of the
Principal and Interest Account, shall be the third business day preceding the
next Payment date and (iii) in all other cases, until the day actually withdrawn
pursuant to the terms hereof.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 6.04 is the cause
of such loss or charge.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Instrument (or other
instrument permitted by Section 6.04(a)) included herein (except to the extent
that the Trustee is the obligor and has defaulted thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by it,
to the fullest extent practicable, in such manner as the Servicer shall from
time to time direct as set forth in Section 6.04(a), but only in one or more
Permitted Instruments (or other instrument permitted by Section 6.04(a)).
(e) All income or other gain from investments in any Account held by the
Trustee, or from amounts on deposit in such Account and invested in Permitted
Instruments, shall be deposited in such Account, as the case may be, immediately
on receipt, and the Trustee shall notify the Servicer of any loss resulting from
such investments. Upon receipt of
<PAGE>
such notification, the Servicer shall promptly remit the amount of any such loss
from its own funds, without reimbursement therefor, to the Trustee for deposit
in the Account from which the related funds were withdrawn for investment.
(f) Any investment earnings on funds held in the Principal and Interest
Account may be reinvested by the Servicer and the proceeds of such reinvestment
are for the account of the Servicer.
(g) Notwithstanding any of the foregoing provisions of this Section 6.04,
at the option of (a) the Class X Certificateholders, exercised by written
direction to the Trustee (such written direction, the "Holder Discretion
Notice"), all or specified percentages (in the case of a Holder Discretion
Notice delivered by a Holder of a Class X Certificates, such specified
percentage not to exceed the Percentage Interest of the Class X Certificates of
such Holder) of the funds on deposit in the Spread Account shall be segregated
into separate sub-accounts (each, a "Holder Discretion Account") in a manner
designated by such Class X Certificateholder which does not impair the Class A
Certificateholders' or the Certificate Insurer's interest in distributions from
the Spread Account or in any such separate sub-accounts. Amounts in any Holder
Discretion Account shall be invested in Permitted Instruments at the direction
of the Class X Certificateholder designated in the Holder Discretion Notice (the
percentage of such funds to be invested at the direction of any one Class X
Certificateholder not to exceed the Percentage Interest of the Class X
Certificates of such Class X Certificateholder). The Trustee shall separately
report investment income on such amounts so invested to such Class X
Certificateholder. The Class X Certificateholder directing the investments in
any Holder Discretion Account shall deposit in such Holder Discretion Account,
from its own funds, the amount of any losses incurred in respect of any such
investments no later than the close of business on the Business Day immediately
preceding the Payment Date immediately following such loss. The Trustee shall
have no liability or responsibility with respect to any Holder Discretion
Account and the provisions of Sections 6.04(a), (b), (d) and (e) shall no longer
apply thereto.
Section 6.05 Priority and Subordination of Distributions.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. The rights of the Class X Certificateholders to receive distributions
in respect of the Class X Certificates shall be subject and subordinate to the
preferential rights of the Class A Certificateholders to receive distributions
in respect of the Class A Certificates, to the extent set forth herein, and
distributions on the Class X Certificates are subject and subordinate to the
maintenance of the Specified Spread Account Requirement as specified herein. In
accordance with the foregoing, the interests of the Class X Certificateholders
in amounts deposited in the Spread Account from time to time shall not vest
unless and until such amounts are distributed in respect of the Class X
Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, no Certificateholder shall
be required to refund any amount properly distributed to it pursuant to Section
6.02, 6.05, 6.09(b) or 6.09(d).
<PAGE>
(b) [Reserved];
(c) As soon as possible, and in no event later than 10:00 a.m. New York
time on the Business Day immediately preceding each Payment Date, the Trustee
shall furnish the Certificate Insurer and the Servicer with a completed notice
in the form set forth as Exhibit Q hereto (the "Notice") in the event that an
Event of Nonpayment will occur, pursuant to the definition thereof, with respect
to such Payment Date. The Notice shall specify the amount of Insured Payment and
shall constitute a claim for an Insured Payment pursuant to the Certificate
Insurance Policy. Upon receipt of Insured Payments for the benefit of the Class
A Certificateholders under the Certificate Insurance Policy, the Trustee shall
deposit such Insured Payments in the Collection Account.
The Trustee shall receive, as attorney-in-fact of each Holder of a Class A
Certificate, any Insured Payment from the Certificate Insurer and disburse the
same to each Holder of a Class A Certificate, respectively, in accordance with
the provisions of this Section 6.05. Insured Payments disbursed by the Trustee
from proceeds of the Certificate Insurance Policy shall not be considered
payment by the Trust Fund nor shall such payment discharge the obligation of the
Trust Fund with respect to such Class A Certificates, and the Certificate
Insurer shall become the owner of such unpaid amounts due from the Trust Fund in
respect of Class A Certificates. The Trustee hereby agrees on behalf of each
Holder of a Class A Certificate for the benefit of the Certificate Insurer that
it recognizes that to the extent the Certificate Insurer makes Insured Payments,
either directly or indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be subrogated to the rights of
the Class A Certificateholders, as applicable, with respect to such Insured
Payment and shall be deemed to the extent of the payments so made to be a
registered Class A Certificateholder and shall receive all future Class A
Remittance Amounts, as the case may be, until all such Insured Payments by the
Certificate Insurer have been fully reimbursed together with interest thereon at
the applicable Pass-Through Rate, subject to the following paragraph. To
evidence such subrogation, the Trustee shall note the Certificate Insurer's
rights as subrogee on the registration books maintained by the Trustee upon
receipt from the Certificate Insurer of proof of payment of any Insured Payment.
Except as otherwise described herein, the Certificate Insurer shall not acquire
any voting rights hereunder as a result of such subrogation.
It is understood and agreed that the intention of the parties is that the
Certificate Insurer shall not be entitled to reimbursement on any Payment Date
for amounts previously paid by it unless on such Payment Date the Class A
Certificateholders shall also have received the full amount of the Class A
Remittance Amount for such Payment Date. For purposes of implementing the
Certificate Insurer's rights as subrogee, distributions shall be made to the
Certificate Insurer under priority fourth of subsection (d) of this Section 6.05
after all distributions are made to the Class A Certificateholders on the
applicable Payment Date as aforesaid.
(d) Not later than 12:00 p.m. New York time on each Payment Date, with
respect to the Fixed Rate Certificates and the Adjustable Rate Certificates, the
Trustee shall
<PAGE>
withdraw from the Accounts described in Section 6.05(e) and clause (viii) of
this Section 6.05(d) from the amounts available therein as set forth in this
Article VI, if any, and shall, to the extent available, distribute (without
duplication) such amount in the priority indicated:
(i) first, sequentially, (a) for deposit into the Insurance Account
for the benefit of the Certificate Insurer, the Monthly Premium with
respect to such Certificates payable to the Certificate Insurer and (b) for
remittance of the Initial Premium Fee Recovery Amount to the
Representative;
(ii) second, for deposit into the Spread Account, the Excess Spread
with respect to the related Mortgage Loan Group (which for federal income
tax purposes will be treated in the manner described in Section 6.09);
(iii) third, from amounts attributable to the related Mortgage Loan
Group, (A) to each of the Fixed Rate Certificateholders, the Fixed Rate
Interest Remittance Amount; and (B) to the Adjustable Rate
Certificateholders, the Adjustable Rate Interest Remittance Amount;
(iv) fourth, to the Fixed Rate Certificates and to the Adjustable Rate
Certificates, the Fixed Rate Principal Remittance Amount and the Adjustable
Rate Principal Remittance Amount, respectively, as follows:
(1) to the Class A-6F Certificates and then to the Class A-7F
Certificates, in that order, until the Principal Balance of each such
Class has been reduced to zero, the Lockout Remittance Amount; and
then, to the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class
A-5F and then, to the Class A-6F and Class A-7F Certificates (in each
case, without regard to the Lockout Remittance Amount), in that order,
in each case until the Principal Balance of each such Class has been
reduced to zero, the Fixed Rate Principal Remittance Amount; and
(2) concurrently, to the Class A-1A Certificates, until the
Principal Balance of such Class has been reduced to zero, the
Adjustable Rate Principal Remittance Amount;
(v) fifth, to the Trustee, any amounts then due and owing representing
fees of the Trustee (without regard to amounts attributable to either
Mortgage Loan Group); provided, that the Trustee certifies in writing that
such amount is due and owing and has not been paid by the Servicer within
30 days after written demand therefor;
(vi) sixth, to the Servicer and/or the Representative, as applicable,
any Reimbursable Amount (without regard to amounts attributable to either
Mortgage Loan Group);
<PAGE>
(vii) seventh, to the Servicer an amount equal to Nonrecoverable
Advances previously made by the Servicer and not previously reimbursed
(without regard to amounts attributable to either Mortgage Loan Group); and
(viii) eighth, to the Class R, Class MR and Class LR
Certificateholders, the balance if any of amounts remaining in the
Upper-Tier Distribution Account, the Middle-Tier Distribution Account and
the Lower-Tier Distribution Account, respectively.
(e) All distributions made pursuant to (d) (ii), (iii) and (iv) above shall
be treated as having been distributed in respect of the Lower-Tier Regular
Interests and deposited in the Middle-Tier Distribution Account, then as having
been distributed in respect of the Middle-Tier Regular Interests and deposited
in the Upper-Tier Distribution Account, then as having been distributed to
Certificateholders from the Upper-Tier Distribution Account. Interest shall be
treated as having been distributed in respect of each Lower-Tier Regular
Interest and Middle-Tier Regular Interest at the rate set forth in the
applicable definition thereof. Principal shall be treated as having been
distributed in respect of each Lower-Tier Regular Interest and Middle-Tier
Regular Interest at the times and in the amounts principal is distributed to the
Class of Certificates referenced in the applicable definition thereof. The
amounts described pursuant to (d) (i), (v), (vi) and (vii) above shall be
treated as having been distributed to the respective recipients from the
Lower-Tier Distribution Account. All distributions made to the Class A
Certificateholders or the Class X, Class R, Class MR, Class LR
Certificateholders as a Class on each Payment Date will be made on a pro rata
basis among the Certificateholders of the respective Class of record on the next
preceding Record Date based on the Percentage Interest represented by their
respective Certificates, and shall be made by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
own of record Class A Certificates which have denominations aggregating at least
$1,000,000 appearing in the Certificate Register, and in all cases with respect
to the Class X, Class R, Class MR and Class LR Certificates, and shall have
provided complete wiring instructions at least five Business Days prior to the
Record Date, and otherwise by check mailed to the address of such
Certificateholder appearing in the Certificate Register.
Section 6.06 Certificate Insurer Default.
If, as of any Payment Date, the Certificate Insurer fails to make an
Insured Payment, the amount available for distribution to Fixed Rate
Certificateholders and Adjustable Rate Certificateholders pursuant to Section
6.05(d) shall be distributed among holders of each Class of Class A
Certificateholders in the priority set forth in Section 6.05(d) in proportion to
the percentage interests set forth on each such Certificate; provided that, if
as of such Payment Date there are no amounts on deposit in the Spread Account,
the amount available for distribution to the Class A Certificateholders pursuant
to Section 6.05(d) shall be distributed among the holders of the Class A
Certificates on a pro rata basis, based on the respective Principal Balances for
each such Class of Class A Certificates.
<PAGE>
Section 6.07 Statements.
Not later than 12:00 noon Chicago, Illinois time on the Business Day
preceding each Determination Date, the Servicer shall deliver to the Trustee and
the Certificate Insurer a computer tape or written report containing the
information set forth on Exhibit R as to each Mortgage Loan with respect to the
related Due Period and such other information with respect to the Mortgage Loans
in the aggregate as the Trustee shall reasonably require. Not later than 12:00
noon Chicago, Illinois time two Business Days preceding each Payment Date, the
Trustee shall deliver to the Depositors, any Paying Agent, the Servicer, the
Certificate Insurer, Moody's and S&P by telecopy, by request, a statement (the
"Remittance Report") containing the information set forth below with respect to
the succeeding Payment Date, with a hard copy thereof to be delivered on the
immediately succeeding Business Day:
(i) the Available Payment Amount attributable to each Mortgage Loan
Group and any portion of the Available Payment Amount that has been
deposited in the Collection Account but may not be withdrawn therefrom
pursuant to an order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the United States
Bankruptcy Code;
(ii) the Class A-1F Principal Balance, the Class A-2F Principal
Balance, the Class A-3F Principal Balance, the Class A-4F Principal
Balance, the Class A-5F Principal Balance, the Class A-6F Principal
Balance, the Class A-7F Principal Balance, the Class A-IO Notional Amount
and the Class A-1A Principal Balance and the Pool Principal Balance with
respect to each Mortgage Loan Group, as reported in the Remittance Report
provided pursuant to subclause (xiii) below for the immediately preceding
Payment Date, or, in the case of the first Determination Date, the Original
Class A-1F Principal Balance, the Original Class A-2F Principal Balance,
the Original Class A-3F Principal Balance, the Original Class A-4F
Principal Balance, the Original Class A-5F Principal Balance, the Original
Class A-6F Principal Balance, the Original Class A-7F Principal Balance,
the Original Class A-IO Notional Amount, the Original Class A-1A Principal
Balance and the Original Pool Principal Balance with respect to each
Mortgage Loan Group;
(iii) with respect to the Mortgage Pool and each Mortgage Loan Group,
the number and Principal Balances of all Mortgage Loans which were the
subject of Principal Prepayments during the related Due Period;
(iv) with respect to the Mortgage Pool and each Mortgage Loan Group,
the amount of all Curtailments which were received during the related Due
Period;
(v) with respect to the Mortgage Pool and each Mortgage Loan Group,
the aggregate amount of principal portion of all Monthly Payments received
during the related Due Period;
<PAGE>
(vi) with respect to the Mortgage Pool and each Mortgage Loan Group,
the amount of interest received on the Mortgage Loans during the related
Due Period;
(vii) with respect to the Mortgage Pool and each Mortgage Loan Group,
the aggregate amount of the Advances made and recovered with respect to
such Payment Date;
(viii) with respect to the Mortgage Pool and each Mortgage Loan Group,
the delinquency and foreclosure information set forth in the form attached
hereto as Exhibit H and the amount of Mortgage Loan Losses during the
related Due Period;
(ix) the Class A-1F Principal Balance, the Class A-2F Principal
Balance, the Class A-3F Principal Balance, the Class A-4F Principal
Balance, the Class A-5F Principal Balance, the Class A-6F Principal
Balance, the Class A-7F Principal Balance, the Class A-IO Notional Amount
and the Class A-1A Principal Balance after giving effect to the
distribution to be made on such Payment Date;
(x) with respect to the Mortgage Pool and each Mortgage Loan Group,
the weighted average maturity and the weighted average Mortgage Interest
Rate of the Mortgage Loans in each Mortgage Loan Group as of the last day
of the related Due Period;
(xi) the Servicing Fees paid and Servicing Fees accrued during the
related Due Period;
(xii) the amount of all payments or reimbursements to the Servicer
pursuant to Section 5.04 (ii), (iv), (v), (vi) and (vii) paid or to be paid
since the prior Payment Date (or in the case of the first Payment Date,
since the Closing Date);
(xiii) the Pool Principal Balance and aggregate Principal Balance for
each Mortgage Loan Group as of the last day of the related Due Period;
(xiv) such other information as the Certificate Insurer, each Account
Party and the Certificateholders may reasonably require;
(xv) the amounts which are reimbursable to the Servicer, the
Representative or the Depositors, as appropriate, pursuant to Section 6.05;
(xvi) with respect to the Mortgage Pool and each Mortgage Loan Group,
the number of Mortgage Loans outstanding at the beginning and at the end of
the related Due Period;
<PAGE>
(xvii) the aggregate interest accrued on the Mortgage Loans at their
respective Mortgage Interest Rates for the related Due Period;
(xviii) the Subordinated Amount, the amount on deposit in the Spread
Account, the Cumulative Excess Spread Receipts, in each case after giving
effect to any payments or withdrawals on such Payment Date, and with
respect to the Mortgage Pool and each Mortgage Loan Group, the Excess
Spread with respect to such Payment Date;
(xix) the aggregate Mortgage Loan Losses since the Cut-off Date as of
the end of the related Due Period; and
(xx) the LIBOR Interest Carryover with respect to such Payment Date
and, any such unpaid LIBOR Interest Carryover from prior payment date(s),
including interest accrued thereon.
The Trustee shall forward such report to the Certificateholders on the
Payment Date, by telecopy, with a hard copy to follow (in the case of the
Depository) or by first class mail. The Depositors and the Trustee may fully
rely upon and shall have no liability with respect to information provided by
the Servicer.
To the extent that there are inconsistencies between the telecopy of the
Remittance Report and the hard copy thereof, the Servicer and the Trustee may
rely upon the telecopy.
In the case of information furnished pursuant to subclauses (ii) and (ix)
above, the amounts shall be expressed in a separate section of the report as a
dollar amount for each of the Class A Certificates for each $1,000 original
principal amount (or in the case of the Class A-IO Certificates, original
notional amount) as of the Cut-off Date.
(a) Upon reasonable advance notice in writing, the Servicer will provide to
the Trustee access to information and documentation regarding the Mortgage Loans
sufficient to permit any Holder which is a savings and loan association, bank or
insurance company to comply with applicable regulations of the FDIC or other
regulatory authorities with respect to investment in the Certificates, as
applicable.
(b) Not later than 10 days after each Payment Date, the Servicer shall
provide the Loss Coverage Ratio to the Trustee and the Certificate Insurer as of
the most recent Payment Date. In addition, the Servicer shall furnish to the
Trustee and to the Certificate Insurer, during the term of this Agreement, such
periodic, special, or other reports or information not specifically provided for
herein, as may be necessary, reasonable, or appropriate with respect to the
Trustee or the Certificate Insurer, as the case may be, or otherwise with
respect to the purposes of this Agreement, all such reports or information to be
provided by and in accordance with such applicable instructions and directions
as the Trustee or the Certificate Insurer may reasonably require; provided, that
the Servicer shall be entitled to be reimbursed by the requesting party, for the
fees and actual expenses associated with
<PAGE>
providing such reports, if such reports are not generally produced in the
ordinary course of its business.
(c) Reports and computer tapes furnished by the Servicer pursuant to this
Agreement shall be deemed confidential and of proprietary nature, and shall not
be copied or distributed except in connection with the purposes and requirements
of this Agreement; provided that the Certificate Insurer may copy or distribute
such information (A) pursuant to a subpoena or order issued by a court of
competent jurisdiction or by a judicial or administrative or legislative body or
committee, (B) as may be required in any report, statement or testimony
submitted to any Federal, state, municipal or other regulatory body having
jurisdiction over the Certificate Insurer, (C) in order to comply with any law,
ruling, order or regulation applicable to the Certificate Insurer, or (D) as may
be required by any rating agency or reinsurer. No Person entitled to receive
copies of such reports or tapes shall use the information therein for the
purpose of soliciting the customers of the Originators or for any other purpose
except as set forth in this Agreement.
(d) The Trustee shall promptly send to the Certificate Insurer and, upon
request, to each Certificateholder in writing:
(i) notice of any reduction in the Specified Spread Account
Requirement;
(ii) notice of any reduction of the percentages set forth in the
definition of "Monthly Excess Spread Amount";
(iii) notice of the appointment of any Subservicer;
(iv) notice of any transfer of any Account to a different depository
institution;
(v) a copy of each Officer's Certificate delivered pursuant to Section
7.04 and any notice received from the Servicer of a change in the fiscal
year of the Servicer;
(vi) a copy of each letter delivered pursuant to Section 7.05; and
(vii) notice of the receipt by the Trustee of any information
regarding the Servicer's servicing activities pursuant to the last
paragraph of Section 10.01(c);
provided, that in each case the Trustee shall only be required to send such
notices and other items to such Persons to the extent that the Trustee has
itself received the related information.
The Depositors, the Servicer and the Trustee on behalf of
Certificateholders (the "Trust Parties") hereby authorize the Certificate
Insurer to include the information contained in reports provided to the
Certificate Insurer hereunder (the "Information") on The
<PAGE>
Bloomberg, an on-line computer based information network maintained by Bloomberg
L.P. ("Bloomberg"), or in other electronic or print information services. The
Trust Parties agree not to commence any actions or proceedings, or otherwise
assert any claims, against the Certificate Insurer or its affiliates or any of
the Certificate Insurer's or its affiliates' respective agents, representatives,
directors, officers or employees (collectively, the "Certificate Insurer
Parties"), arising out of, or related to or in connection with the dissemination
and/or use of any Information by the Certificate Insurer, including, but not
limited to, claims based on allegations of inaccurate, incomplete or erroneous
transfer of information by the Certificate Insurer to Bloomberg or otherwise
(other than in connection with the Certificate Insurer's negligence or willful
misconduct). The Trust Parties waive their rights to assert any such claims
against the Certificate Insurer Parties and fully and finally release the
Certificate Insurer Parties from any and all such claims, demands, obligations,
actions and liabilities (other than in connection with the Certificate Insurer's
negligence or willful misconduct). The Certificate Insurer makes no
representations or warranties, expressed or implied, of any kind whatsoever with
respect to the accuracy, adequacy, timeliness, completeness, merchantability or
fitness for any particular purpose of any Information in any form or manner. The
Certificate Insurer reserves the right at any time to withdraw or suspend the
dissemination of the Information by the Certificate Insurer. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
Section 6.08 Advances by the Servicer.
Not later than the close of business on the third Business Day preceding
each Payment Date, the Servicer shall remit to the Trustee (but solely from and
to the extent of amounts on deposit in the Principal and Interest Account as of
the related Determination Date, after giving effect to withdrawals from the
Principal and Interest Account as of the Determination Date for such Payment
Date pursuant to Section 5.04(i)), an amount (the "Advance") equal to the sum of
(a) the interest accrued in the related Due Period on the Mortgage Loans but
uncollected as of the close of business on the last day of such Due Period (net
of the Servicing Fee) and (b) with respect to each REO Property which was
acquired during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount equal to the
excess, if any, of interest on the Principal Balance of such REO Property
computed at the related Mortgage Interest Rate (net of the Servicing Fee
(computed in the manner described in paragraph (i) or (ii), as applicable, of
the definition thereof)) for the most recently ended Due Period over the net
income from the REO Property deposited in the Principal and Interest Account
during such Due Period pursuant to Section 5.10.
Notwithstanding the provisions in the foregoing paragraph of this Section
6.08, with respect to the Payment Dates occurring on or before July 15, 1998 if
the amounts on deposit in the Principal and Interest Account are insufficient to
make the full Advance (as defined herein), and as a result thereof an Event of
Nonpayment would occur, the Servicer shall make an Advance from its own funds
equal to such insufficiency to the extent of
<PAGE>
delinquent payments of interest and may reimburse itself for such Advances from
collections on the related Mortgage Loans pursuant to Section 5.04(ii).
Section 6.09 Establishment of Spread Account; Deposits in Spread Account;
Permitted Withdrawals from Spread Account.
(a) No later than the Closing Date, the Trustee will establish and maintain
in a non-interest bearing trust account with itself, a Spread Account which
shall be an Eligible Account, titled "EQCC Home Equity Loan Trust 1998-1 Spread
Account". At the time of the issuance of the Certificates, there shall be
deposited in the Spread Account from the proceeds of the sale of Class A
Certificates an amount equal to $0.00. The Spread Account shall be an asset of
the Trust Fund, in the control of the Trustee. No holder of any Certificate
shall have any rights with respect to the assets contained in the Spread Account
other than as specifically set forth in this Agreement, and the assets contained
therein shall not be "property of the estate" of any Certificateholder" pursuant
to 11 U.S.C. Section 541, shall not be available to satisfy any obligations of
any Certificateholder, and shall not be available to the creditors of any
Certificateholder. The Spread Account shall be an "outside reserve fund" within
the meaning of Treasury Regulation 1.860G-2(h) and shall not be an asset of any
Trust REMIC. Solely for federal income tax purposes, the Trustee and the Holders
of the Class X Certificates shall treat amounts distributed by the Upper-Tier
REMIC to the Spread Account as having been distributed in respect of the Class X
Interest and held in the Spread Account. Distributions on the Class X
Certificates out of the Spread Account shall not be considered to be
distributions from any Trust REMIC. The parties hereto intend and agree, as a
condition to ownership of the Class X Certificates, and the Trustee agrees to
take no action inconsistent therewith, to treat the Spread Account as an
arrangement described in Treasury Regulations Section 1.61-13(b); provided, that
if the Internal Revenue Service does not permit such treatment, the parties
hereto intend and agree, as a condition of ownership of the Class X
Certificates, and the Trustee agrees to take no action inconsistent therewith,
that solely for federal and, to the extent applicable, state and local tax
purposes, (i) if the Class X Certificates are held by a single Holder, that the
assets and liabilities of the Spread Account be treated solely for federal
income tax purposes as assets and liabilities of the Class X Certificateholder
pursuant to Treasury Regulations Section 301.7701-3(b)(ii), and (ii) if the
Class X Certificates are held by more than one Holder, the Spread Account be
treated solely for federal income tax purposes as a partnership pursuant to
Treasury Regulations Section 301.7701-3(b)(ii), in which event each Class X
Certificateholder, including all successors to the original Class X
Certificateholder, irrevocably elects under Section 761 of the Code to exclude
the Spread Account from the application of Subchapter K of the Code. The Trustee
shall separately report to any Class X Certificateholders amounts deposited
into, paid to Class X Certificateholders from, and released from the Spread
Account, together with reinvestment income thereon. The Trustee shall treat the
portion of the Trust Fund holding (i) the regular interests in the Upper-Tier
REMIC represented by the Class X Interest and (ii) the right of the Class A-1A
Certificates to receive payments from the Spread Account in respect of LIBOR
Interest Carryovers, as a grantor trust under Subpart E of Part 1 of Subchapter
J of Chapter 1 of Subtitle A of the Code, which grantor trust interests are
beneficially owned solely for federal, state and local income tax purposes by
the Class X Certificates and the Class A-1A
<PAGE>
Certificates, respectively. The Trustee shall separately report all amounts
received by Class A-1A Certificateholders from the Spread Account in respect of
LIBOR Interest Carryovers. Notwithstanding the foregoing, the rights of the
Class X Certificateholders are subject to and subordinate to the Class A
Certificateholders and the Spread Account Requirement as described in Section
6.05(a) and 6.09(b)(iii).
After the time of the issuance of the Certificates, the Trustee shall,
promptly upon receipt, deposit into the Spread Account as distributions in
respect of the Class X Interest and retain therein:
(i) on each Payment Date, the Excess Spread remitted by the Trustee
pursuant to Section 6.05(d)(ii) for the related Payment Date;
(ii) upon receipt, amounts required to be withdrawn from the Insurance
Account for deposit in the Spread Account pursuant to Section 6.03(b)(iii);
and
(iii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.04(e) or a Class X Certificateholder pursuant to
Section 6.04(g);
provided, however, that the Trustee shall not accept funds for deposit into
the Spread Account from any Person, other than funds constituting Excess Spread,
without the consent of the Certificate Insurer.
(b) From amounts on deposit in the Spread Account (after giving effect to
the deposits therein pursuant to Section 6.09(a)) the Trustee shall make
withdrawals on each Payment Date in the following order of priority:
(i) to deposit in the Insurance Account the amount of any
insufficiency in such Account which the Servicer failed to advance pursuant
to Section 6.03(a);
(ii) to deposit in the Collection Account, an amount (the "Spread
Account Amount") equal to the excess of (x) the sum of (A) the Fixed Rate
Remittance Amount and (B) the Adjustable Rate Remittance Amount over (y)
the Available Payment Amount with respect to both Mortgage Loan Groups,
less the amounts withdrawn from the Collection Account with respect to both
Mortgage Loan Groups, pursuant to Section 6.02(i). Amounts on deposit in
the Spread Account shall be available to all Class A Certificateholders
pursuant to this clause (ii) without regard to whether such Certificates
are Fixed Rate Certificates or Adjustable Rate Certificates;
(iii) (1) to pay to the Servicer from the Remainder Excess Spread
Amount (net of any such amounts paid pursuant to clauses (b)(i) and (b)(ii)
above) with respect to any Payment Date for any Reimbursable Amounts and
<PAGE>
(2) the remainder of such Remainder Excess Spread Amount to the Class X
Certificateholders;
(iv) to the extent that the remaining amount then on deposit in the
Spread Account then exceeds the Specified Spread Account Requirement as of
such Payment Date (such excess, a "Spread Account Excess"), an amount equal
to such Spread Account Excess shall be distributed to the Servicer and/or
the Representative to the extent of any Reimbursable Amounts; then to the
Holders of the Adjustable Rate Certificateholders in payment of any LIBOR
Interest Carryover to the extent attributable to the Mortgage Loans in the
Adjustable Rate Group; and last, to the Holders of the Class X
Certificates.
and also, in no particular order of priority:
(v) to invest amounts on deposit in the Spread Account in Permitted
Instruments pursuant to Section 6.04;
(vi) to withdraw any amount not required to be deposited in the Spread
Account or deposited therein in error; and
(vii) to clear and terminate the Spread Account upon the termination
of this Agreement.
(c) Any amounts which are required to be withdrawn from the Spread Account
pursuant to paragraph (b) above shall be withdrawn from the Spread Account in
the following order of priority: (i) first, from any uninvested funds therein
and (ii) second, from the proceeds of the liquidation of any investments therein
pursuant to Section 6.04(b).
(d) Upon the earlier to occur of the Cross-Over Date or the Payment Date on
which all amounts due have been paid to the Class A Certificateholders,
including the Certificate Insurer as subrogee of the Class A Certificateholders,
the Trustee shall:
(A) clear and terminate the Spread Account, liquidate any
investments therein and distribute any uninvested funds therein or the
proceeds of such liquidation to the Servicer and/or the Representative
to the extent of any Reimbursable Amounts and the remainder to the
Class X Certificateholders;
(B) distribute future receipts of the Excess Spread to the
Servicer and/or the Representative to the extent of any Reimbursable
Amounts and the remainder to the Class X Certificateholders.
<PAGE>
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law. In such event, the
Servicer shall enter into an assumption agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage Documents, the Mortgagor remains liable thereon. The Servicer is
also authorized with the prior approval of the Certificate Insurer to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Depositors, the Trustee and the Certificate Insurer that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee (or to the Custodian on behalf of the Trustee) the original of such
substitution or assumption agreement and a duplicate thereof to the Depositors
and the Certificate Insurer, which original shall be added by the Trustee (or by
the Custodian on behalf of the Trustee) 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. In
connection with any assumption or substitution agreement entered into pursuant
to this Section 7.01, the Servicer shall not change the Mortgage Interest Rate
or the Monthly Payment, defer or forgive the payment of principal or interest,
reduce the outstanding principal amount or extend the final maturity date on
such Mortgage Loan. Any fee collected by the Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional Servicing Compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
With respect to any mortgage loan secured by an interest in an Illinois
Land Trust, if the Servicer receives notice of the sale of the beneficial
interest in a Illinois Land Trust or the related Mortgaged Property by the
holder of a First Lien secured thereby to a Person other than the Servicer, the
Depositors or the Trustee, then, prior to distribution of any proceeds of such
sale, the Servicer shall demand in writing that such holder of a First Lien pay
the amount necessary to satisfy all indebtedness under the Mortgage Loan from
the proceeds of
<PAGE>
such sale. If such holder of a First Lien so requests, the Servicer shall
furnish reasonable proof of the Depositor's and Trustee's interest with respect
to such proceeds. Unless and until the Servicer has received instruction
otherwise from the Majority in Aggregate Voting Interest (with the consent of
the Certificate Insurer) or from the Certificate Insurer, the Servicer shall,
with respect to any such First Lien and the related Mortgage Loan, follow
servicing standards consistent with those of prudent lending institutions in the
geographic area where the Mortgaged Property is located, including the making of
any appropriate Servicing Advances with respect thereto. In any event, the
Servicer shall follow any instructions from the Majority in Aggregate Voting
Interest with the consent of the Certificate Insurer or from the Certificate
Insurer as soon as practicable following receipt thereof.
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders or the
Certificate Insurer may have under the mortgage instruments subject to Section
5.01 hereof. The Servicer shall maintain the Fidelity Bond as provided for in
Section 5.09 insuring the Servicer against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee or
the Custodian on behalf of the Trustee by an Officers' Certificate in the form
of Exhibit B attached to the Custodial Agreement (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Principal
and Interest Account pursuant to Section 5.03 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 or the Custodian on
behalf of the Trustee shall promptly release the related Mortgage File to the
Servicer. Expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be payable by the Servicer and shall not be
reimbursed from the Principal and Interest Account or the Collection Account.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee or the Custodian on behalf of
the Trustee shall, upon request of the Servicer and delivery to the Trustee or
the Custodian on behalf of the Trustee of a certification in the form of Exhibit
B attached to the Custodial Agreement signed, by a Servicing Officer, promptly
release the related Mortgage File to the Servicer, and the Trustee shall execute
such documents as shall be necessary to the prosecution of any such proceedings.
Such servicing receipt shall obligate the Servicer to return the Mortgage File
or any document released therefrom to the Trustee or the Custodian on behalf of
the Trustee when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan has been liquidated and the Net Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Principal and Interest Account and
remitted to the Trustee for deposit in the Collection
<PAGE>
Account or the Mortgage File has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released promptly by the Trustee to
the Servicer.
The Trustee shall promptly execute and deliver to the Servicer any legal
notices, court pleadings, requests for trustee's sale in respect of a Mortgaged
Property or any legal action brought to obtain judgment against any Mortgagor on
the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to enforce
any other remedies or rights provided by the Mortgage Note or Mortgage or
otherwise available at law or in equity. Together with such documents or
pleadings, the Servicer shall deliver to the Trustee a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
Trustee and certifying as to the reason such documents or pleadings are required
and that the execution and delivery thereof by the Trustee will not invalidate
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. The Trustee shall,
upon receipt of a written request from a Servicing Officer, execute any document
provided to the Trustee by the Servicer or take any other action requested in
such request that is, in the opinion of the Servicer as evidenced by such
request, required by any state or other jurisdiction to discharge the lien of a
Mortgage upon the satisfaction thereof and the Trustee will promptly sign and
deliver, but will not guarantee receipt of, any such documents to the Servicer,
or such other party as the Servicer may direct, within five Business Days, or
more promptly if needed, of the Trustee's receipt of such certificate or
documents. Such certificate or documents shall establish to the Trustee's
satisfaction that the related Mortgage Loan has been paid in full by or on
behalf of the Mortgagor and that such payment has been deposited in the
Principal and Interest Account.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be entitled
to withdraw from the Principal and Interest Account or to retain from interest
payments on the Mortgage Loans, the Servicer's Servicing Fee. Additional
servicing compensation in the form of assumption and other administrative fees
(including bad check charges, late payment fees and similar fees), interest paid
on funds on deposit in the Principal and Interest Account, amounts remitted
pursuant to Section 6.03(b)(iv) and Excess Proceeds shall be retained by or
remitted to the Servicer, to the extent not otherwise required to be remitted to
the Trustee for deposit in the Collection Account and not constituting the
Representative's Yield. The 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 therefor except as specifically provided for
herein. The Representative's Yield is the property of the Representative, and
not the property of the Servicer, and such ownership shall not be affected by
any termination of the Servicer.
<PAGE>
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Certificate Insurer, the Trustee and each
Rating Agency, not later than the last day of the fourth month following the end
of the Servicer's fiscal year, which currently ends on December 31, beginning
with the fiscal year ending December 31, 1998, an Officers' Certificate stating
that (i) the Servicer has fully complied with the provisions of Articles V and
VIII, (ii) a review of the activities of the Servicer during the preceding
fiscal year and of performance under this Agreement has been made under such
officers' supervision, and (iii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all 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
officers and the nature and status thereof and the action being taken by the
Servicer to cure such default. The Servicer shall promptly notify the
Certificate Insurer, the Trustee and each Rating Agency promptly upon any change
in the basis on which its fiscal year is determined.
Section 7.05 Annual Independent Public Accountants' Servicing Report.
Not later than the last day of the fourth month following the end of the
Servicer's fiscal year, beginning with the fiscal year ending December 31, 1998,
the Servicer, at its expense, shall cause a firm of independent public
accountants reasonably acceptable to the Trustee and the Certificate Insurer to
furnish a letter or letters to the Certificate Insurer, the Trustee and each
Rating Agency to the effect that such firm has with respect to the Servicer's
overall servicing operations examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 7.06 Right to Examine Servicer Records.
The Trustee or the Trustee at the request of a Majority in Aggregate Voting
Interest (or the representatives thereof) and the Certificate Insurer shall have
the right upon reasonable prior notice, during normal business hours and as
often as reasonably required, to examine and audit any and all of the books,
records or other information of the Servicer, whether held by the Servicer or by
another on behalf of the Servicer, which may be relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement.
Section 7.07 Reports to the Trustee; Principal and Interest Account
Statements.
If the Principal and Interest Account is not maintained with the Trustee,
then not later than 25 days after each Payment Date, the Servicer shall forward
to the Certificate Insurer and the Trustee a statement, certified by a Servicing
Officer, setting forth the status of the Principal and Interest Account as of
the end of the preceding Due Period and showing, for the period covered by such
statement, the aggregate of deposits into the Principal and Interest Account for
each category of deposit specified in Section 5.03, the aggregate of withdrawals
<PAGE>
from the Principal and Interest Account for each category of withdrawal
specified in Section 5.04, the aggregate amount of permitted withdrawals not
made in the related period, and the amount of Advances, if any, for the related
period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer will furnish to the Certificate Insurer, the Depositors or the
Trustee on request interim, unaudited financial statements of the Servicer
relating to periods subsequent to the most recent annual audited period.
The Servicer also agrees to make available on a reasonable basis to the
Certificate Insurer, the Depositor, the Trustee, any Certificateholder or any
prospective Certificateholder a knowledgeable financial or accounting officer
for the purpose of answering reasonable questions respecting recent developments
affecting the Servicer or the financial statements of the Servicer.
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
The Servicer agrees to indemnify and hold the Depositors, the Custodian,
the Trustee, the Certificate Insurer and each Holder harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Custodian, the Certificate Insurer and any Holder may sustain in any way related
to the failure of the Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Depositors, the Trustee, the Custodian, the Certificate
Insurer and each Certificateholder, if a claim is made by a third party with
respect to this Agreement, and the Servicer shall assume (with the consent of
the Trustee and the Certificate Insurer) the defense of any such claim and
advance all expenses in connection therewith, including reasonable counsel fees,
and promptly advance funds to pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Certificate Insurer
and/or any Certificateholder in respect of such claim. The Trustee may, if
necessary, reimburse the Servicer from amounts otherwise distributable on the
Class X Certificates for all amounts advanced by it pursuant to the preceding
sentence except when the claim relates directly to the failure of the Servicer
to service and administer the Mortgage Loans in compliance with the terms of
this Agreement. The Servicer shall have no lien on the assets of the Trust with
respect to amounts advanced pursuant to this Section 9.01 directly as a result
of Servicer's
<PAGE>
failure to service and administer the Mortgage Loans in compliance with the
terms of this Agreement.
Section 9.02 Merger or Consolidation of the Servicer.
The Servicer will each keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer or the Representative shall be a party, or any Person succeeding to the
business of the Servicer, shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and shall be the
successor of the Servicer or the Representative, as applicable 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. The
Servicer shall send notice of any such merger or consolidation to the Trustee,
the Certificate Insurer and each Rating Agency.
Section 9.03 Limitation on Liability of the Servicer and Others.
The Servicer and any director, officer, employee or agent of the Servicer
may rely on any document of any kind which it in good faith reasonably believes
to be genuine and to have been adopted or signed by the proper authorities
respecting any matters arising hereunder. Subject to the terms of Section 9.01
herein, the Servicer shall have no obligation to appear with respect to,
prosecute or defend, any legal action which is not incidental to the Servicer's
duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 Servicer Not to Resign.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Representative (if the Representative is not the Servicer), the
Certificate Insurer, the Trustee and the Majority in Aggregate Voting Interest,
or upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by a written Opinion of Counsel (who may be counsel for the
Servicer) to such effect delivered to the Trustee, the Representative (if the
Representative is not the Servicer) and the Certificate Insurer, which Opinion
of Counsel shall be in form and substance acceptable to the Certificate Insurer
and the Trustee. No such resignation shall become effective until a successor
has assumed the Servicer's responsibilities and obligations hereunder in
accordance with Section 9.02. The Servicer shall promptly notify each Rating
Agency promptly of its intention to resign pursuant to this Section 9.04.
Section 9.05 Removal of Servicer.
<PAGE>
The Depositors may, with the prior written consent of the Certificate
Insurer and a Majority in Aggregate Voting Interest, remove the Servicer upon 90
days' prior written notice to the Servicer. No such removal shall become
effective until a successor (other than the Trustee, unless the Trustee agrees
to so act) has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Section 9.02. The Servicer shall promptly notify each Rating
Agency of such removal.
ARTICLE X
SERVICER DEFAULT
Section 10.01 Servicer Default.
(a) In case one or more of the following events (each a "Servicer Default")
by the Servicer shall occur and be continuing:
(i) (A) an Event of Nonpayment (subject to paragraph (c) below); (B)
the failure by the Servicer to make any required Servicing Advance (other
than a Nonrecoverable Advance), to the extent such failure materially and
adversely affects the interests of the Certificate Insurer or the
Certificateholders; (C) the failure by the Servicer to make a required
Advance (other than a Nonrecoverable Advance) pursuant to the second
paragraph of Section 6.08; or (D) any other failure by the Servicer to
remit to the Trustee for the benefit of any Holders, any payment required
to be made under the terms of this Agreement (other than a Nonrecoverable
Advance) which continues unremedied after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to a Servicing Officer of the Servicer by the Certificate Insurer,
the Trustee or to a Servicing Officer of the Servicer and the Trustee by
any Holder; or
(ii) the failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure continues unremedied
for a period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Certificate Insurer or the Trustee or to the Servicer and
the Trustee by any Holder or the Certificate Insurer; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
<PAGE>
(iv) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property; or
(v) the Servicer shall admit in writing its inability to pay its debts
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;
(vi) the Servicer shall fail for 60 days to pay, or bond against, an
unappealable, undischarged, unvacated and unstayed final judgment by a
court of competent jurisdiction in an aggregate amount of $250,000 or more;
(vii) if (a) on the sixth Payment Date or on any Payment Date
thereafter prior to the twelfth Payment Date, the Loss Coverage Ratio is
greater than or equal to 25%, (b) on the twelfth Payment Date or on any
Payment Date thereafter prior to the eighteenth Payment Date, the Loss
Coverage Ratio is greater than or equal to 40%, (c) on the eighteenth
Payment Date or on any Payment Date thereafter prior to the twenty-fourth
Payment Date, the Loss Coverage Ratio is greater than or equal to 55%, (d)
on the twenty-fourth Payment Date or on any Payment Date thereafter prior
to the thirty-sixth Payment Date, the Loss Coverage Ratio is greater than
or equal to 70%, or (e) on the thirty-sixth Payment Date or on any Payment
Date thereafter, the Loss Coverage Ratio is greater than or equal to 80%.
(b) then, and in each and every such case, so long as such Servicer Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(C)), if such Servicer Default shall not have been remedied within
three Business Days after the Servicer has received notice of such Servicer
Default, (x) with respect solely to clause (i)(C) above, if such Advance is not
made by 4:00 p.m. New York time on the second Business Day prior to the
applicable Payment Date, the Certificate Insurer or the Trustee, upon receipt of
written notice or discovery by a Responsible Officer of such failure, shall give
immediate telephonic notice of such failure to a Servicing Officer of the
Servicer, and the Trustee shall notify each Certificateholder and, unless such
failure is cured, either by receipt of payment or receipt of evidence
satisfactory to the Certificate Insurer (e.g., a wire reference number
communicated by the sending bank; the Certificate Insurer shall notify the
Trustee, if the Certificate Insurer receives satisfactory evidence that such
funds have been sent), by 12:00 noon New York time on the following Business
Day, the Trustee, or a successor servicer appointed in accordance with Section
10.02, shall immediately make such Advance (unless such Advance is a
Nonrecoverable Advance) and assume, pursuant to Section 10.02 hereof, the duties
of a successor Servicer; and (y) in the case of clauses (i)(A), (i)(B), (i)(D),
(ii), (iii), (iv), (v), (vi) and (vii) above, the Majority in Aggregate Voting
Interest, subject to the prior written consent of the Certificate Insurer, which
consent may not be unreasonably withheld, or the Certificate Insurer, by notice
in writing to the Servicer and a Responsible Officer of the
<PAGE>
Trustee may, in addition to whatever rights they or it may have at law or equity
to damages, including injunctive relief and specific performance, commence
termination of all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, as
servicer. Upon receipt by the Servicer of a second written notice (except
relative to clause (i)(C) above) from the Majority in Aggregate Voting Interest,
subject to the prior written consent of the Certificate Insurer, which consent
may not be unreasonably withheld, or the Certificate Insurer stating that they
or it intend to terminate the Servicer as a result of such Servicer Default, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall, subject to Section 10.02, pass to and
be vested in the Trustee or its designee and the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Mortgage Loans and related
documents to the extent required by this Agreement. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee, for the benefit of the Holders of the Certificates, or
its designee for administration by it of all amounts which shall at the time be
credited by the Servicer to the Principal and Interest Account or thereafter
received with respect to the Mortgage Loans.
The Trustee shall not be deemed to have knowledge of a Servicer Default
unless a Responsible Officer thereof has received written notice thereof.
(c) Notwithstanding anything to the contrary contained in this Agreement,
upon the occurrence of an Event of Nonpayment or a Performance Default of which
the Certificate Insurer has knowledge, the Certificate Insurer shall promptly
notify the Trustee. During any applicable grace period following receipt of such
notice (or immediately following such notice in the case of a Performance
Default), the Trustee and the Certificate Insurer shall cooperate with each
other to determine if the occurrence of such Event of Nonpayment is in their
reasonable business judgment or Performance Default is in the reasonable
business judgment of the Certificate Insurer (x) the result of the acts or
omissions of the Servicer or (y) the result of events beyond the control of the
Servicer. If the Trustee and the Certificate Insurer conclude that such Event of
Nonpayment or Performance Default is the result of the latter, Section 10.01(b)
above shall not apply, and the Servicer shall not be terminated, unless and
until an Event of Default unrelated to such Event of Nonpayment or Performance
Default has occurred and is continuing, whether or not the Servicer has cured
such Event of Nonpayment or Performance Default. If the Trustee and the
Certificate Insurer conclude that the Event of Nonpayment or Performance Default
is the result of the former, the Certificate Insurer or the Majority in
Aggregate Voting Interest, as the case may be, may terminate the Servicer in
accordance with Section 10.01(b) above, provided that the Trustee shall have
until the 60th day following the date of receipt of notice of the Event of
Nonpayment or Performance Default to either assume the servicing or appoint a
successor servicer pursuant to Section 10.02 hereof.
<PAGE>
If the Trustee and the Certificate Insurer cannot agree, and the basis for
such disagreement is not arbitrary or unreasonable, as to the cause of the Event
of Nonpayment or Performance Default, the decision of the Certificate Insurer
shall control; provided, however, that if the Certificate Insurer decides to
terminate the Servicer, the Trustee shall be relieved of its obligation to
assume the servicing or to appoint a successor, which shall be the exclusive
obligation of the Certificate Insurer.
The Trustee shall promptly notify each Rating Agency, the Certificate
Insurer, the Trustee and each Certificateholder, of the occurrence of a Servicer
Default.
Section 10.02 Trustee to Act; Appointment of Successor Servicer.
On and after the time the Servicer receives a notice of termination
pursuant to Section 10.01, or the Trustee receives the resignation of the
Servicer evidenced by an Opinion of Counsel pursuant to Section 9.04, or the
Servicer is removed as servicer pursuant to this Article X (in which event the
Trustee shall promptly notify each Rating Agency), except as otherwise provided
in Section 10.01, the Trustee shall be the successor in all respects to the
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 Servicer
by the terms and provisions hereof; provided, however, that the Trustee shall
not be liable for any actions of any servicer prior to the Trustee becoming the
Servicer under this Agreement. The Trustee shall be obligated to make advances
pursuant to Sections 5.10, 5.13 and 6.08 unless, and only to the extent the
Trustee determines reasonably and in good faith that, such advances would not be
recoverable pursuant to Section 5.04(ii) or 6.05(d)(v) and (vi), such
determination to be evidenced by a certification of a Responsible Officer of the
Trustee delivered to the Certificate Insurer; provided that the Trustee shall
not be required to make an advance from its own funds if such advance is
prohibited by law. As compensation therefor, the Trustee, or any successor
servicer appointed pursuant to the following paragraph, shall be entitled to all
funds relating to the Mortgage Loans which the Servicer would have been entitled
to receive from the Principal and Interest Account pursuant to Section 5.04 and
from the Collection Account pursuant to Section 6.05 if the Servicer had
continued to act as servicer hereunder, together with other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 7.01 and 7.03. In no event shall the assets of the Trust
include, nor the Trustee or any other successor servicer acquire any rights to,
the Representative's Yield.
Notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, and shall, if it is unable to so act or if the Majority in Aggregate Voting
Interest (with the consent of the Certificate Insurer), or the Certificate
Insurer so request in writing to the Trustee, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer, which acceptance shall not be
unreasonably withheld, that has a net worth of not less than $15,000,000 and
which is approved as a servicer by FNMA and FHLMC as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any collections received by the
Servicer after removal or resignation shall be
<PAGE>
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer (including, without limitation, the Trustee) so appointed
shall be the aggregate Servicing Fees, together with other Servicing
Compensation in the form of assumption fees, late payment charges or otherwise.
In the event the Trustee is required to solicit bids, the Trustee shall solicit,
by public announcement, bids from housing and home finance institutions, banks
and mortgage servicing institutions meeting the qualifications set forth above.
Such public announcement shall specify that the successor servicer shall be
entitled to the full amount of the aggregate Servicing Fees as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Servicer
in respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Advances. After such deductions, the remainder of such
sum shall be paid by the Trustee to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Servicer agrees to cooperate
with the Trustee and any successor servicer in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Mortgage Loans. Neither the
Trustee nor any other successor servicer shall be held liable by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer
hereunder. No appointment of a successor to the Servicer hereunder (other than
the Trustee) shall be effective until the Trustee and the Certificate Insurer
shall have consented thereto. The Trustee shall not resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed.
Pending appointment of a successor to the Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 8.03, together with
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in this Agreement. The Servicer, the Trustee,
any Custodian and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
<PAGE>
Section 10.03 Waiver of Defaults.
The Certificate Insurer or a Majority in Aggregate Voting Interest may, on
behalf of all Certificateholders, and subject to the consent of the Certificate
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer as servicer pursuant to this Article X. Upon
any waiver of a past default, such default shall cease to exist, and any
Servicer Default 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
each Rating Agency.
Section 10.04 Control by Majority in Aggregate Voting Interest.
The Certificate Insurer, or the Majority in Aggregate Voting Interest with
the consent of the Certificate Insurer, which consent may not be unreasonably
withheld, may direct the time, method and place of conducting any proceeding
relating to the assets of the Trust or the Certificates or for any remedy
available to the Trustee with respect to the Certificates, or exercising any
trust or power conferred on the Trustee with respect to the Certificates or the
assets of the Trust, provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Agreement;
(ii) the Trustee shall have been provided with indemnity satisfactory
to it; and
(iii) the Trustee may take any other action deemed proper by it which
is not inconsistent with such direction; provided, however, that the
Trustee need not take any action which it determines might involve it in
liability or may be unjustly prejudicial to the Holders not so directing.
If inconsistent directions are given, the Certificate Insurer's directions
shall control.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
Subject to Section 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the collection with respect to the last Mortgage Loan (or
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due hereunder and the
payment of all amounts due and payable to the Certificate Insurer and the
Trustee or (b) mutual consent of the Servicer, the Certificate Insurer and all
Certificateholders in writing.
<PAGE>
Subject to Section 11.03, the Servicer may, at its option, elect to
terminate this Agreement on any date following the first Payment Date on which
the Pool Principal Balance is less than 10% of the Original Pool Principal
Balance (such Payment Date being the "Optional Purchase Date") by causing the
Trust to sell (which may be to the Depositors or the Residual or Class X
Certificateholders), as of the last day of the Due Period with respect to the
next succeeding Payment Date, all of the outstanding Mortgage Loans and REO
Properties at a price (the "Termination Price") equal to the fair market value
thereof (determined as provided below); provided, that the Trust shall not sell
the Mortgage Loans and REO Properties if the Termination Price to be received is
less than the sum of (x) 100% of the aggregate Principal Balance of the
outstanding Mortgage Loans and REO Properties and (y) accrued and unpaid
interest on each such Mortgage Loan at a rate equal to its respective Mortgage
Interest Rate and (z) any unpaid LIBOR Interest Carryover. In connection with
any such sale, the Servicer shall pay any outstanding and unpaid fees and
expenses of the Trustee and the Certificate Insurer relating to this Agreement
that such parties would otherwise have been entitled to pursuant to Section
6.05(d).
The fair market value of the outstanding Mortgage Loans and REO Properties
for purposes of this Section 11.01 shall be an amount equal to the average of
the bid prices for such assets taken as a whole, provided to the Servicer by two
Independent, nationally recognized dealers in whole loans substantially similar
to the Mortgage Loans.
Any such sale pursuant to this Section 11.01 shall be accomplished by
depositing into the Collection Account, on the third Business Day immediately
preceding the final Payment Date on which such purchase is to be effected, the
amount of the Termination Price. On the same day that the Termination Price is
deposited into the Collection Account, any other amounts then on deposit in the
Principal and Interest Account shall be transferred to the Collection Account
pursuant to Section 5.04(ii) for payment to Certificateholders pursuant to
Section 6.05(d) on the final Payment Date as specified in the notice to
Certificateholders described below; provided, that the amount of any unpaid
LIBOR Interest Carryover shall not be paid from any of the Trust REMICs but
shall be treated as paid directly from the purchaser of the Mortgage Loans to
the Class A-1A Certificateholders. Any amounts received with respect to the
Mortgage Loans and REO Properties subsequent to the last day of the related Due
Period shall belong to the Person purchasing the Mortgage Loans and REO
Properties. Promptly upon receipt of the Termination Price, the Trustee shall
release (or cause to be released) each related Mortgage File to the Person
purchasing the Mortgage Loans and REO Properties as set forth herein.
Notice of any termination, specifying the Payment Date upon which this
Agreement will terminate shall be given promptly by the Trustee by letter to the
Certificateholders mailed during the month of such final Payment Date before the
Determination Date in such month, specifying (i) the Payment Date upon which
final payment of the Certificates will be made and (ii) the amount of any such
final payment. The obligations of the Certificate Insurer hereunder shall
terminate upon the deposit by the Servicer with the Trustee for deposit into the
Collection Account of a sum sufficient to purchase all of the Mortgage Loans and
REO Properties as set forth above.
<PAGE>
Each Holder is required, and hereby agrees, to return to the Trustee any
Certificate with respect to which the Trustee has made the final distribution
due thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be outstanding
for any purpose of this Agreement, whether or not such Certificate is ever
returned to the Trustee.
In the event that any amount due to any Class A Certificateholder remains
unclaimed, the Servicer shall, at the expense of the Trust Fund, which amount
shall be allocated to the Upper-Tier REMIC, cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. If, within the period then specified in the escheat laws of the State
of New York after such publication such amount remains unclaimed, 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 11.02 Additional Termination Requirements.
In the event the Servicer exercises its purchase option as provided in
Section 11.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been furnished with an
Opinion of Counsel to the effect that the failure of the Trust Fund to comply
with the requirements of this Section 11.02 will not (i) result in the
imposition of taxes on prohibited transactions" of any Trust REMIC as defined in
Section 860F of the Code, or (ii) cause any Trust REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the final Payment Date the Trustee shall
designate a date as the date of adoption of a plan of complete liquidation
of such REMIC under Section 860F of the Code and any regulations thereunder
and shall specify such date in the Trust REMICs' final federal income tax
returns;
(ii) At or after the date of such a plan of complete liquidation and
at or prior to the final Payment Date, the Trustee shall sell all of the
assets of the Trust Fund to the Servicer or the Certificate Insurer for
cash;
(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 Fixed Rate Certificateholders, the Fixed
Rate Principal Balance, plus one month's interest on each Class of Fixed
Rate Certificates at the respective Pass-Through Rate, (B) pro rata with
(A), to the Adjustable Rate Certificateholders, the Adjustable Rate
Principal Balance, plus one month's interest on the Adjustable Rate
Certificates at the Class A-1A Pass-Through Rate, (C) after such payments
to the Class A Certificateholders, to the Class X Certificateholders, the
amount if any accrued but unpaid Excess Spread and (D) to the Class R
Certificateholders, all cash on hand after such payment to the Class A and
Class X Certificateholders (other than cash retained to meet
<PAGE>
claims), and each Trust REMIC and the Trust Fund shall terminate at such
time; and
(iv) In no event may the final payment on the Certificates (except to
the extent permitted in Section 11.01 with respect to Certificateholders
who fail to surrender their Certificates) be made after the 89th day from
the date of such plan of complete liquidation.
Section 11.03 Accounting Upon Termination of Servicer.
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee, the Mortgage Files and related documents and statements held by it
hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders, a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Mortgage Loans to its successor and to more fully and definitively vest in
such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
Section 11.04 Representative's Right to Representative's Yield Absolute.
The Representative's right to receive the Representative's Yield with
respect to each Mortgage Loan shall be absolute and unconditional, and shall
survive notwithstanding the termination of the rights and obligations of the
Servicer hereunder, the resignation of the Servicer or the termination of this
Agreement. The Representative's right to receive the Representative's Yield
shall not be subject to offset or counterclaim, whether or not such right has
been assigned in whole or in part, notwithstanding any breach of any
representation or warranty of the Representative or any Depositor under this
Agreement or any default by the Representative or any Depositor of any of its
obligations or covenants under this Agreement. The Representative shall have the
right to assign any or all of its rights in and to the Representative's Yield,
without notice to or the consent of any party to this Agreement or any
Certificateholder.
Section 11.05 Termination Upon Loss of REMIC Status.
<PAGE>
(a) Following a final determination by the Internal Revenue Service, or by
a court of competent jurisdiction, in either case, from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that any Trust REMIC does not and will no longer qualify as a
REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination (i) the Majority in Voting Interest may direct the Trustee on
behalf of each Trust REMIC to adopt a "plan of complete liquidation" (within the
meaning of Section 860F(a)(4)(B)(i) of the Code) and (ii) the Certificate
Insurer may notify the Trustee of the Certificate Insurer's determination to
purchase from the Trust Fund all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in the Trust Fund at a price equal to the
Termination Price. Upon receipt of notice from the Certificate Insurer, the
Trustee shall notify the Class R, Class MR and Class LR Certificateholders of
such election to liquidate or such determination to purchase, as the case may be
(the "Termination Notice"). The Holders of a majority of the Percentage Interest
of the Class R, Class MR and Class LR Certificates, respectively, then
outstanding may, within 60 days from the date of receipt of the Termination
Notice (the "Purchase Option Period"), at their option, purchase from the Trust
all Mortgage Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Mortgage Loan then remaining
in the Trust Fund at a purchase price equal to the Termination Price. Any such
purchase shall be accomplished in the manner set forth in Section 11.01.
(b) If, during the Purchase Option Period, each of the Class R, Class MR
and Class LR Certificateholders have not exercised the option described in the
immediately preceding paragraph, then upon the expiration of the Purchase Option
Period (i) in the event that the Majority in Aggregate Voting Interest have
given the Trustee the direction described in clause (a)(i) above, the Trustee
shall sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust Fund, each in accordance with the plan of complete liquidation, such
that, if so directed, the liquidation of the Trust Fund, the distribution of the
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 60th day, or such later day as the Majority in Aggregate
Voting Interest shall permit or direct in writing, after the expiration of the
Purchase Option Period and (ii) in the event that the Certificate Insurer has
given the Trustee notice of the Certificate Insurer's determination to purchase
the Trust Fund described in clause (a)(ii) preceding, the Certificate Insurer
shall so purchase the Trust Fund within 60 days after the expiration of the
Purchase Option Period.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R, Class MR and Class LR Certificates then
outstanding may, at their option and upon delivery to the Class A and Class X
Certificateholders and the Certificate Insurer of an opinion of nationally
recognized tax counsel selected by the Holders of the Class R, Class MR and
Class LR Certificates, which opinion shall be reasonably satisfactory in form
and substance to the Majority in Aggregate Voting Interest and the Certificate
Insurer, to the effect that the effect of the Final Determination is to increase
substantially the probability that the gross income of each Trust REMIC will be
subject to
<PAGE>
federal taxation, purchase from the Trust Fund all Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Mortgage Loan then remaining in the Trust Fund at a
purchase price equal to the Termination Price. Any such purchase shall be
accomplished in the manner set forth in Section 11.01. The foregoing opinion
shall be deemed satisfactory unless the Majority in Aggregate Voting Interest
give the Holders of a majority of the Percentage Interest of the Class R, Class
MR and Class LR Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default and after the
curing of all Servicer Defaults which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If a Servicer Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's 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 shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or either Depositor hereunder. If any such instrument
is found not to conform to the requirements of this Agreement, the Trustee shall
notify the Certificate Insurer and request written instructions as to the action
it deems appropriate to have the instrument corrected, and if the instrument is
not so corrected, the Trustee will provide notice thereof to the Certificate
Insurer who shall then direct the Trustee as to the action, if any, to be taken.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Default, and after the
curing of all Servicer Defaults 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
<PAGE>
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 or other officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(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 the Class A
Certificateholders, relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any Default or Servicer Default unless a
Responsible Officer of the Trustee shall have received notice thereof. In
the absence of receipt of such notice, the Trustee may conclusively assume
that there is no default or Servicer Default;
(v) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement;
(vi) Subject to the other provisions of this Agreement and without
limiting the generality of this Section, the Trustee shall have no duty (A)
to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of
any such recording or filing or depositing or to any rerecording, refiling
or redepositing of any thereof, (B) to see to any insurance, (C) to see to
the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust Fund or any Trust REMIC,
(D) to confirm or verify the
<PAGE>
contents of any reports or certificates of the Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties; and
(vii) The Trustee shall not be deemed a fiduciary for the Certificate
Insurer in its capacity as such, except to the extent the Certificate
Insurer has made an Insured Payment and is thereby subrogated to the rights
of the Certificateholders with respect thereto.
Section 12.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, Opinion
of Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order
or direction of the Certificate Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer, as applicable, shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Servicer Default (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement, and
to use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of a Servicer Default hereunder and after
the curing of all Defaults which may have occurred, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
<PAGE>
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Certificate Insurer or Holders of
Class A Certificates evidencing not less than 25% of the sum of the Fixed
Rate Principal Balance and the Adjustable Rate Principal Balance; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the Servicer
or, if paid by the Trustee, shall be repaid by the Servicer upon demand
from the Servicer's own funds;
(vi) 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;
(vii) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder; and
(viii) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder, including, without limitation, under
Section 2.06 hereof, either directly or by or through agents or attorney.
(b) Following the Startup Day, the Trustee shall not knowingly accept any
contribution of assets, including substitutions, to the Trust Fund or any Trust
REMIC, unless the Trustee shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund or any Trust REMIC
will not cause any Trust REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding or subject any Trust REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
Section 12.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Depositors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositors of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not
<PAGE>
be responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 Servicer to Pay Trustee's Fees and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (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 it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, including the powers and duties described in
Section 2.07 hereof, and the Servicer will pay or reimburse the Trustee upon its
request, and, if such amounts are not paid by the Servicer within thirty (30)
days of demand therefor, with interest thereon at the Trustee's prime rate
(which prime rate shall not exceed 10% per annum), for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including, without limitation, the
reasonable fees, expenses and disbursements of its counsel (including,
reasonable compensation of its in-house counsel on an hourly basis) and of all
persons not regularly in its employ, including any agents, attorneys and
accountants of the Trustee, as described in Section 2.07(a) hereof) and such
out-of-pocket expenses as may be incurred by the Trustee in assuming servicing
responsibilities under Section 10.02 hereof, such reimbursable amounts to
include expenses incurred due to the Servicer's failure to properly discharge
its responsibilities hereunder or to the representations and warranties as to
any Mortgage Loan or Loans being untrue, but not to include general overhead
incurred by the Trustee as a result of becoming Successor Servicer (provided
however, prior to incurring such expenses, disbursements and advances ("costs"),
the Trustee will give the Servicer an opportunity to provide such services to
render such costs unnecessary), except any such expense, disbursement or advance
as may arise from its negligence or bad faith, provided that the Trustee shall
have no lien on the Trust Fund or any Trust REMIC for the payment of its fees
and expenses. Failure by the Servicer to pay any such fees or other expenses
shall not relieve the Trustee of its obligation hereunder. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Servicer and held harmless against any loss, liability or expense (i) 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 in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, and (ii) resulting from any error in any tax or information return
prepared by the Servicer. The obligations of the Servicer under this Section
12.05 shall survive termination of the Servicer and payment of the Certificates,
and shall extend to any co-trustee appointed pursuant to this Article XII. The
<PAGE>
compensation due to the Trustee pursuant to this Section 12.05 shall be paid by
the Servicer from it own funds.
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) a banking association
organized and doing business under the laws of any state or the United State of
America, (ii) authorized under such laws to exercise corporate trust powers,
including taking title to the Trust Fund asset on behalf of the
Certificateholders, (iii) having a combined capital and surplus of at least
$50,000,000, (iv) whose long-term deposits, if any, shall be rated at least
"BBB" by S&P or such lower long-term deposit rating by S&P as may be approved in
writing by the Certificate Insurer and S&P, and with a long-term deposit rating
of at least "Baa2" from Moody's (or such lower rating which would not cause
Moody's to reduce its then current ratings of the Class A Certificates), (v) is
subject to supervision or examination by federal or state authority and (vi) is
reasonably acceptable to the Certificate Insurer as evidenced in writing. If
such banking association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 12.06 its combined capital and
surplus shall be deemed to be as set forth in it most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall give notice of
such ineligibility to the Certificate Insurer and shall resign, upon the request
of the Certificate Insurer or the Majority in Aggregate Voting Interest, in the
manner and with the effect specified in Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall, with the consent of the Certificate Insurer,
promptly appoint a successor trustee by written instrument, in duplicate, which
Instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Servicer. Unless a successor trustee shall have been appointed and have
accepted appointment within 60 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 12.06 and shall fail to resign after written request
therefor by the Servicer, the Certificate Insurer or the Majority in Aggregate
Voting Interest, or if at any time the Trustee shall become incapable of acting,
or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and shall, within 30 days after such removal, appoint, subject to the
approval of the Certificate Insurer, which approval shall not be unreasonably
withheld, a successor trustee by written instrument, in
<PAGE>
duplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer.
The Majority in Aggregate Voting Interest or, if the Trustee fails to
perform in accordance with this Agreement, the Certificate Insurer may remove
the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, or by the Certificate Insurer, as the case may be, one complete
set of which instruments shall be delivered to the Servicer, one complete set to
the Trustee so removed and one complete set to the Successor Trustee so
appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
12.08.
Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the 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 the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Trustee's
Mortgage Files and related documents and statement held by it hereunder, and the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers duties and obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses shown in the
Certificate Register and to Moody's and S&P. If the Servicer fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 12.09 Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association
<PAGE>
shall be eligible under the provisions of Section 12.06, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
Section 12.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Certificate Insurer with written notice to Moody's to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 12.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case a Servicer Default shall have occurred and be continuing, the Trustee
alone (with the consent of the Certificate Insurer with written notice to
Moody's) 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 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
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 XII. 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.
<PAGE>
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 12.11 Appointment of Custodians.
The Trustee may, with the consent of the Servicer and the Certificate
Insurer and notice to Moody's, appoint one or more Custodians to hold all or a
portion of the Trustee's Mortgage Files as agent for the Trustee, by entering
into a Custodial Agreement. BankBoston is initially appointed Custodian with
respect to all Mortgage Loans and, for so long as it shall be the Custodian
hereunder, agrees to comply with the terms of the provisions of Exhibit N hereto
applicable to the duties of the Custodian. Subject to this Article XII, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders and the Certificate Insurer. The Servicer shall be
liable for the fees of any Custodian appointed hereunder. Each Custodian shall
be a depository institution subject to supervision by federal or state authority
and shall be qualified to do business in the jurisdiction in which it holds any
Trustee's Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 13.02.
Section 12.12 Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Depositors, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request to:
(i) more effectively hold in trust all or any portion of the Trust
Fund;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the rights of the
Trustee, and the ownership Interests of the Holders represented thereby, in
such Trust Fund against the claims of all Persons and parties.
The Trustee shall send copies of any request received from the Certificate
Insurer or the Depositors to take any action pursuant to this Section 12.12 to
the others.
<PAGE>
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, by action, suit or proceeding at law
or equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Holders; provided, however, that nothing in this Section 12.12 shall require
any action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and second (ii) when required by this Agreement,
have been requested to take such action by the Majority in Aggregate Voting
Interest, the Certificate Insurer or the Depositors in accordance with the terms
of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such Instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be suspended
during any period in which the Certificate Insurer is in default in its payment
obligations under the Certificate Insurance Policy, and its rights during such
period shall vest in the Majority in Aggregate Voting Interest. At such time as
the Certificates are no longer outstanding, and no amounts owed to the
Certificate Insurer hereunder remain unpaid and the Certificate Insurance Policy
has expired in accordance with its terms, the Certificate Insurer's rights
hereunder shall terminate.
Section 13.02 Amendment.
(a) This Agreement may be amended from time to time by the Depositors and
the Servicer by written agreement, upon the prior written consent of the Trustee
and the Certificate Insurer, without notice to or consent of the
Certificateholders, to cure any ambiguity or mistake, to correct or supplement
any provisions herein, to comply with any changes in the Code, or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
or any Custodial Agreement; provided, however, that such action shall not
adversely affect the interests of any Certificateholder or the Certificate
Insurer, as evidenced by an Opinion of Counsel or written notification from each
Rating Agency to the effect that such amendment will not cause such Rating
Agency to lower or withdraw the then current ratings on the Certificates, at the
expense of the party requesting the change, delivered to the Certificate
Insurer, the Trustee and the Depositors; and provided, further, that no such
amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other
<PAGE>
party hereto without the consent of such party. The Trustee shall give prompt
written notice to each Rating Agency of any amendment made pursuant to this
Section 13.02(a).
(b) This Agreement may be amended from time to time by the Depositors and
the Servicer, with the consent of the Trustee and the Certificate Insurer, the
Majority in Aggregate Voting Interest of the Class A Certificates and the
Holders of the majority of the Percentage Interest in the Class R, Class MR and
Class LR Certificates for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any payments which are required to be distributed on any Class A Certificate
without the consent of the Holder of such Certificate or reduce the percentage
for each Class of Certificates the Holders of which are required to consent to
any such amendment without the consent of the Holders of 100% of each Class of
Certificates affected thereby. Prior notice of any proposed amendment pursuant
to this Section 13.02(b) shall be given to each Rating Agency.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
(d) Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment or the exercise
of any power granted to the Servicer, the Representative, any Depositor, the
Certificate Insurer or the Trustee in accordance with such amendment will not
result in the imposition of a tax on any Trust REMIC or cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Certificate is outstanding. No
amendment shall have the effect of varying the latest possible maturity,
principal amount or interest rate of the Trust unless the Trustee shall have
received an Opinion of Counsel that the amendment will not cause the regular
interest to lack fixed terms within the meaning of the REMIC provisions.
(e) An amendment or supplement to the original issue discount legend shall
not be an amendment or supplement for purposes of this Article 13.
Section 13.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement, or a memorandum
thereof if permitted under applicable law, is subject to recordation in all
appropriate public offices for real property records in all of 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 Servicer at the Holders' or
Certificate Insurer's expense on direction and at the expense of the Majority in
Aggregate Voting Interest or the Certificate Insurer requesting such
recordation, but only when accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders or the Certificate Insurer or is necessary for the
administration or servicing of the Mortgage Loans.
<PAGE>
Section 13.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 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 HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW (BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, WHICH BY ITS TERMS APPLIES TO THIS AGREEMENT).
Section 13.06 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Servicer and the Representative, EquiCredit Corporation of
America, 10401 Deerwood Park Boulevard, Jacksonville, Florida 32256-0505
Attention: General Counsel, or such other addresses as may hereafter be
furnished to the Trustee in writing by the Representative and the Servicer, (ii)
in the case of each Depositor, c/o EquiCredit Corporation of America, 10401
Deerwood Park Boulevard, Jacksonville, Florida 32256-0505 Attention: General
Counsel, or such other addresses as may hereafter be furnished to the Trustee in
writing by such Depositor, (iii) in the case of the Certificateholders, as set
forth in the Certificate Register, (iv) in the case of the Trustee, U.S. Bank
National Association, 111 East Wacker Drive, Suite 3000, Chicago, Illinois
60601, Attention: Corporate Trust Department, (v) in the case of Moody's, 99
Church Street, New York, New York 10007, Attention: Home Equity Monitoring
Group, (vi) in the case of S&P, 26 Broadway, New York, New York 10004,
Attention: Ms. Nancy Gigante and (vii) in the case of the Certificate Insurer,
Ambac Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Structured Financed MBS (re: EQCC Home Equity Loan Trust 1998-1). Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be held invalid for any reason whatsoever, 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 covenants,
agreements, provisions or terms of this Agreement.
<PAGE>
Section 13.08 No Partnership.
Except for federal, state and local income, franchise or similar tax
purposes, nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 Counterparts.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Depositors, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 Headings.
The headings of the various Sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 Limitation of Liability of Trustee.
Notwithstanding anything contained herein to the contrary, this Agreement
has been executed by U.S. Bank National Association not in its individual
capacity but solely as Trustee and in no event shall U.S. Bank National
Association have any liability for the representations, warranties, covenants,
agreements or other obligations of the Depositors hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Trust Fund.
Section 13.13 Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the
Depositors, the Servicer, the Trustee, the Certificateholders and the
Originators and nothing in this Agreement whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the assets of the Trust or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. The Certificate Insurer is
an intended third party beneficiary of this Agreement.
Section 13.14 No Petition.
The Servicer and the Trustee by entering into this Agreement hereby
covenants and agrees that it shall not, prior to the date which is one year and
one day after the
<PAGE>
termination of this Agreement pursuant to Article XI hereof, acquiesce, petition
or otherwise invoke or cause the Depositors to invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Depositors under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of each of the Depositors or any
substantial part of its respective property, or ordering the winding up or
liquidation of the affairs of each of the Depositors.
Section 13.15 Third Party Beneficiary .
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and, in addition, shall inure to the benefit of
Certificateholders and, to the extent provided herein, the Certificate Insurer
and their respective successors and permitted assigns. Except as otherwise
provided in this Agreement, no other Person shall have any right or obligation
hereunder.
<PAGE>
IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositors have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Name:
Title:
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By:_______________________________
Name:
Title:
THE DEPOSITORS
EQCC RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
EQCC ASSET BACKED CORPORATION
By:_______________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of April, 1998 before me, a Notary Public in and for the
State of New York, personally appeared James B. Dodd, known to me to be the Vice
President of EQCC Receivables Corporation, the 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 NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of April, 1998 before me, a Notary Public in and for the
State of New York, personally appeared James B. Dodd, known to me to be the Vice
President of EQCC Asset Backed Corporation, the 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 NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of April, 1998 before me, a Notary Public in and for the
State of New York, personally appeared James B. Dodd, known to me to be the Vice
President of EquiCredit Corporation of America, a 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 NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of April, 1998 before me, a Notary Public in and for the
State of New York, personally appeared Melissa A. Rosal, known to me to be Vice
President of U.S. Bank National Association, 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 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>
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items (copies to the extent the originals have been delivered to
the Depositors pursuant to Section 2.04 of the Pooling and Servicing Agreement),
all of which shall be available for inspection by the Trustee and the Custodian,
to the extent required by applicable laws:
1. The original Mortgage Note, with any intervening endorsements,
endorsed*/ "Pay to the - order of BankBoston, N.A., as Custodian under
the Custodial Agreement dated as of April 1, 1998, Series 1998-1,
without recourse" and signed, by facsimile or manual signature, in the
name of the Originator transferring such Mortgage Loan to the
applicable Depositor pursuant to the Transfer Agreement by a
Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to such
Originator, if the Originator from whom the Depositor acquired such
Mortgage Loan was not the originator and, with respect to manufactured
housing units, the certificate of title, if any;
2. Either: (i) the original Mortgage, with evidence of recording thereon
(and, in the case of a Mortgaged Property held in an Illinois Land
Trust, signed by the trustee of such Illinois Land Trust), (ii) a copy
of the Mortgage certified as a true copy by a Responsible Officer of
the applicable Depositor (provided, however, that such Responsible
Officer may complete one or more blanket certificates attaching copies
of one or more Mortgages relating thereto) or by the closing attorney,
or by an officer of the title insurer or agent of the title insurer
which issued the related title insurance policy, or commitment
therefor, if the original has been transmitted for recording until
such time as the original is returned by the public recording office
or (iii) a copy of the Mortgage certified by the public recording
office in those instances where the original recorded Mortgage has
been lost;
3. Except for a Mortgaged Property held in an Illinois Land Trust, either
(i) the original Assignment of Mortgage from the Originator to*/
- --------------------
*/ contemporaneously with the issuance of the Certificates, the Depositor shall
cause the Custodian to (A) endorse each Mortgage Note to the order of the
Trustee, which endorsement shall be in substantially the form set forth in
Section 2.04(a)(i) of the Pooling and Servicing Agreement, with appropriate
alterations to reflect the interest of the Trustee and the limited nature of the
Custodian's interest therein as may be acceptable to the Depositors, the
Servicer
<PAGE>
BankBoston, N.A., as Custodian under the Custodial Agreement dated as
of April 1, 1998: or in blank pursuant to the Transfer Agreement;
4. The original policy of title insurance or a true copy thereof or, if
such policy has not yet been delivered by the insurer, the commitment
or binder to issue same.
5. All intervening assignments, if any, showing a complete chain of
assignment from the originator to the applicable Originator, including
any recorded warehousing assignments, with evidence of recording
thereon, certified by a Responsible Officer of the applicable
Originator as a true copy of the original of such intervening
assignments;
6. Originals of all assumption and modification agreements, if any or a
copy certified as a true copy by a Responsible Officer of the
applicable Originator.
7. Except for a Mortgaged Property held in an Illinois Land Trust,
either: (i) originals of all intervening assignments, if any showing a
complete chain of title from the originator to the applicable
Depositor, including any recorded warehousing assignments, with
evidence of recording thereon, or, (ii) if the original intervening
assignments have not yet been returned from the recording office, a
copy of the originals of such intervening assignments together with a
certificate of a Responsible Officer of the Depositor or the closing
attorney or an officer of the title insurer which issued the related
title insurance policy, or commitment therefor, or its duly authorized
agent certifying that the copy is a true copy of the original of such
intervening assignments or (iii) a copy of the intervening assignment
certified by the public recording office in those instances where the
original recorded intervening assignment has been lost.
8. If the Mortgaged Property is held in an Illinois Land Trust, the
original Assignment of Beneficial Interest, or, if the trustee of such
Illinois Land Trust retains such original Assignment of Beneficial
Interest, a certified
- --------------------
and the Trustee, (B) execute each Assignment of Mortgage to the Trustee, which
assignment shall be in substantially the form set forth in Section 2.04(c) of
the Pooling and Servicing Agreement, with appropriate alterations to reflect the
interest of the Trustee and (C) with respect to each Illinois Land Trust,
execute a Reassignment of Assignment of Beneficial Interest to the Trustee,
which reassignment shall be substantially in the form set forth in Section
2.04(h) of the Pooling and Servicing Agreement, with appropriate alterations to
reflect the interest of the Trustee. Upon the occurrence of Recordation Trigger,
the Servicer shall promptly cause each Assignment of Mortgage to be recorded in
the applicable recording office in the name of the Trustee.
<PAGE>
true copy of such Assignment of Beneficial Interest so certified by
such trustee;
9. If the Mortgaged Property is held in an Illinois Land Trust, an
original Reassignment of Assignment of Beneficial Interest from the
Company to*/ BankBoston, N.A., as - Custodian under the Custodial
Agreement dated as of April 1, 1998, Series 1998-1 or in blank. In the
event that the Mortgage Loan was acquired by the applicable Originator
in a merger, the Reassignment of the Assignment of Beneficial Interest
must be by "[Originator], successor by merger to "[name of
predecessor]"; and in the event that the Mortgage Loan was acquired or
originated by such Depositor while doing business under another name,
the Reassignment of Assignment of Beneficial Interest must be by
"[Originator], formerly known as [previous name]";
10. If the Mortgaged Property is held in an Illinois Land Trust, originals
of all intervening Reassignments of Assignment of Beneficial Interest,
showing a complete chain of assignment from the beneficiaries of such
Illinois Land Trust to the applicable Originator of all of such
beneficiaries' right, title, and interest in, to, and under the trust
agreement with respect to such Illinois Land Trust; and
11. If the Mortgaged Property is held in an Illinois Land Trust, (A) a
certified copy of the instrument creating the Illinois Land Trust, (B)
a copy of the UCC-1 Financing Statement evidencing the assignment of
the Mortgagor's beneficial interest in the Illinois Land Trust, with
evidence of filing thereon, and (C) the original personal guaranty of
the Mortgage Note, executed by each beneficiary of the Illinois Land
Trust.
12. Mortgage Loan closing statement and any other truth-in-lending or real
estate settlement procedure forms required by law.
13. Residential loan application.
14. Verification of employment and income, and tax returns, if any.
15. Credit report on the mortgagor.
16. The full appraisal made in connection with the origination of the
related Mortgage Loan with photographs of the subject property and of
comparable properties, constituting evidence sufficient to indicate
that the Mortgaged Property relates to a Residential Dwelling.
17. Copy of the First Lien, if in the Servicer's file.
<PAGE>
18. All other papers and records developed or originated by the applicable
Depositor or others, required to document the Mortgage Loan or to
service the Mortgage Loan.*/
- --------------------
*/ contemporaneously with the issuance of the Certificates, the Depositor shall
cause the Custodian to (A) endorse each Mortgage Note to the order of the
Trustee, which endorsement shall be in substantially the form set forth in
Section 2.04(a)(i) of the Pooling and Servicing Agreement, with appropriate
alterations to reflect the interest of the Trustee and the limited nature of the
Custodian's interest therein as may be acceptable to the Depositors, the
Servicer and the Trustee, (B) execute each Assignment of Mortgage to the
Trustee, which assignment shall be in substantially the form set forth in
Section 2.04(c) of the Pooling and Servicing Agreement, with appropriate
alterations to reflect the interest of the Trustee and (C) with respect to each
Illinois Land Trust, execute a Reassignment of Assignment of Beneficial Interest
to the Trustee, which reassignment shall be substantially in the form set forth
in Section 2.04(h) of the Pooling and Servicing Agreement, with appropriate
alterations to reflect the interest of the Trustee. Upon the occurrence of
Recordation Trigger, the Servicer shall promptly cause each Assignment of
Mortgage to be recorded in the applicable recording office in the name of the
Trustee.
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A-1F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-1F Original Class A-1F Principal Balance:
No. A-1F-__ $_________________
Class A-1F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-1F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-1F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-2
[FORM OF CLASS A-2F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-2F Original Class A-2F Principal Balance:
No. A-2F-__ $_________________
Class A-2F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-2F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-2F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-3
[FORM OF CLASS A-3F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-3F Original Class A-3F Principal Balance:
No. A-3F-__ $_________________
Class A-3F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-3F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-3F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-4
[FORM OF CLASS A-4F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-4F Original Class A-4F Principal Balance:
No. A-4F-__ $_________________
Class A-4F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-4F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-4F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-5
[FORM OF CLASS A-5F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-5F Original Class A-5F Principal Balance:
No. A-5F-__ $_________________
Class A-5F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-5F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-5F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-6
[FORM OF CLASS A-6F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-6F Original Class A-6F Principal Balance:
No. A-6F-__ $_________________
Class A-6F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-6F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-6F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-7
[FORM OF CLASS A-7F CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-7F Original Class A-7F Principal Balance:
No. A-7F-__ $_________________
Class A-7F Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-7F Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-7F Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-8
[FORM OF CLASS A-IO CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-IO Original Class A-IO Notional Amount:
No. A-IO-__ $_________________
Class A-IO Pass-Through Rate: Original Dollar Amount as of the Cut-off
______% Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Fixed Rate
May 15, 1998 Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-IO Certificates with
respect to certain fixed-rate residential first and second mortgage loans (the
"Fixed Rate Group") which comprise part of a Trust Fund consisting primarily of
certain residential fixed-rate and adjustable-rate first and second mortgage
loans (the "Mortgage Loans") master serviced by EquiCredit Corporation of
America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Fixed Rate Group was originated or acquired by
the Representative and certain of its wholly-owned subsidiaries as set forth in
the Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Fixed Rate Group will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of April 1, 1998 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and U.S. Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-IO Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement.
Solely for U.S. federal income tax purposes, this Certificate is a "regular
interest" in a "real estate mortgage investment conduit" as those terms are
defined, respectively, in Section 860G and 860D of the Internal Revenue Code of
1986, as amended.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-9
[FORM OF CLASS A-1A CERTIFICATE]
[Form of Face of Certificate]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUST
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class A-1A Original Class A-1A Principal Balance:
No. A-1A-__ $_________________
Class A-1A Pass-Through Rate: Original Dollar Amount as of the Cut-off
[______%] Date Represented by this Certificate:
$-----------------
Cut-off Date: April 1, 1998 Percentage Interest of this Certificate:
-----%
First Payment Date: Original Pool Principal Balance of Adjustable
May 15, 1998 Rate Group: $____________________
Closing Date: Latest Maturity Date:
April 23, 1998 ____________________
CUSIP:___________ Common Code:_______________
ISIN:_____________
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in distributions to the Holders of the Class A-2F Certificates with
respect to certain adjustable-rate residential first and second mortgage loans
(the "Adjustable Rate Group") which comprise part of a Trust Fund consisting
primarily of certain residential fixed-rate and adjustable-rate first and second
mortgage loans (the "Mortgage Loans") master serviced by EquiCredit Corporation
of America (hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the
<PAGE>
Agreement referred to below). The Adjustable Rate Group was originated or
acquired by the Representative and certain of its wholly-owned subsidiaries as
set forth in the Agreement referred to below (the Representative and such
subsidiaries, the "Depositors"). The Adjustable Rate Group will be serviced by
the Servicer pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of April 1, 1998 (the "Agreement") by and among the
Representative, the Servicer, the Depositors and U.S. Bank National Association,
as trustee (the "Trustee"), certain of the pertinent provisions of which are set
forth herein. 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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of the Class A-1A Certificates on such
Payment Date pursuant to Section 6.05 of the Agreement. The Class A-1A
Pass-Through Rate is adjustable in accordance with the provisions of the
Agreement.
Solely for U.S. federal income tax purposes, this Certificate represents
(i) a "regular interest" in a "real estate mortgage investment conduit" as those
terms are defined, respectively, in Section 860G and 860D of the Internal
Revenue Code of 1986, as amended, and (ii) the right to LIBOR Interest
Carryovers from the Spread Account.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-10
[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 OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (The "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR TO AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN, OR ANY
OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, UNLESS THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY
TO THE SERVICER AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE BY OR ON
BEHALF OF SUCH PLAN IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR
RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE SERVICER, THE DEPOSITORS OR
THE TRUSTEE TO ANY OBLIGATION OR LIABILITY (INCLUDING
<PAGE>
OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) IN ADDITION
TO THOSE UNDERTAKEN IN THE AGREEMENT.
<PAGE>
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class X Percentage Interest of this Certificate:
No. A-X-__ _____%
Cut-off Date: April 1, 1998 Original Pool Principal Balance for all
Mortgage Loans:
$____________________
First Payment Date: Closing Date:
May 15, 1998 April 23, 1998
This certifies that _________________________ is the registered owner of
the percentage interest (the "Percentage Interest") evidenced by this
Certificate in certain monthly distributions with respect to a Trust Fund
consisting primarily of residential fixed-rate and adjustable-rate first and
second mortgage loans (the "Mortgage Loans") master serviced by EquiCredit
Corporation of America (hereinafter called the "Servicer", in its capacity as
Servicer, and "Representative", in its capacity as Representative, which terms
include any successor entity under the Agreement referred to below). The
Mortgage Loans were originated or acquired by the Representative and certain of
its wholly-owned subsidiaries as set forth in the Agreement referred to below
(the Representative and such subsidiaries, the "Depositors"). The Mortgage Loans
will be serviced by the Servicer pursuant to the terms and conditions of that
certain Pooling and Servicing Agreement dated as of April 1, 1998 (the
"Agreement") by and among the Representative, the Servicer, the Depositors and
U.S. Bank National Association, as trustee (the "Trustee"), certain of the
pertinent provisions of which are set forth herein. 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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Remittance Date occurs) (the "Record Date"), an amount equal to
the product of the Percentage Interest evidenced by this Certificate and any
amount required to be distributed to the Holders of the Class X Certificates on
such Remittance Date pursuant to Section 6.05 and 6.09 of the Agreement.
No transfer of any Class X Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made without such
registration or qualification, (a) the Trustee and the Depositors shall require
the transferee to execute an investment letter, which investment letter shall
not be an expense of the Depositors, the Servicer or the Trustee and (b) in the
event that such a transfer is not made pursuant to Rule 144A under the Act, the
Trustee shall require an Opinion of Counsel
<PAGE>
satisfactory to the Trustee and the Depositors that such transfer may be made
without such registration or qualification, which Opinion of Counsel shall not
be an expense of the Depositors, the Trustee or the Servicer. Neither the
Depositors nor the Trustee is obligated to register or qualify any of the Class
X Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositors and the Servicer 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. In connection with any such transfer, the Trustee will also
require (i) a representation letter, in the form as described in the Agreement,
stating that the transferee is not a Plan and is not acting on behalf of a Plan
or using the assets of a Plan to effect such purchase or (ii) if such transferee
is a Plan, or is acting on behalf of or using the assets of a Plan, (a) a
certification of facts and an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee and the Depositors with respect to certain
matters.
Solely for U.S. federal income tax purposes, this Certificate represents
(i) a "regular interest" in a "real estate mortgage investment conduit" as those
terms are defined, respectively, in Section 860G and 860D of the Internal
Revenue Code of 1986, as amended and (ii) the rights under the Spread Account
set forth in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class X Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-11
[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.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A DISQUALIFIED NON-U.S.
PERSON OR A DISQUALIFIED ORGANIZATION OR AGENT THEREOF.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS
NOT DELIVERED A REPRESENTATION LETTER STATING THAT THE TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE, OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY,
A "PLAN"), AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE DEPOSITORS AND
THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION OR AGENT
THEREOF, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
<PAGE>
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT THEREOF, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
<PAGE>
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class R Percentage Interest of this Certificate:
No. A-R-__ _____%
Cut-off Date: April 1, 1998 Original Pool Principal Balance for all
Mortgage Loans:
$____________________
First Payment Date: Closing Date:
May 15, 1998 April 23, 1998
This certifies that _________________________ is the registered owner of
the interest (the "Percentage Interest") evidenced by this Certificate in
certain distributions with respect to a Trust Fund consisting primarily of
residential fixed-rate and adjustable-rate first and second mortgage loans (the
"Mortgage Loans") master serviced by EquiCredit Corporation of America
(hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the Agreement referred to below). The Mortgage Loans were
originated or acquired by the Representative and certain of its wholly-owned
subsidiaries as set forth in the Agreement referred to below (the Representative
and such subsidiaries, the "Depositors"). The Mortgage Loans will be serviced by
the Servicer pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of April 1, 1998 (the "Agreement") by and among the
Representative, the Servicer, the Depositors and U.S. Bank National Association,
as trustee (the "Trustee"), certain of the pertinent provisions of which are set
forth herein. 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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Remittance Date occurs) (the "Record Date"), an amount equal to
the product of the Percentage Interest evidenced by this Certificate and any
amount required to be distributed to the Holders of the Class R Certificates on
such Remittance Date pursuant to Section 6.05 of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee, (ii) the transfer of any Ownership Interest in this
Certificate will be conditioned upon the delivery to the Trustee of, among other
things, an affidavit to the effect that it is a Permitted Transferee and (iii)
any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee. The Percentage Interest
this Certificate is set forth above.
<PAGE>
Notwithstanding the fact this Certificate has no principal balance, this
Certificate will remain outstanding under the Agreement and the Holder hereof
may have additional obligations as set forth in the Agreement.
No transfer of any Class R Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made without such
registration or qualification, (a) the Trustee and the Depositors shall require
the transferee to execute an investment letter, which investment letter shall
not be an expense of the Depositors, the Servicer or the Trustee and (b) in the
event that such a transfer is not made pursuant to Rule 144A under the Act, the
Trustee shall require an Opinion of Counsel satisfactory to the Trustee and the
Depositors that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositors, the Trustee or the Servicer. Neither the Depositors nor the Trustee
is obligated to register or qualify any of the Class R Certificates under the
1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositors and the Servicer 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. In connection with any such transfer, the Trustee will also require
a representation letter, in the form as described in the Agreement, stating that
the transferee is not a Plan and is not acting on behalf of a Plan or using the
assets of a Plan to effect such purchase.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the within-mentioned
Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-12
[FORM OF CLASS MR 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.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A DISQUALIFIED NON-U.S.
PERSON OR A DISQUALIFIED ORGANIZATION OR AGENT THEREOF.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS
NOT DELIVERED A REPRESENTATION LETTER STATING THAT THE TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE, OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY,
A "PLAN"), AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE DEPOSITORS AND
THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION OR AGENT
THEREOF, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
<PAGE>
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT THEREOF, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
<PAGE>
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class MR Percentage Interest of this Certificate:
No. A-MR-__ _____%
Cut-off Date: April 1, 1998 Original Pool Principal Balance for all
Mortgage Loans:
$____________________
First Payment Date: Closing Date:
May 15, 1998 April 23, 1998
This certifies that _________________________ is the registered owner of
the interest (the "Percentage Interest") evidenced by this Certificate in
certain distributions with respect to a Trust Fund consisting primarily of
residential fixed-rate and adjustable-rate first and second mortgage loans (the
"Mortgage Loans") master serviced by EquiCredit Corporation of America
(hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the Agreement referred to below). The Mortgage Loans were
originated or acquired by the Representative and certain of its wholly-owned
subsidiaries as set forth in the Agreement referred to below (the Representative
and such subsidiaries, the "Depositors"). The Mortgage Loans will be serviced by
the Servicer pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of April 1, 1998 (the "Agreement") by and among the
Representative, the Servicer, the Depositors and U.S. Bank National Association,
as trustee (the "Trustee"), certain of the pertinent provisions of which are set
forth herein. 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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Remittance Date occurs) (the "Record Date"), an amount equal to
the product of the Percentage Interest evidenced by this Certificate and any
amount required to be distributed to the Holders of the Class MR Certificates on
such Remittance Date pursuant to Section 6.05 of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee, (ii) the transfer of any Ownership Interest in this
Certificate will be conditioned upon the delivery to the Trustee of, among other
things, an affidavit to the effect that it is a Permitted Transferee and (iii)
any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee. The Percentage Interest
this Certificate is set forth above.
<PAGE>
Notwithstanding the fact this Certificate has no principal balance, this
Certificate will remain outstanding under the Agreement and the Holder hereof
may have additional obligations as set forth in the Agreement.
No transfer of any Class MR Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made without such
registration or qualification, (a) the Trustee and the Depositors shall require
the transferee to execute an investment letter, which investment letter shall
not be an expense of the Depositors, the Servicer or the Trustee and (b) in the
event that such a transfer is not made pursuant to Rule 144A under the Act, the
Trustee shall require an Opinion of Counsel satisfactory to the Trustee and the
Depositors that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositors, the Trustee or the Servicer. Neither the Depositors nor the Trustee
is obligated to register or qualify any of the Class MR Certificates under the
1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositors and the Servicer 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. In connection with any such transfer, the Trustee will also require
a representation letter, in the form as described in the Agreement, stating that
the transferee is not a Plan and is not acting on behalf of a Plan or using the
assets of a Plan to effect such purchase.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class MR Certificates referred to in the
within-mentioned Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
EXHIBIT B-13
[FORM OF CLASS LR 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.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A DISQUALIFIED NON-U.S.
PERSON OR A DISQUALIFIED ORGANIZATION OR AGENT THEREOF.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS
NOT DELIVERED A REPRESENTATION LETTER STATING THAT THE TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE, OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY,
A "PLAN"), AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE DEPOSITORS AND
THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION OR AGENT
THEREOF, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
<PAGE>
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT THEREOF, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
<PAGE>
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1998-1, Class LR Percentage Interest of this Certificate:
No. A-LR-__ _____%
Cut-off Date: April 1, 1998 Original Pool Principal Balance for all
Mortgage Loans:
$____________________
First Payment Date: Closing Date:
May 15, 1998 April 23, 1998
This certifies that _________________________ is the registered owner of
the interest (the "Percentage Interest") evidenced by this Certificate in
certain distributions with respect to a Trust Fund consisting primarily of
residential fixed-rate and adjustable-rate first and second mortgage loans (the
"Mortgage Loans") master serviced by EquiCredit Corporation of America
(hereinafter called the "Servicer", in its capacity as Servicer, and
"Representative", in its capacity as Representative, which terms include any
successor entity under the Agreement referred to below). The Mortgage Loans were
originated or acquired by the Representative and certain of its wholly-owned
subsidiaries as set forth in the Agreement referred to below (the Representative
and such subsidiaries, the "Depositors"). The Mortgage Loans will be serviced by
the Servicer pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of April 1, 1998 (the "Agreement") by and among the
Representative, the Servicer, the Depositors and U.S. Bank National Association,
as trustee (the "Trustee"), certain of the pertinent provisions of which are set
forth herein. 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.
On each Payment Date, commencing on May 15, 1998, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Remittance Date occurs) (the "Record Date"), an amount equal to
the product of the Percentage Interest evidenced by this Certificate and any
amount required to be distributed to the Holders of the Class LR Certificates on
such Remittance Date pursuant to Section 6.05 of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee, (ii) the transfer of any Ownership Interest in this
Certificate will be conditioned upon the delivery to the Trustee of, among other
things, an affidavit to the effect that it is a Permitted Transferee, and (iii)
any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee. The Percentage Interest
this Certificate is set forth above.
<PAGE>
Notwithstanding the fact this Certificate has no principal balance, this
Certificate will remain outstanding under the Agreement and the Holder hereof
may have additional obligations as set forth in the Agreement.
No transfer of any Class LR Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made without such
registration or qualification, (a) the Trustee and the Depositors shall require
the transferee to execute an investment letter, which investment letter shall
not be an expense of the Depositors, the Servicer or the Trustee and (b) in the
event that such a transfer is not made pursuant to Rule 144A under the Act, the
Trustee shall require an Opinion of Counsel satisfactory to the Trustee and the
Depositors that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositors, the Trustee or the Servicer. Neither the Depositors nor the Trustee
is obligated to register or qualify any of the Class LR Certificates under the
1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositors and the Servicer 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. In connection with any such transfer, the Trustee will also require
a representation letter, in the form as described in the Agreement, stating that
the transferee is not a Plan and is not acting on behalf of a Plan or using the
assets of a Plan to effect such purchase.
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed as of the date set forth below.
EQCC HOME EQUITY LOAN TRUST 1998-1
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class LR Certificates referred to in the
within-mentioned Agreement.
By: U.S. Bank National Association,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
Exhibit B-14
[FORM OF REVERSE OF CERTIFICATE]
[Form of Reverse Certificate]
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate or the making of any notation thereon, at a bank
or other entity having appropriate facilities therefor, if such Person shall own
of record Class A Certificates of the same Class which have denominations
aggregating at least $1,000,000 appearing in the Certificate Register and in all
cases to the Class X , Class R, Class MR and Class LR Certificates, and shall
have so notified the Trustee at least five business days prior to the related
Record Date, or by check mailed to the address of such Person appearing in the
Certificate Register.
Upon receiving the final distribution hereon, the Holder hereof is required
to send this Certificate to the Trustee. The Agreement provides that, in any
event, upon the making of the final distribution due on this Certificate, this
Certificate shall be deemed cancelled for all purposes under the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as EQCC Home Equity Loan Asset Backed Certificates, Series 1998-1,
Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class
A-7F, Class A-IO, Class A-1A, Class X, Class R, Class MR and Class LR (herein
called the "Certificates") and, as set forth in the Agreement, representing
interests in (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all proceeds
thereof (other than the Representative's Yield), (ii) such assets as from time
to time are identified as REO Property or are deposited in the Collection
Account, Principal and Interest Account (including all earnings thereon and
proceeds thereof), Spread Account, or Insurance Account, including amounts on
deposit in the Accounts or the Principal and Interest Account and invested in
Permitted Instruments, (iii) the Trustee's rights under all insurance policies
with respect to the Mortgage Loans required to be maintained pursuant to the
Agreement and any Insurance Proceeds, (iv) the Certificate Insurance Policy, (v)
Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds (all of the
foregoing being hereinafter collectively called the "Trust Fund"). The Class X
Certificates are subordinate in right of payment to the Class A Certificates, to
the extent set forth in the Agreement.
The Certificates do not represent an obligation of, or an interest in, the
Servicer, the Representative, the Depositors or the Trustee and are not insured
or guaranteed by the Federal Deposit Insurance Corporation, the Government
National Mortgage Association, the Federal Housing Administration or the
Veterans Administration or any other governmental agency. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Mortgage Loans, and amounts withdrawable from the Collection Account, all as
more specifically set forth herein and in the Agreement.
<PAGE>
Ambac Assurance Corporation has issued a certificate guaranty surety bond
with respect to the Class A Certificates, a copy of which is attached as Exhibit
I to the Agreement.
As provided in the Agreement, deposits and withdrawals from the Collection
Account and the Insurance Account may be made by the Trustee from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of certain expenses incurred by the Servicer and
investment in Permitted Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Depositors, the
Servicer and the Trustee without the consent of the Certificateholders, and (b)
by the Depositors, the Representative, the Servicer, the Trustee, the Majority
in Aggregate Voting Interest and the holders of a majority of the Percentage
Interest in the Class R, Class MR and Class LR Certificates. The Agreement
permits the Majority in Aggregate Voting Interest to waive, on behalf of all
Certificateholders, any default by the Servicer in the performance of its
obligations under the Agreement and its consequences, except in a default in
making any required distribution on a Certificate. Any such consent or waiver by
the Majority in Aggregate Voting Interest shall be conclusive and binding on the
holder of this Certificate and upon all future holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in New York, New York or Chicago,
Illinois duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates. As provided
in the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership 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 Servicer, the Representative, the Depositors and the Trustee and any
agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
<PAGE>
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of the distribution to Certificateholders of the final
payment or collection with respect to the last Mortgage Loan, or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee, (ii) the purchase by the Servicer of
all outstanding Mortgage Loans and REO Properties at a price determined as
provided in the Agreement (the exercise of the right of the Servicer to purchase
all the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates), the right of the Servicer to purchase
being subject to the Pool Principal Balance of the Mortgage Loans and REO
Properties at the time of purchase being less than ten percent (10%) of the
Original Pool Principal Balance, (iii) by the mutual consent of the Servicer,
the Certificate Insurer and all Certificateholders in writing or (iv) upon the
failure of the Trust to qualify as three separate REMICs, pursuant to Section
11.05 of the Agreement. By its acceptance of this Certificate, the
Certificateholder hereby appoints the Servicer as its attorney-in-fact to adopt
a plan of liquidation of the Trust Fund in accordance with Section 11.02 of the
Agreement.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE>
EXHIBIT C
DTC LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT D
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT E
FORM OF TRUSTEE INITIAL CERTIFICATION
April 23, 1998
[Representative]
[Insurer]
[Servicer]
[Depositors]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class A-1F, Class A-2F, Class
A-3F, Class A-4F, Class A-5F, Class A-6F, Class A-7F, Class
A-IO, Class A-1A, Class X, Class R, Class MR and Class LR,
dated as of April 1, 1998 among EquiCredit Corporation of
America, as Servicer, the Depositors listed therein and U.S.
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with Section 2.06 of the Agreement, the undersigned, as
Trustee, hereby certifies that, except as noted on the Master Exception Report
dated [], 1998 and made a part hereof, it or the Custodian on its behalf has
received, with respect to each Mortgage Loan, the documents specified in
Sections 2.04(a), (b), (c), (g) and (h) of the Pooling and Servicing Agreement,
as applicable, a Mortgage, or a certified copy thereof, Assignment of Mortgage,
or a certified copy thereof, and a Mortgage Note with respect to each Mortgage
Loan listed in the Mortgage Loan Schedule and the documents contained therein
appear to bear original signatures or copies of originals if the originals have
not yet been delivered.
Neither the Trustee nor the Custodian on its behalf has made any
independent examination of any such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any such documents or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT F-1
FORM OF TRUSTEE INTERIM CERTIFICATION
, 19__
[Representative]
[Insurer]
[Depositors]
[Servicer]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class A-1F, Class A-2F, Class
A-3F, Class A-4F, Class A-5F, Class A-6F, Class A-7F, Class
A-IO, Class A-1A, Class X, Class R, Class MR and Class LR,
dated as of April 1, 1998, among EquiCredit Corporation of
America, as Servicer, the Depositors listed therein and U.S.
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the above-referenced
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 any Mortgage Loan listed on the attachment
hereto), it or the Custodian on its behalf has reviewed the documents delivered
to it or the Custodian on its behalf pursuant to Section 2.04 of the Pooling and
Servicing Agreement and has determined that (i) all such documents are in its
possession or in the possession of the Custodian on its behalf (other than those
listed in Section 2.04(f)), (ii) such documents have been reviewed by it or the
Custodian on its behalf and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Mortgage Loan, (iii) based on its
examination, or the examination of the Custodian on its behalf, and only as to
the foregoing documents, the information set forth in the Mortgage Loan Schedule
(other than items (i), (iv) and (x) of the definition of Mortgage Loan Schedule)
respecting such Mortgage Loan accurately reflects the information set forth in
the Mortgage File and (iv) each Mortgage Note has been endorsed as provided in
Section 2.04 of the Pooling and Servicing Agreement.
Neither the Trustee nor the Custodian on its behalf has made any
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i)
<PAGE>
the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and servicing
Agreement.
===================================,
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT F-2
FORM OF TRUSTEE FINAL CERTIFICATION
, 19__
[Representative]
[Insurer]
[Depositors]
[Servicer]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class A-1F, Class A-2F, Class
A-3F, Class A-4F, Class A-5F, Class A-6F, Class A-7F, Class
A-IO, Class A-1A, Class X, Class R, Class MR and Class LR,
dated as of April 1, 1998 among EquiCredit Corporation of
America, as Servicer, the Depositors listed therein and U.S.
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it or to the Custodian on its behalf has reviewed the
documents delivered to it or to the Custodian on its behalf pursuant to Section
2.04 of the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession or in the possession of the Custodian on its
behalf (other than those listed in Section 2.04(f)), (ii) such documents have
been reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Mortgage loan, (iii) based on its
examination, and only as to the foregoing documents, the information set forth
in the Mortgage Loan Schedule (other than items (i), (iv) and (x) of the
definition of Mortgage Loan Schedule) respecting such Mortgage Loan accurately
reflects the information set forth in the Trustee's Mortgage File and (iv) each
Mortgage Note has been endorsed as provided in Section 2.04 of the Pooling and
Servicing Agreement. Neither the Trustee nor the Custodian on its behalf has
made any independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the
<PAGE>
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
===================================,
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT G
LIST OF BANKRUPTCY LOANS
<PAGE>
EXHIBIT H
FORM OF DELINQUENCY REPORT
Mortgage Pool
% of
Number of Principal Aggregate
Accounts Balance Principal
-------- ------- ---------
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In REO
Fixed Rate Group
% of
Number of Principal Aggregate
Accounts Balance Principal
-------- ------- ---------
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
<PAGE>
% of
Number of Principal Aggregate
Accounts Balance Principal
-------- ------- ---------
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In REO
Adjustable Rate Group
% of
Number of Principal Aggregate
Accounts Balance Principal
-------- ------- ---------
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In REO
<PAGE>
EXHIBIT I
CERTIFICATE INSURANCE POLICY
Issuer: EQCC Home Equity Loan Trust 1998-1 Policy Number: AB0166BE
Insured Obligations: $738,874,072
in aggregate principal amount of EQCC
Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class
A-1F, Class A-2F, Class A-3F, Class
A-4F, Class A-5F, Class A-6F, Class
A-7F, Class A-IO and Class A-1A
Certificates (the "Certificates")
Trustee: U.S. Bank National Association
Ambac Assurance Corporation ("Ambac"), a Wisconsin stock insurance company, in
consideration of its receipt of the Deposit Premium and subject to the terms of
this Surety Bond, hereby unconditionally and irrevocably agrees to pay each
Insured Payment to the Trustee name above or its successor, as trustee for the
Certificates, to the extent set forth in the Pooling and Servicing Agreement,
dated as of April 1, 1998, by and among EQCC Receivables Corporation and EQCC
Asset Backed Corporation, as Depositors, EquiCredit Corporation of America, as
Representative and Servicer, and U.S. Bank National Association, as Trustee (the
"Pooling and Servicing Agreement"). This Surety Bond does not cover, and an
Insured Payment shall not include, any LIBOR Interest Carryover.
Ambac will make an Insured Payment out of its own funds by 12:00 noon (New York
City time) in immediately available funds to the Trustee on the later of (i) the
Business Day next following the day on which Ambac shall have received Notice
that an Insured Payment is due and (ii) the Payment Date on which the Insured
Payment id distributable to Certificateholders pursuant to the Pooling and
Service Agreement, for disbursement to such Certificateholders in the same
manner as other payments with respect to the Certificates are required to be
made. Any Notice received by Ambac after 12:00 noon New York City time on a
given Business Day or on any day that is not a Business Day shall be deemed to
have been received by Ambac on the next succeeding Business Day.
Upon such payment, Ambac shall be fully subrogated to the rights of the
Certificateholders to receive the amount so paid. Ambac's obligations hereunder
with respect to each Payment Date shall be discharged to the extent funds
consisting of the Insured Payment are received by the Trustee on behalf of the
Certificateholders for distribution of such Certificateholders, as provided in
the Pooling and Servicing Agreement and herein, whether or not such funds are
properly applied by the Trustee.
<PAGE>
This Surety Bond is non-cancelable for any reason, including nonpayment of any
premium. The premium on this Surety Bond is not refundable for any reason,
including the payment of the Certificates prior to their respective maturities.
This Surety Bond shall expired and terminate without any action on the part of
Ambac or any other Person on the date that is one year and one day following the
date on which the Certificates shall have been paid in full.
The "Deposit Premium" shall be due and payable on the date hereof, as provided
in a letter agreement of even date herewith among Ambac and the Depositors, and
a monthly premium shall be due and payable as provided in the Pooling and
Servicing Agreement.
This Surety Bond is subject to and shall be governed by the laws of the State of
Illinois. The insurance provided by this Surety Bond is not covered by the New
York Property/Casualty Insurance Security Fund (New York Insurance Law, Article
76).
Capitalized terms used and not defined herein shall have respective meanings set
forth in the Pooling and Servicing Agreement. "Notice" means written notice in
the form of Exhibit Q to the Pooling and Servicing Agreement by registered or
certified mail or telephonic or telegraphic notice, subsequently confirmed by
written notice delivered via telecopy, telex or hand delivery from the Trustee
to Ambac specifying the information set forth therein. "Certificateholder"
means, as to a particular Certificate, the person, other than the Trust, the
Servicer, any Subservicer or the Representative or any Depositor who, on the
applicable Payment Date, is entitled under the terms of such Certificate to
payment thereof.
In the event that payments under any Certificate is accelerated, nothing herein
contained shall obligate Ambac to make any payment of principal or interest on
such Certificates on an accelerated basis, unless such acceleration of payment
by Ambac is at the sole option of Ambac.
IN WITNESS WHEREOF, Ambac has caused this Surety Bond to be affixed with its
corporate seal and to be signed by its duly authorized officer in facsimile to
become effective and bind upon Ambac by virtue of the countersignature of its
duly authorized representative.
_______________________________ ______________________________
First Vice President Authorized Representative
Effective Date: April 23, 1998
<PAGE>
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
EQCC Receivables Corporation
EQCC Asset Backed Corporation
[ADDRESS]
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Re: EQCC Home Equity Loan Asset Backed Certificates, Series
1998-1, Class [R][MR][LR]
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________________ (the "Asset Seller") to ___________________ (the
"Purchaser") of a ____% Percentage Interest of EQCC Home Equity Loan Asset
Backed Certificates, Series 1997-1, Class [R][MR][LR] (the "Certificates"),
pursuant to Section 4.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of dated as of April 1, 1998 by and among
EquiCredit Corporation of America, as Representative and Servicer, the
Depositors listed therein ("Depositors") and U.S. Bank National Association, as
trustee ("Trustee"). All terms used herein and not otherwise defined shall have
the meanings set forth in the Pooling and Servicing Agreement. The Asset Seller
hereby certifies, represents and warrants to, and covenants with, the Company
and the Trustee that:
1. No purpose of the Asset Seller relating to the transfer of the
Certificates by the Asset Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Asset Seller understands that the Purchaser has delivered to the
Trustee and the Servicer a transfer affidavit and agreement in the form attached
to the Pooling and Servicing Agreement as Exhibit I. The Asset Seller does not
know or believe that any representation contained therein is false.
3. The Asset Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Asset Seller has determined that the Purchaser has
historically paid its debts as they become due and has found
<PAGE>
no significant evidence to indicate that the Purchaser will not continue to pay
its debts as they become due in the future. The Asset Seller understands that
the transfer of a Class [R][MR][LR] Certificate may not be respected for United
States income tax purposes (and the Asset Seller may continue to be liable for
United States income taxes associated therewith) unless the Asset Seller has
conducted such an investigation.
4. The Asset Seller has no actual knowledge that the proposed Purchaser is
not both a United States Person and a Permitted Transferee.
Very truly yours,
___________________________________
(Asset Seller)
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT K
LIST OF ORIGINATORS
EquiCredit Corporation of America
EquiCredit Corporation/Ala. & Miss.
California/EquiCredit Corporation
EquiCredit Corporation of In.
EquiCredit Corporation of Pa.
EquiCredit Corporation of SC
<PAGE>
EXHIBIT L
[RESERVED]
<PAGE>
EXHIBIT M-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
State of ___________ )
) ss.:
County of __________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or beneficial
owner of the EQCC Home Equity Loan Asset Backed Certificates, Series 1998-1,
Class [R][MR][LR] (the "Owner")), a [savings institution] [corporation] duly
organized and existing under the laws of [the State of __________________] [the
United States], on behalf of which he makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified organization"
as of [date of transfer] within the meaning of Section 860E(e)(5) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) will endeavor to
remain other than a disqualified organization for so long as it retains its
ownership interest in the Class [R][MR][LR] Certificates, and (iii) is acquiring
the Class [R][MR][LR] Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class [R][MR][LR] Certificates to disqualified organizations under
the Code; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class [R][MR][LR]
Certificates may be "noneconomic residual interests" within the meaning of
Treasury regulations promulgated pursuant to the Code and that the transferor of
a noneconomic residual interest will remain liable for any taxes
<PAGE>
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.
4. That the Owner is aware that the Trustee will not register the transfer
of any Class [R][MR][LR] Certificates unless the transferee, or the transferee's
agent, delivers to it an affidavit and agreement, among other things, in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.
5. That the Owner has reviewed the restrictions set forth on the face of
the Class [R][MR][LR] Certificates and the provisions of Section 4.02(d) of the
Pooling and Servicing Agreement under which the Class [R][MR][LR] Certificates
were issued (in particular, clause (6) of Section 4.02(d) which authorize the
Trustee to deliver payments to a person other than the Owner in the event the
Owner holds such Certificates in violation of Section 4.02(c)). The Owner
expressly agrees to be bound by and to comply with such restrictions and
provisions.
6. That the Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class [R][MR][LR] Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
7. The Owner's Taxpayer Identification Number is ___________.
8. This affidavit and agreement relates only to the Class [R][MR][LR]
Certificates held by the Owner and not to any other holder of the Class
[R][MR][LR] Certificates. The Owner understands that the liabilities described
herein relate only to the Class [R][MR][LR] Certificates.
9. That no purpose of the Owner relating to the transfer of any of the
Class [R][MR][LR] Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
10. That the Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class [R][MR][LR]
Certificate that the Owner intends to pay taxes associated with holding such
Class [R][MR][LR] Certificate as they become due, fully understanding that it
may incur tax liabilities in excess of any cash flows generated by the Class
[R][MR][LR] Certificate.
11. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as any of the
Class [R][MR][LR] Certificates remain outstanding.
<PAGE>
12. That the Owner (i) is a U.S. Person or (ii) is a person other than a
U.S. Person (a "Non-U.S. Person") that holds the Class [R][MR][LR]] Certificate
in connection with the conduct of a trade or business within the United States
and has furnished the transferor and the Trustee with an effective Internal
Revenue Service Form 4224 or successor form at the time and in the manner
required by the Code or (iii) is a Non-U.S. Person that has delivered to both
the transferor and the Trustee an opinion of a nationally recognized tax counsel
to the effect that the transfer of the Class [R][MR][LR] Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of the [R][MR][LR] Certificate will not be
disregarded for federal income tax purposes. "U.S. Person" means a citizen or
resident of the United States, a corporation, partnership (except to the extent
provided in applicable Treasury regulations) or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, an estate that is subject to U.S. federal income tax regardless of the
source of its income or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Title
of Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
________________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Owner, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of ________________, 199__.
___________________________________
NOTARY PUBLIC
COUNTY OF__________________________
STATE OF___________________________
My Commission expires the ____ day of
_______________, 19__.
<PAGE>
EXHIBIT M-2
FORM OF INVESTOR REPRESENTATION LETTER
------------,-----
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Re: EQCC Home Equity Loan Asset Backed Certificates, Series
1998-1
Ladies and Gentlemen:
_______________________ (the "Purchaser") intends to purchase from
____________________ (the "Seller"), a ____% Percentage Interest of EQCC Home
Equity Loan Asset Backed Certificates, Series 1998-1, Class [X][R][MR][LR] (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of April 1, 1998, among U.S. Bank
National Association, as trustee (the "Trustee"), Equicredit Corporation of
America, EQCC Receivables Corporation and EQCC Asset Backed Corporation. All
terms used herein and not otherwise defined shall have the meanings set forth in
the Pooling and Servicing Agreement. The Purchaser hereby certifies, represents
and warrants to, and covenants with, the Company and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
and will not be registered or qualified under the Securities Act of 1933,
as amended (the "Act") or any state securities law, (b) the Company is not
required to so register or qualify the Certificates, (c) the Certificates
may be resold only if registered and qualified pursuant to the provisions
of the Act or any state securities law, or if an exemption from such
registration and qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the Certificates
and (e) the Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account for
investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters, and, in particular, in such matters related to securities similar
to the Certificates, such that it is capable of evaluating the merits and
risks of investment in the Certificates, (b) able to bear the economic
risks of such an
<PAGE>
investment and (c) an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity
to review a copy of the Private Placement Memorandum dated ___________,
_____, relating to the Certificates, the Pooling and Servicing Agreement
and such other information concerning the Certificates, the Mortgage Loans
and the Company as has been requested by the Purchaser from the Company or
the Asset Seller and is relevant to the Purchaser's decision to purchase
the Certificates. The Purchaser has had any questions arising from such
review answered by the Company or the Asset Seller to the satisfaction of
the Purchaser.
5. The Purchaser has not and will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any offer to buy
or to accept a pledge, disposition of other transfer of any Certificate,
any interest in any Certificate or any other similar security from any
person in any manner, (c) otherwise approach or negotiate with respect to
any Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general solicitation
by means of general advertising or in any other manner or (e) take any
other action, that (as to any of (a) through (e) above) would constitute a
distribution of any Certificate under the Act, that would render the
disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Pooling
and Servicing Agreement.
[6. For Class X Certificates] Either (A) the Purchaser is not an
employee benefit plan or other retirement arrangement subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), or a governmental plan, as defined in Section 3(32) of ERISA,
subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (collectively, a
"Plan"), and is not acting on behalf of or investing the assets of a Plan,
(B) if the Purchaser is an insurance company, the source of funds used to
purchase the Class X Certificates is an "insurance company general account"
is an "insurance company general account" (as such term is defined in
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"),
60 Fed. Reg. 35925 (July 12, 1995) and there is no Plan with respect to
which the amount of such general account's reserves and liabilities for the
contract(s) held by or on behalf of such Plan and all other Plans
maintained by the same employer (or affiliate thereof as defined
<PAGE>
in Section V(a)(1) of PTE 95-60) or by the same employee organization
exceeds 10% of the total of all reserves and liabilities of such general
account (as such amounts are determined under Section I(a) of PTE 95-60) at
the date of acquisition or (C) the Purchaser has provided a certification
of facts and an opinion of counsel which establish to the satisfaction of
the Company and the Trustee that such transfer will not result in a
violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or the Trustee to be deemed a fiduciary of such Plan or result in
the imposition of an excise tax under Section 4975 of the Code and will not
subject the Trustee, the Company or the Master Servicer to any obligation
in addition to those undertaken in the Pooling and Servicing Agreement
(including any liability for civil penalties or excise taxes imposed
pursuant to ERISA, Section 4975 of the Code or a similar law.
[6. For Class R, Class MR and Class LR Certificates] The Purchaser is
not an employee benefit plan or other retirement arrangement subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or a governmental plan, as defined in Section 3(32) of ERISA,
subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (collectively, a
"Plan"), and is not acting on behalf of or investing the assets of a Plan.
Very truly yours,
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT M-3
Form of Transferor Representation Letter
___________, 199__
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Re: EQCC Home Equity Loan Asset Backed Certificates, Series
1998-1
Ladies and Gentlemen:
In connection with the sale by _____________ (the "Asset Seller") to
__________________ (the "Purchaser") of [$___________ initial Certificate
Principal Balance][_____% Percentage Interest] of EQCC Home Equity Loan Asset
Backed Certificates, Series 1998-1, Class [X][R][MR][LR] (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of April 1, 1998, among U.S. Bank National
Association, as trustee (the "Trustee"), Equicredit Corporation of America, EQCC
Receivables Corporation and EQCC Asset Backed Corporation (collectively, the
"Company"). The Asset Seller hereby certifies, represents and warrants to, and
covenants with, the Company and the Trustee that:
Neither the Asset Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Asset Seller will not act in
any manner set forth in the foregoing sentence with respect to any Certificate.
The Asset Seller has not and will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
<PAGE>
Very truly yours,
===================================
(Asset Seller)
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT M-4
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
EQCC Home Equity Loan
Asset Backed Certificates
Series 1998-1, Class ___, No. ___
The undersigned Asset Seller, as registered holder (the "Transferor"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the agreements
pursuant to which the Rule 144A Securities were issued, the Transferor hereby
certifies the following facts: Neither the Transferor nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, or otherwise approached or negotiated
with respect to the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any other manner,
or taken any other action, which would constitute a distribution of the Rule
144A Securities under the Securities Act of 1933, as amended (the "1933 Act"),
or which would render the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, and that the
Transferor has not offered the Rule 144A Securities to any person other than the
Buyer or another "qualified institutional buyer" as defined in Rule 144A under
the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Transferor, the Trustee and the Servicer pursuant to Section 4.02 of the Pooling
and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A Securities have not been
registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding the
Rule 144A Securities that it has requested from the Transferor, the Trustee
or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any
<PAGE>
interest in the Rule 144A Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that would
render the disposition of the Rule 144A Securities a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act. The Buyer is aware that the sale
to it is being made in reliance on Rule 144A. The Buyer is acquiring the
Rule 144A Securities for its own account or the account of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed to
be a qualified institutional buyer that purchases for its own account or
for the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with, the
Transferor, the Servicer and the Company that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a plan
within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986
(the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the Buyer's
purchase of the Rule 144A Securities will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
4. This document may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this document as of
the date set forth below.
________________________________ ______________________________
Print Name of Transferor Print Name of Buyer
By:_____________________________ By:___________________________
Name: Name:
Title Title
Taxpayer Identification: Taxpayer Identification:
No. ____________________________ No. __________________________
Date:___________________________ Date:_________________________
<PAGE>
EXHIBIT N
FORM OF CUSTODIAL AGREEMENT
================================================================================
CUSTODIAL AGREEMENT
AMONG
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC
EQUICREDIT CORPORATION/ALA. & MISS.
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
REPRESENTATIVE AND SERVICER
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
DEPOSITORS
U.S. BANK NATIONAL ASSOCIATION
TRUSTEE
AND
BANKBOSTON, N.A.
CUSTODIAN
DATED AS OF APRIL 1, 1998
EQCC HOME EQUITY LOAN TRUST 1998-1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions ................................................
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian ...................................
Section 2.2. Maintenance of Office ......................................
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Mortgage Loans; Delivery of Documents ..........
Section 3.2. Trust Receipt and Certification ............................
Section 3.3. Release of Mortgage Files ..................................
Section 3.4. Purchase; Payment In Full ..................................
Section 3.5. Other Duties of Custodian ..................................
Section 3.6. Access to Records ..........................................
Section 3.7. Instructions; Authority to Act .............................
ARTICLE IV
OWNERSHIP AND TRANSFER OF MORTGAGE LOANS
Section 4.1. Transfer of Mortgage Loans .................................
Section 4.2. Substitution and Purchase of Mortgage Loans ................
Section 4.3. No Service Charge for Transfer of Mortgage Loans ...........
Section 4.4. Defeasance .................................................
ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and Covenants of Custodian .....
Section 5.2. Charges and Expenses .......................................
Section 5.3. No Adverse Interests .......................................
Section 5.4. Inspections ................................................
Section 5.5. Insurance ..................................................
<PAGE>
Section 5.6. Limitation of Liability ....................................
Section 5.7. Indemnification ............................................
Section 5.8. Further Rights of Custodian ................................
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment ..................................................
Section 6.2. Governing Law ..............................................
Section 6.3. Notices ....................................................
Section 6.4. Severability of Provisions .................................
Section 6.5. No Partnership .............................................
Section 6.6. Termination of Agreement ...................................
Section 6.7. Counterparts ...............................................
Section 6.8. Assignment .................................................
Section 6.9. Headings ...................................................
Section 6.10. Advice of Counsel .........................................
Section 6.11. Third Party Beneficiary ...................................
Section 6.12. Resignation of Custodian ..................................
Section 6.13. Limitation of Liability of Trustee ........................
EXHIBIT A Trust Receipt and Certification .....................
EXHIBIT B Request for Release of Documents ....................
EXHIBIT C List of Originators .................................
EXHIBIT D Transfer Certificate ................................
SCHEDULE I Mortgage Loan Schedule
<PAGE>
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT is made as of April 1, 1998, by and among THE
ORIGINATORS LISTED ON EXHIBIT C HERETO (collectively, the "Originators"),
EQUICREDIT CORPORATION OF AMERICA, as Representative (the "Representative") and
as Servicer (the "Servicer"), EQCC RECEIVABLES CORPORATION and EQCC ASSET BACKED
CORPORATION (collectively, the "Depositors"), U.S. BANK NATIONAL ASSOCIATION, as
Trustee under the Pooling and Servicing Agreement (the "Trustee") and
BANKBOSTON, N.A., as Custodian (the "Custodian").
RECITALS
WHEREAS, the Originators collectively are the owners of the Mortgage Loans.
WHEREAS, pursuant to the Transfer Agreement, each Originator will transfer
its related Mortgage Loans to one of the Depositors.
WHEREAS, pursuant to the Pooling and Servicing Agreement, each Depositor
will transfer its related Mortgage Loans acquired pursuant to the Transfer
Agreement to the Trustee for the benefit of the Certificateholders.
WHEREAS, during such time as the Depositors or the Trustee holds the
Mortgage Loans, such Person or Persons shall be referred to herein as the
"Mortgage Holder," and the Custodian shall hold all Mortgage Loans as bailee of
and agent for the benefit of each Depositor and the Trustee (for the benefit of
the Certificateholders) during such time as such Person is a Mortgage Holder.
References in this Agreement to the Mortgage Holder, when referring to transfers
or possession of, or security interests in, Mortgage Loans, shall refer to
Custodian, in its capacity as custodian for the benefit of such Mortgage Holder.
WHEREAS, in connection with the foregoing, the parties hereto desire to
provide for the custody and management of the Mortgage Loans which become
subject to these transfers of Mortgage Loans (each, a "Transfer").
WHEREAS, Custodian is a financial institution regulated by the Comptroller
of the Currency of the United States.
WHEREAS, each Originator, each Depositor and the Trustee during such time
as such Person is a Mortgage Holder desires to have Custodian (i) hold title to
the Mortgage Loans as custodian for each such party, (ii) take possession of the
Mortgage Notes and the Mortgages related to the Mortgage Loans, along with
certain other documents specified in this Agreement (the "Collateral"), as the
custodian for, and bailee of, such Mortgage Holder in accordance with the terms
and conditions of this Agreement, and (iii) endorse the Mortgage Notes to the
order of the Trustee and retain possession of the Mortgage Notes and Mortgages
and such other documents as custodian for and bailee of the Trustee. Custodian
is willing and able to perform the duties and obligations of a custodian and
bailee as set forth herein.
<PAGE>
WHEREAS, Servicer will act as servicer of the Mortgage Loans pursuant to
the Pooling and Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Originators, the Representative, the Servicer, the
Depositors, the Trustee and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Certain capitalized terms used in this Agreement
and not otherwise defined herein shall have the respective meanings assigned
them in Article I of the Pooling and Servicing Agreement dated as of April 1,
1998 (the "Pooling and Servicing Agreement") among the Depositors and the
Servicer. All references in this Agreement to Articles, Sections, Subsections
and Exhibits are to the same contained in or attached to this Agreement unless
otherwise specified. All terms defined in this Agreement shall have the defined
meanings when used in any certificate, notice or other document made or
delivered pursuant hereto unless otherwise defined therein.
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian. Subject to the terms and conditions
hereof, the Depositors and the Trustee (for the benefit of the
Certificateholders), as their interests may appear, hereby appoint BankBoston,
N.A., and BankBoston, N.A., hereby accepts such appointment, as Custodian to
maintain custody of the Mortgage Files during such time as each such Person is a
Mortgage Holder. The Servicer shall be liable for all of the Custodian's fees
and expenses under this Agreement.
Section 2.2. Maintenance of Office. The Custodian agrees to maintain each
Mortgage File identified in Section 2.04 of the Pooling and Servicing Agreement
and Section 2.04 of the Transfer Agreement (a) initially at its office located
at 7861 Bayberry Road, Jacksonville, Florida 32256 and (b) then at such of its
other offices in Florida or Massachusetts as Custodian shall designate from time
to time after giving the Originators, the Depositors, the Trustee and the
Certificate Insurer 30 days prior written notice.
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Mortgage Loans; Delivery of Documents. Before a
mortgage loan shall
<PAGE>
become a Mortgage Loan subject to this Agreement, the Originators shall deliver,
or cause to be delivered, to Custodian, the Mortgage File for such Mortgage Loan
referred to in Section 2.04 of the Transfer Agreement. Until the Closing Date
and the occurrence of the applicable initial Transfer described below, the
Custodian shall hold the Mortgage Loans (including the Mortgage Files) as
custodian and bailee for the Originators.
On the Closing Date, the Originators shall deliver to the Custodian a
Transfer Certificate in the form attached hereto as Exhibit D evidencing the
Transfer by the Originators to the Depositors of the Mortgage Loans pursuant to
the Transfer Agreement. Upon receipt of any such Transfer Certificate duly
executed by the Originators, the Custodian shall issue to the Depositors a Trust
Receipt and Certification (the "Depositors' Trust Receipt"), as described in
Section 3.2 below.
On the Closing Date, upon receipt of the Depositors' Trust Receipt, the
Depositors shall deliver to the Custodian a Transfer Certificate in the form
attached hereto as Exhibit D evidencing the Transfer by the Depositors to the
Trustee (for the benefit of the Certificateholders) of the Mortgage Loans
pursuant to the Pooling and Servicing Agreement, together with the Depositor's
Trust Receipt. Upon receipt of a Transfer Certificate duly executed by the
Depositors and the Depositor's Trust Receipt, the Custodian shall issue to the
Trustee a Trust Receipt and Certification (the "Trustee's Trust Receipt"), as
described in Section 3.2 below, and shall cancel the Depositor's Trust Receipt.
Promptly after delivery of the Trustee's Trust Receipt, the Custodian shall
endorse the related Mortgage Notes to the Trustee in the form specified in the
Pooling and Servicing Agreement. Promptly upon the occurrence of the Recordation
Trigger, the Custodian shall forward the Assignments of Mortgage and
Reassignments of Assignments of Beneficial Interest to the Servicer, whereupon,
the Servicer shall (a) cause the Assignments of Mortgage and Reassignments of
Assignments of Beneficial Interest to be recorded in the name of the Trustee
(for the benefit of the Certificateholders) in accordance with Section 2.04 of
the Pooling and Servicing Agreement and (b) return the acknowledgment copies of
such Assignments of Mortgage and Reassignments of Assignments of Beneficial
Interest to the Custodian immediately upon the Servicer's receipt thereof.
Custodian hereby acknowledges receipt of the Transfer Agreement and the
Pooling and Servicing Agreement. Custodian further acknowledges that, on the
Closing Date and pursuant to this Agreement, the Transfer Agreement and the
Pooling and Servicing Agreement, Custodian will be given possession of the
Mortgage Files relating to the Mortgage Loans, each of which Mortgage Loans will
be described specifically on the Mortgage Loan Schedule, a copy of which will be
delivered to Custodian simultaneously with the delivery of the Mortgage Files
relating thereto. On and after the Closing Date and the completion of the
Transfers described above, and so long as this Agreement shall remain in effect,
Custodian shall hold the Mortgage Loans and other Collateral now and hereafter,
from time to time, in its custody or control as custodian for and bailee of the
Trustee, as trustee for the benefit of the Certificateholders, unless and until
released in accordance with the Pooling and Servicing Agreement, in which event,
Custodian shall hold the Mortgage Files relating to the Mortgage Loans and other
Collateral as agent, trustee and bailee for the benefit of the applicable
Mortgage Holder.
<PAGE>
Section 3.2. Trust Receipt and Certification. Upon delivery to Custodian of
the Mortgage Files, as specified in Section 3.1, Custodian shall review the same
on account of the Depositors and the Trustee in accordance with the terms of
Section 2.05(a) of the Transfer Agreement and Section 2.06(a) of the Pooling and
Servicing Agreement and (subject to Section 4.1 hereof) shall provide to the
Originators, the Depositors and the Trustee, as the case may be, with a copy to
the Certificate Insurer, a receipt indicating that (i) all the documents in the
Mortgage Files required to be delivered under Section 3.1 (being the documents
described in Section 2.04 of the Transfer Agreement, and Section 2.04 of the
Pooling and Servicing Agreement) have been delivered (subject to any exceptions
noted in the related exception report referred to in such receipt) and (ii)
Custodian holds such documents on behalf of the applicable Mortgage Holder
pursuant to this Agreement (the "Mortgage Receipt"). Upon consummation of a
Transfer in accordance with Article IV hereof, Custodian shall, with respect to
the Mortgage Loans transferred to the applicable Mortgage Holder in connection
with the applicable Transfer, as described in Section 3.1 hereof, number,
execute and deliver to the applicable Mortgage Holder (with a copy to the
Originators and the Certificate Insurer) one or more certifications (each, a
"Trust Receipt and Certification") in the form attached hereto as Exhibit A.
Upon issuance of a Trust Receipt and Certification with respect to any Transfer,
the Mortgage Receipt relating to such Mortgage Loans previously delivered shall
be deemed cancelled with respect to such Mortgage Loans.
If recordation of any Assignment of Mortgage or Reassignment of Assignment
of Beneficial Interest is required after the occurrence of a Recordation
Trigger, upon delivery of such Assignment of Mortgage or Reassignment of
Assignment of Beneficial Interest to the Custodian as set forth in Section
2.06(d) of the Pooling and Servicing Agreement, the Custodian shall review the
Assignment of Mortgage or Reassignment of Assignment of Beneficial Interest to
confirm the information set forth therein, shall notify the Trustee of any
defect therein and shall otherwise take such actions as may be required under
Section 2.06(d).
Section 3.3. Release of Mortgage Files. From time to time and as provided
in the Pooling and Servicing Agreement, Custodian is hereby authorized, upon
written request of Servicer in the form annexed hereto as Exhibit B (which
written request may be transmitted by electronic means containing electronic
facsimile signature in a manner mutually agreeable to the Servicer and the
Custodian), to release to Servicer the Mortgage File related to any Mortgage
Loan identified in such request to Servicer. All Mortgage Files so released to
Servicer shall be held by it in trust for the benefit of the Trustee (for the
benefit of the Certificateholders). Servicer shall return the Mortgage File to
Custodian when Servicer's need therefor in connection with such foreclosure or
repossession no longer exists, unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certification to this effect from Servicer to
Custodian in the form annexed hereto as Exhibit B, the related Mortgage File
shall be released by Custodian to Servicer, and Custodian shall thereupon
reflect any such liquidation on the related Mortgage.
Section 3.4. Purchase; Payment In Full. Upon the purchase or substitution
of any Mortgage Loan pursuant to Section 2.06 or 3.03 of the Pooling and
Servicing Agreement or Section 2.06 or 3.03 of the Transfer Agreement, or upon
the payment in full of any
<PAGE>
Mortgage Loan, which shall be evidenced by Custodian's receipt of the request
for release in the form annexed hereto as Exhibit B, Custodian shall promptly
release the related Mortgage File to Servicer and the interest in such Mortgage
Loan and related Mortgage File granted by the Depositors to the Trustee pursuant
to the Pooling and Servicing Agreement shall terminate without any further
action by the Custodian, the Originators, the Depositors or Trustee.
Section 3.5. Other Duties of Custodian. The Custodian shall have and
perform the other following powers and duties:
(a) Safekeeping. To segregate the Mortgage Files from all other
mortgages and mortgage notes and similar documents in its possession, to
identify the Mortgage Files as being held and to hold the Mortgage Files
for and on behalf of the Mortgage Holders (which, on and after the Closing
Date, and after completion of the Transfers described in Section 3.1, shall
be the Trustee for the benefit of the Certificateholders), to maintain
accurate records pertaining to each Mortgage Note and Mortgage in the
Mortgage Files, to provide no later than 45 days following the Closing
Date, and monthly thereafter, a list of all Mortgage Loan Files held by it,
together with a current exception report, and to provide such information
as is necessary to enable the Trustee to deliver the reports and
notifications required by Section 2.06 of the Pooling and Servicing
Agreement. Custodian will promptly report to the Trustee any failure on its
part to hold the Mortgage Files as herein provided and promptly take
appropriate action to remedy any such failure.
(b) Administration; Reports. In general, to attend to all
non-discretionary details in connection with maintaining custody of the
Mortgage Files on behalf of the Mortgage Holders as may be expressly
provided herein or as may be required or customary for a custodian or
bailee pursuant to FNMA guidelines. In addition, Custodian shall assist the
Trustee and the Servicer (at Servicer's cost) generally in the preparation
of reports to holders or to regulatory bodies to the extent necessitated by
Custodian's custody of the Mortgage Files.
Section 3.6. Access to Records. Custodian shall permit the Trustee, the
Certificate Insurer and their respective duly authorized agents, attorneys or
auditors and those Persons permitted access pursuant to Section 5.12 of the
Pooling and Servicing Agreement to inspect the Mortgage Files and the books and
records maintained by the Custodian pursuant hereto at such reasonable times as
they may reasonably request, subject only to compliance with the terms of the
Pooling and Servicing Agreement.
Section 3.7. Instructions; Authority to Act. The Custodian shall be deemed
to have received proper instructions with respect to the Mortgage Files upon its
receipt of written instructions signed by a Responsible Officer of the Trustee
and may conclusively rely on such instructions. In addition, the Custodian may
conclusively rely upon any release request delivered to it in the form attached
as Exhibit B hereto duly executed by the Servicer, such
<PAGE>
release form being agreed to constitute certification to the Custodian (upon
which Custodian may rely) that all conditions precedent to the release of the
Mortgage File have been met.
ARTICLE IV
OWNERSHIP AND TRANSFER OF MORTGAGE LOANS
Section 4.1. Transfer of Mortgage Loans. The transfer of Mortgage Loans in
connection with any Transfer shall occur in the following manner:
(i) Custodian shall, promptly upon receiving a Transfer Certificate
relating to the transfer of Mortgage Loans pursuant to a Transfer:
(a) Determine whether each document in the Mortgage File listed
in Section 2.04 of the Transfer Agreement and Section 2.04 of the
Pooling and Servicing Agreement with respect to each Mortgage Loan
listed on the Mortgage Loan Schedule has been delivered to Custodian,
and whether Custodian is able to deliver a Trust Receipt and
Certification;
(b) promptly advise the applicable Mortgage Holder, the
Certificate Insurer, the Trustee, the applicable Originator and the
applicable Depositor by telephone or by facsimile transmission if it
determines that any document referred to in (a) above has not been so
delivered and take no further action under this Section 4.1 until it
determines that such documents have been so delivered;
(c) upon determining that such documents have been so delivered,
Custodian shall issue and deliver to applicable Mortgage Holder the
Trust Receipt and Certification in accordance with Sections 3.1 and
3.2 of this Agreement; and
(ii) Custodian shall hold the Mortgage Files for each Mortgage Holder
subject to satisfaction of the conditions precedent with respect to the
applicable Transfer.
Section 4.2. Substitution and Purchase of Mortgage Loans. The substitution
or purchase of Mortgage Loans pursuant to Section 2.05 or Section 3.03 of the
Transfer Agreement and Section 2.06 or Section 3.03 of the Pooling and Servicing
Agreement shall occur in the following manner:
(i) On or before the date of such substitution or purchase, the
Servicer shall send the Trustee notice, with a copy to Custodian,
indicating the Mortgage Loans to be replaced with Qualified Substitute
Mortgage Loans or to be purchased and the aggregate purchase prices and
Substitution Adjustments, if any, to be paid on such date.
<PAGE>
(ii) Upon receiving written confirmation from the applicable
Depositors and the Trustee on behalf of the Certificateholders that they
have received the applicable purchase price, Qualified Substitute Mortgage
Loans or Substitution Adjustments, Custodian shall return to the applicable
party (as identified to the Custodian by the Trustee) Mortgage Files
related to the Mortgage Loans purchased or substituted on such date.
Section 4.3. No Service Charge for Transfer of Mortgage Loans. No service
charge shall be made for any transfer of Mortgage Loans, but Custodian may
require payment from the Servicer of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer of
Mortgage Loans.
Section 4.4. Defeasance. When a Mortgage Loan is purchased or
substituted by the Servicer, the Depositor or the applicable Originator pursuant
to the terms of the Transfer Agreement and the Pooling and Servicing Agreement,
the applicable Mortgage Holder's interest in such Mortgage Loan and all
Collateral with respect to such Mortgage Loan shall terminate, such Mortgage
Loan and related Collateral shall revert to the applicable Originator and the
applicable Mortgage Holder's rights, title and interest therein shall cease, and
the Trustee shall execute such instruments acknowledging termination and
discharge of its interest therein as are required by applicable law.
ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and Covenants of Custodian.
Custodian hereby represents and warrants to, and covenants with, the
Originators, the Depositors, the Representative, the Servicer, the Certificate
Insurer and the Trustee, that as of the date of each Trust Receipt and
Certification:
(i) Custodian is duly organized, validly existing and in good standing
under the laws of the United States;
(ii) Custodian has the full power and authority to hold each Mortgage
Loan (whether acting alone or through an agent), to hold title to the
Mortgage Loans as custodian on behalf of the Mortgage Holders, and to
execute, deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement constitutes a legal, valid
and binding obligation of Custodian, enforceable against it in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
<PAGE>
(iii) Neither the execution and delivery of this Agreement, the
delivery of Mortgage Loans and assignments of Mortgages to Custodian, the
issuance of the Mortgage Receipts and Trust Receipt and Certifications, the
consummation of the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the terms,
conditions or provisions of Custodian's charter or bylaws or any agreement
or instrument to which Custodian is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Custodian or its property is subject; except
that no representation or warranty is made as to compliance with laws and
regulations, other than those of the United States, the State of Florida
and the Commonwealth of Massachusetts, relating to qualifications,
licensure or regulation of custodians of mortgage loans originated in
states or commonwealths other than Florida or Massachusetts;
(iv) Custodian 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;
(v) To Custodian's knowledge after due inquiry, there is no litigation
pending or threatened, which if determined adversely to Custodian, would
adversely affect the execution, delivery or enforceability of this
Agreement, or any of the duties or obligations of Custodian thereunder, or
which would have a material adverse effect on the financial condition of
Custodian;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Custodian of or compliance by Custodian with this Agreement
or the consummation of the transactions contemplated hereby or thereby;
except that no representation or warranty is made as to consents,
approvals, authorizations or orders of any courts or governmental agencies
or bodies, other than those of the United States, the State of Florida and
the Commonwealth of Massachusetts, relating to qualifications, licensure or
regulation of custodians of mortgage loans originated in states or
commonwealths other than Florida and Massachusetts; and
(vii) Upon written request of the Trustee or the Certificate Insurer,
Custodian shall take such steps as requested by the Trustee or the
Certificate Insurer to protect or maintain any interest in any Mortgaged
Property and any insurance applicable thereto.
Custodian makes no representations or warranties as to the validity,
legality, sufficiency, enforceability, perfection, genuineness or prior recorded
status of any of the
<PAGE>
documents contained in each Mortgage File or the collectability, insurability,
effectiveness or suitability of any Mortgage Loan.
Section 5.2. Charges and Expenses. The Servicer will pay all fees of
Custodian in connection with the performance of its duties hereunder in
accordance with written agreements to be entered into from time to time between
the parties hereto and Custodian, including fees and expenses of counsel
incurred by Custodian in the performance of its duties hereunder; provided,
however, that (i) Custodian shall in no event acquire any lien upon any Mortgage
Loan deposited under this Agreement or the Transfer Agreement or the Pooling and
Servicing Agreement, or any claim against any Mortgage Holder by reason of the
failure of the Servicer to pay any of such charges or expenses and (ii) in the
event the Servicer fails to pay the fees and expenses of Custodian as set forth
in such written agreements, Custodian shall have no obligation to take actions
or incur costs in connection with this Agreement unless the Servicer or another
Person has made adequate provision for payment of Custodian's fees and expenses.
The Servicer shall indemnify the Custodian against payment of any documentary
stamp taxes, intangible taxes and other similar taxes, penalties and interest
incurred in connection with the Mortgage Loans and the transactions contemplated
hereby.
Section 5.3. No Adverse Interests. Custodian covenants and warrants to the
Originators, the Depositors, the Representative, the Servicer, the Certificate
Insurer, and the Trustee, that as of the date of each Trust Receipt and
Certification: (i) it holds no adverse interest, by way of security or
otherwise, in any Mortgage Loan; and (ii) the execution of this Agreement and
the creation of the custodial relationship hereunder does not create any
interest, by way of security or otherwise, of Custodian in or to any Mortgage
Loan, other than Custodian's rights as custodian hereunder.
Section 5.4. Inspections. Upon reasonable prior written notice to
Custodian, the Servicer, the Depositors, the Trustee, the Certificate Insurer
and such Person's agents, accountants, attorneys and auditors will be permitted
during normal business hours to examine Custodian's documents, records and other
papers in possession of or under the control of Custodian relating to the
Mortgage Loans.
Section 5.5. Insurance. Custodian shall, at its own expense, maintain at
all times during the existence of this Agreement and keep in full force and
effect, (1) fidelity insurance, (2) theft of documents insurance, and (3)
forgery insurance subject to deductibles and in such amounts, as is customary
for custodians of this kind, and with insurance companies reasonably acceptable
to the Servicer, the Trustee and the Certificate Insurer. A certificate of the
respective insurer as to each such policy or a blanket policy for such coverage
shall be furnished to the Servicer, the Trustee or the Certificate Insurer, upon
request, containing the insurer's statement or endorsement that such insurance
shall not terminate prior to receipt by such party, by registered mail, of 10
days advance notice thereof.
Section 5.6. Limitation of Liability. Custodian assumes no obligation, and
shall be subject to no liability, under this Agreement, except for its
negligence or willful misconduct in the performance of the obligations and
duties as are specifically set forth herein.
<PAGE>
Custodian shall not be liable for any action or non-action by it in reliance on
advice of counsel believed by it in good faith to be competent to give such
advice. Custodian may rely and shall be protected in acting upon any written
notice, order, request, direction or other document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
Section 5.7. Indemnification. The Servicer hereby agrees to indemnify and
hold the Custodian harmless from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Custodian may incur or with
which the Custodian may be threatened by reasons of its acting as custodian
under this Agreement, including indemnification of the Custodian against any and
all expenses, including attorney's fees if counsel for the Custodian has been
approved by the Servicer (said approval not to be unreasonably withheld), and
the cost of defending any action, suit or proceedings or resisting any claim.
Notwithstanding the foregoing, it is specifically understood and agreed that in
the event any such claim, liability, loss, action, suit or proceeding or other
expense, fees or charge shall have been caused by reason of any negligent act,
negligent failure to act, or willful misconduct on the part of the Custodian, or
which shall constitute a willful breach of its duties hereunder, the
indemnification provisions of this Agreement shall not apply. The Custodian
agrees to indemnify, defend and hold harmless the Trustee against any liability
to Certificateholders arising out of the negligence or willful misconduct of the
Custodian (a) in the verification or execution of any Trust Receipt and
Certification or (b) resulting in the loss of Mortgage Files in the custody of
the Custodian. This indemnity shall include indemnification as to reasonable
attorneys' fees and costs, whether or not suit be brought, and including such
fees and costs on appeal. The Trustee shall give prompt written notice to the
Custodian of any claim for which indemnity is or may be sought and shall afford
to the Custodian the opportunity to defend such claim.
Section 5.8. Further Rights of Custodian. If the Custodian is at any time
uncertain of its obligations hereunder, the Custodian, upon prior written notice
to the Trustee, the Originators, the Depositors and the Servicer, may refrain
from taking any action with respect to such matter until such uncertainty is
removed. If conflicting demands are made on the Custodian with respect to any
matter, the Trustee's demand shall control, except during the period prior to
the issuance of the Trustee's Trust Receipt pursuant to Section 3.1 hereof, when
the applicable Mortgage Holder's demand shall control and the Custodian shall
have the right to rely on such controlling demand. The Custodian shall have the
right in any such case to interplead any or all of the documents contained in
the Mortgage Files in a court of competent jurisdiction and, upon delivery
thereof, shall have no further obligations thereunder with respect to such
documents.
(b) The obligations of the Custodian shall be determined solely by the
express provisions of this Agreement. No representation, warranty, covenant or
obligation of the Custodian shall be implied with respect to this Agreement or
the Custodian's service hereunder. Without limiting the generality of the
foregoing statement, except as specifically required herein, the Custodian shall
be under no obligation to inspect, review or examine the
<PAGE>
Mortgage Files to determine that the contents thereof are complete, genuine,
enforceable or appropriate for the represented purpose or that they have been
actually recorded or filed in required offices or that they are other than what
they purport to be on their face.
(c) No provision of this Agreement shall require the Custodian to spend
or risk its own funds or otherwise incur financial liability in performance of
its duties under this Agreement unless, pursuant to Section 5.2 hereof, adequate
provision has been made for the reimbursement of the Custodian's expenses
hereunder.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment. This Agreement may be amended from time to time by
Custodian, the Originators, the Depositors, the Representative, the Servicer and
the Trustee (subject to the prior written consent of the Certificate Insurer) by
written agreement signed by such parties.
Section 6.2. 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 HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW (BUT WITH REFERENCE TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH BY ITS TERMS
APPLIES TO THIS AGREEMENT).
Section 6.3. Notices. All demands, notices and communication hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to (i) in the case of the Servicer, each Originator and the
Representative, EquiCredit Corporation of America, 10401 Deerwood Park
Boulevard, Jacksonville, Florida 32256-0505, Attention: General Counsel, (ii) in
the case of each Depositor, c/o EquiCredit Corporation of America, 10401
Deerwood Park Boulevard, Jacksonville, Florida 32256-0505, Attention: General
Counsel, (iii) in the case of the Trustee, U.S. Bank National Association, 111
East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: EQCC Home
Equity Loan Trust 1998-1, (iv) in the case of the Custodian, BankBoston, N.A.,
7861 Bayberry Road, Jacksonville, Florida 32256, Attention: Joanne Morgan and
(v) in the case of the Certificate Insurer and the Rating Agencies, at their
respective addresses set forth in the Pooling and Servicing Agreement, and, in
each such case, at such other addresses as may hereafter be furnished to each
party hereto in writing.
Section 6.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no
<PAGE>
way affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement.
Section 6.5. No Partnership. Nothing herein contained shall be deemed or
construed to create a co-partnership or joint venture between Custodian and the
other parties hereto.
Section 6.6. Termination of Agreement. This Agreement shall be terminated
upon termination of the Pooling and Servicing Agreement or at the option of
Trustee on 30 days written notice to Custodian, the Depositors and the
Originators. Concurrently with, or as soon as practicable after, the termination
of this Agreement, Custodian shall redeliver the Mortgage Files to the Trustee
at such place as the Trustee may reasonably designate. In connection with the
administration of this Agreement, Custodian and the Trustee may agree from time
to time upon the interpretation of the provisions of this Agreement, as such
interpretation may in their opinion be consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed and annexed
hereto.
Section 6.7. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
Section 6.8. Assignment. No party hereto shall sell, pledge, assign or
otherwise transfer this Agreement without the prior written consent of the other
parties hereto.
Section 6.9. Headings. Section headings are for reference purposes only and
shall not be construed as a part of this Agreement.
Section 6.10. Advice of Counsel. Custodian shall be entitled to rely and
act upon advice of counsel with respect to its performance hereunder as
Custodian and shall be without liability for any action reasonably taken
pursuant to such advice, provided that such action is not in violation of
application Federal or State law. This paragraph shall not negate Custodian's
obligations under Section 5.7.
Section 6.11. Third Party Beneficiary. The Certificate Insurer is an
intended third party beneficiary of this Agreement.
Section 6.12. Resignation of Custodian. (a) The Custodian may at any time
resign and terminate its obligations under this Agreement upon at least 90 days'
prior written notice to the Servicer and the Trustee. The Custodian may be
removed at any time at the written request of the Trustee or the Servicer. In
the event of such resignation or removal, the Servicer shall promptly appoint a
successor custodian acceptable to the Trustee and the Certificate Insurer (which
approvals shall not be unreasonably withheld). If the Servicer fails to appoint
a successor custodian within 30 days, the Trustee shall appoint a successor
custodian. In no event shall the resignation of the Custodian be effective until
a successor custodian is duly appointed hereunder. If a successor Custodian has
not been appointed and/or has not accepted appointment within 90 days after
giving notice of such resignation, the
<PAGE>
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor custodian. One original counterpart of such
instrument of appointment shall be delivered to each of the Servicer, the
Custodian and the successor custodian. The Servicer shall notify S&P and Moody's
of any such resignation or removal and the appointment of a successor custodian.
(b) In the event of any resignation, the Custodian shall promptly
transfer to the successor custodian (or to the Trustee if no successor custodian
has been appointed) all of the Mortgage Files in its possession under this
Agreement and take such other action as may be reasonably requested by the
Servicer or Trustee to effect the transfer of the Custodian's Mortgage Files to
the successor custodian, which shall provide a written receipt for all such
transferred documents and instruments. On completion of such transfer, the
Custodian shall be relieved of all further responsibilities and obligations
hereunder.
Section 6.13. Limitation of Liability of Trustee. Notwithstanding anything
contained herein to the contrary, this Agreement has been executed by U.S. Bank
National Association, not in its individual capacity but solely in its capacity
as Trustee, and in no event shall U.S. Bank National Association in its
individual capacity have any liability for the representations, warranties,
covenants, agreements or other obligations of the Depositors hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Depositors.
<PAGE>
IN WITNESS WHEREOF, the parties hereto 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.
ORIGINATORS
-----------
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC.
EQUICREDIT CORPORATION/ALA. & MISS.
By:_______________________________
Name:
Title:
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By:_______________________________
Name:
Title:
DEPOSITORS
----------
EQCC RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
<PAGE>
EQCC ASSET BACKED CORPORATION
By:_______________________________
Name:
Title:
TRUSTEE
-------
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Name: Melissa A. Rosal
Title: Vice President
CUSTODIAN
---------
BANKBOSTON, N.A.,
as Custodian
By:_______________________________
Name: David Hall
Title: Senior Manager, Custody
<PAGE>
EXHIBIT A
TRUST RECEIPT AND CERTIFICATION
Trust Receipt No._____
Aggregate Outstanding
Principal Amount:________
April 1, 1998
To: [DEPOSITOR]
[TRUSTEE]
Re: Custodial Agreement, dated as of April 1, 1998 (the
"Custodial Agreement"), by and among the Originators listed
on Exhibit C thereto (collectively, the "Originators")
Equicredit Corporation of America, as Representative (the
"Representative") and as Servicer (the "Servicer"), EQCC
Receivables Corporation and EQCC Asset Backed Corporation
(collectively, the "Depositors"), U.S. Bank National
Association, as Trustee (the "Trustee") and BankBoston,
N.A., as Custodian (the "Custodian")
Gentlemen:
In accordance with the provisions of Section 3.2 of the above-referenced
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received all of the items listed in Section 3.1 of the Custodial Agreement with
respect to each Mortgage Loan identified on the Mortgage Loan Schedule (the
"Mortgage Loan Schedule") attached hereto dated as of _______, 199_. Custodian
confirms that the Mortgage Loan number in each Mortgage File conforms to the
respective Mortgage Loan number listed on the Mortgage Loan Schedule and that
the "Aggregate Outstanding Principal Amount" set forth above corresponds to like
information contained on the Mortgage Loan Schedule. Any exceptions or
deficiencies in a Mortgage File which are required by the Custodial Agreement to
be reported are set forth in the Master Exception Report dated _________ , 199_
and made a part hereof. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Custodial Agreement.
Custodian further certifies that as to each Mortgage Loan, Custodian holds
the Mortgage Loan in its name as custodian for the benefit of [the Depositor]
[the Trustee], without written notice (a) of any adverse claims, liens or
encumbrances, (b) that any Mortgage Loan was overdue or has been dishonored, (c)
of evidence on the face of any Mortgage Loan or other document in the Mortgage
File of any security interest therein, or (d) of any defense against or claim to
the Mortgage Loan by any other party.
<PAGE>
Custodian makes no representations or warranties as to the validity,
legality, sufficiency, enforceability, genuineness or prior recorded status of
any of the documents contained in each Mortgage File or the collectability,
insurability, effectiveness or suitability of any Mortgage Loan.
Custodian confirms that it holds each Mortgage Loan and the other documents
in the related Mortgage File for the benefit of [the Depositor][the Trustee] and
its transferees from time to time. Custodian hereby acknowledges and agrees that
it is holding such Mortgage Loans now and hereafter, from time to time, in its
custody or control as agent and bailee for the [Depositor][the Trustee], if the
transfer of Mortgage Loans is deemed not to be an absolute transfer of such
Mortgage Loans, subject to the continuing pledge and security interest granted
by [Originator][Depositor] to [the Depositor][the Trustee] under the [Transfer
Agreement] [Pooling and Servicing Agreement].
Upon repurchase or substitution of the Mortgage Loans to which this Trust
Receipt and Certification relates and payment of the applicable repurchase
price, the Mortgage Loans to which this Trust Receipt and Certification relates
shall be returned and released by Custodian to [Depositor][the Trustee], and
this Trust Receipt and Certification shall be and be deemed to be canceled by
Custodian and of no force and effect.
------------------------
----------------,
as Custodian
By _____________________
Name:
Title:
<PAGE>
EXHIBIT B
REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
To: [Custodian]
Re: Custodial Agreement, dated as of April 1, 1998, by and among
the Originators listed on Exhibit C thereto (collectively,
the "Originators"), Equicredit Corporation of America, as
Representative (the "Representative") and as Servicer (the
"Servicer"), EQCC Receivables Corporation and EQCC Asset
Backed Corporation (collectively, the "Depositors"), U.S.
Bank National Association, as Trustee (the "Trustee") and
BankBoston, N.A., as Custodian (the "Custodian")
In connection with the administration of the Mortgage Loans held by you as
Custodian under the above-referenced Custodial Agreement, [_________], on behalf
of [________], requests the release, and acknowledges receipt, of the following
for the Mortgage Loan described below, for the reason indicated:
A. Documents Released
_____ 1. Mortgage Note
_____ 2. Mortgage
_____ 3. Assignment of Mortgage
_____ 4. Other documents: ___________________
___________________
___________________
___________________
B. Mortgagor's Name, Address & Zip Code:
C. Mortgage Loan Number:
D. Reason for Requesting Documents (check one)
_____ 1. Mortgage Loan Paid in Full.
_____ 2. Mortgage Loan in Foreclosure.
<PAGE>
_____ 3. Mortgage Loan Substituted.
_____ 4. Other Liquidation (Mortgage Loan in Bankruptcy, Repurchase,
Rescission).
_____ 5. Non Liquidation (Other, explain)
____________________________________
____________________________________
If box 1, 3 or 4 above is checked, and if all or part
of Mortgage File was previously released to us, please
release to us our previous receipt on file with you, as well
as any additional documents in your possession relating to
the above specified Mortgage Loan.
If box 2 or 5 above is checked, upon our return of all
of the above documents to you as Custodian, please
acknowledge your receipt by signing in the space indicated
below, and returning this form.
The Servicer hereby certifies that all amounts received
or to be received in connection with such payment which are
required to be deposited in the Principal and Interest
Account pursuant to Section 5.03 of the Pooling and
Servicing Agreement dated April 1, 1998, have been or will
be so deposited.
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By__________________________
Name:
Title:
Date:
[__________________________]
By__________________________
Name:
Title:
Date:
Documents returned to Custodian:
- -----------------------------------------
as Custodian
<PAGE>
By____________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT C
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC
EQUICREDIT CORPORATION/ALA. & MISS.
<PAGE>
EXHIBIT D
Transfer Certificate
--------------------
[Date]
BANKBOSTON, N.A.
as Custodian under the
Custodial Agreement (defined below)
100 Federal Street
Boston, Massachusetts 02110
RE: Custodial Agreement, dated as of April 1, 1998 (the
"Custodial Agreement"), by and among the Originators listed
in Exhibit C thereto (collectively, the "Originators"),
Equicredit Corporation of America, as Representative (the
"Representative") and as Servicer (the "Servicer"), EQCC
Receivables Corporation and EQCC Asset Backed Corporation
(collectively, the "Depositors"), U.S. Bank National
Association, as Trustee (the "Trustee") and BankBoston,
N.A., as Custodian (the "Custodian")
To whom it may concern:
Pursuant to Section 3.1 of the above-referenced Custodial Agreement
(capitalized terms used herein but not otherwise defined shall have the same
meanings assigned to such terms in the Custodial Agreement), we hereby advise
you of the Transfer by the undersigned to [Depositor][the Trustee] of the
Mortgage Loans identified on the Mortgage Loan Schedule[s] attached [hereto] [to
the [Depositor's Trust Receipt[s]] with respect to the undersigned which we are
delivering to you for cancellation]. You are instructed to deliver to
[Depositor][the Trustee] a [Depositor's] [Trustee's] Trust Receipt evidencing
[such Depositor's] [the Trustee's] interest in these Mortgage Loans.
Very truly yours,
[________________________________]
By________________________________
Name:
Title:
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
(See Exhibit D to the Pooling and Servicing Agreement)
<PAGE>
EXHIBIT O
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $ ________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Total Proceeds $_______
2. Servicing Advances $ ________
Monthly Advances ________
Servicing Fees ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage $_______
Loan on date of liquidation
5. Loss, if any $_______
(Line 4 minus Line 3)
<PAGE>
EXHIBIT P
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: (the "Account Depository")
_______________________________
_______________________________
As "Servicer" under the Pooling and Servicing Agreement, dated as of April
1, 1998 (the "Agreement") with respect to EQCC Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class A-1F, Class A-2F, Class A-3F, Class A-4F,
Class A-5F, Class A-6F, Class A-7F, Class A-IO, Class A-1A, Class X, Class R,
Class MR and Class LR (collectively, the "Certificates"), we hereby authorize
and request you to establish an account, as a Principal and Interest Account
pursuant to Section 5.03 of the Agreement, in the name of U.S. Bank National
Association and to be titled "EQCC Home Equity Loan Trust, Series 1998-1
Principal and Interest Account". The Principal and Interest Account shall bear
an additional designation clearly indicating that the funds deposited therein
are held for the Trustee for the benefit of the holders of the Certificates. All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Servicer. You may refuse any deposit which would result in violation of
the requirement that the account be fully insured as described below. This
letter is submitted to you in duplicate. Please execute and return one original
to us.
EQUICREDIT CORPORATION OF AMERICA
By:______________________________
Name:
Title:
The undersigned, as Account Depository, hereby certifies that the above
described account has been established under Account Number ___________, at the
office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.
<PAGE>
(Name of Account Depository)
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT Q
FORM OF NOTICE
TO: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Telephone: (212) 668-0340
Telecopier: (212) 363-1459
RE: EQCC Home Equity Loan Asset Backed Certificates, Series 1998-1, Class
A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class
A-7F, Class A-IO and Class A-1A
Policy No. __________
Determination Date:
Payment Date:
We refer to that certain Pooling and Servicing Agreement among Credit
Corporation of America, the Depositors listed therein and U.S. Bank National
Association, as trustee, relating to EQCC Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class A-1F, Class A-2F, Class A-3F, Class A-4F,
Class A-5F, Class A-6F, Class A-7F, Class A-IO, Class A-1A, Class X, Class R,
Class MR and Class LR (the "Pooling and Servicing Agreement") dated as of April
1, 1998; all capitalized terms not otherwise defined herein shall have the same
respective meanings as set forth in such Pooling and Servicing Agreement.
As of the Determination Date, the Trustee has determined under the Pooling and
Servicing Agreement and hereby certifies that in respect of the related Payment
Date:
(i) The Class A Remittance Amount ($__________) exclusive of amounts
attributable to clause (iv) of the definition of "Basic Principal Amount,"
to the extent such amount is due but not paid by the Representative, the
Depositors or the Originators.
(ii) The Available Payment Amount with respect to each Mortgage Loan Group in
the Mortgage Pool is $______________ and the amount of Excess Spread on
deposit in the Collection Account is $_____________ (less $_____________,
the amounts to be withdrawn for deposit into the Insurance Account or
Spread Account pursuant to Sections 6.02(i) and (iii) of the Pooling and
Servicing Agreement).
(iii)$_____________, amounts previously paid to Class A Certificateholders as
Insured Payments.
<PAGE>
(iv) The amount that has been deposited in the Collection Account but may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy
court of competent jurisdiction imposing a stay pursuant to Section 362 of
the United States Bankruptcy Code and would otherwise have constituted all
or a portion of the amount described in Item (ii) above is
$_______________.
(v) The excess of the amount stated in (i), above, over the amount stated in
(ii), above, less the amount described in (iii), above, less the amount
stated in (iv) above is $_________________.
(vi) Monthly installments of principal and interest on the Mortgage Loans that
were due during the Due Period related to this Payment Date and were not
received prior to this Payment Date equal $_____________.
(vii)In accordance with the above and the Agreement, the Insured Payment is
$_________________.
[Attached hereto is a copy of the court order in connection with a voidable
preference that constitutes a component of the Class A Principal Remittance
Amount in the amount set forth therein.]
Accordingly, an Event of Nonpayment has occurred and, pursuant to Section 6.05
of the Pooling and Servicing Agreement, this statement constitutes a claim for
an Insured Payment in the amount of $__________ under the Insurance Policy.
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information, or conceals for the purpose of misleading,
information concerning any fact material thereto, commits a fraudulent insurance
act, which is a crime, and shall also be subject to a civil penalty not to
exceed Five Thousand ($5,000.00) Dollars and the stated value of the claim for
each such violation.
The amount claimed should be paid as follows:
______________________________
______________________________
______________________________
______________________________
___________, as Trustee
By: __________________________
Name:_________________________
Title:________________________
Telephone #:__________________
<PAGE>
For Ambac Assurance Corporation Use Only
Wire Transfer Sent On:
By:___________________________
Confirmation Number:
<PAGE>
EXHIBIT R
MONTHLY INFORMATION DELIVERED BY SERVICER
1. With respect to the Mortgage Pool and each Mortgage Loan Group, the number
and Principal Balances of all Mortgage Loans which were the subject of
Principal Prepayments during the related Due Period.
2. With respect to the Mortgage Pool and each Mortgage Loan Group, the amount
of all Curtailments which were received during the related Due Period.
3. With respect to the Mortgage Pool and each Mortgage Loan Group, the
aggregate amount of principal portion of all Monthly Payments received
during the related Due Period.
4. With respect to the Mortgage Pool and each Mortgage Loan Group, the amount
of interest received on the Mortgage Loans during the related Due Period.
5. With respect to the Mortgage Pool and each Mortgage Loan Group, the
aggregate amount of the Advances made and recovered with respect to such
Payment Date.
6. With respect to the Mortgage Pool and each Mortgage Loan Group, the
delinquency and foreclosure information set forth in Exhibit H to the
Pooling and Servicing Agreement and the amount of Mortgage Loan Losses
during the related Due Period.
7. With respect to the Mortgage Pool and each Mortgage Loan Group, the
weighted average maturity, the weighted average Mortgage Interest Rate and
the weighted average Net Mortgage Interest Rate as of the last day of the
Due Period preceding of the related Accrual Period.
8. The Servicing Fees paid and Servicing Fees accrued during the related Due
Period.
9. The amount of all payments or reimbursements to the Servicer pursuant to
Section 5.04 (ii), (iv), (v), (vi) and (vii) paid or to be paid since the
prior Payment Date (or in the case of the first Payment Date, since the
Closing Date).
10. The Pool Principal Balance and aggregate Principal Balance for each
Mortgage Loan Group.
11. Such other information as the Certificate Insurer, each Account Party and
the Certificateholders may reasonably require.
12. The amounts which are reimbursable to the Servicer, the Representative or
the Depositors, as appropriate, pursuant to Section 6.05.
<PAGE>
13. With respect to the Mortgage Pool and each Mortgage Loan Group, the number
of Mortgage Loans outstanding at the beginning and at the end of the
related Due Period.
14. The aggregate interest accrued on the Mortgage Loans at their respective
Mortgage Interest Rates for the related Due Period.
15. The amount deposited in the Collection Account which may not be withdrawn
therefrom pursuant to an Order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
Bankruptcy Code.
16. The Principal Balance of Mortgage Loans in the Fixed Rate Group with
Mortgage Interest Rates less than 7.63% per annum.
17. The aggregate Mortgage Loan Losses since the Cut-off Date as of the end of
the related Due Period.
18. The LIBOR Interest Carryover with respect to such Payment Date.
<PAGE>
EXHIBIT S
LIST OF DELINQUENT LOANS
<PAGE>
EXHIBIT T
SCHEDULE OF MORTGAGE LOANS SUBJECT TO
THE HOME OWNERSHIP AND EQUITY PROTECTION ACT OF 1994
NOTICE: Each Mortgage Loan listed on this Mortgage Loan Schedule is subject to
special rules under the federal Truth in Lending Act. Purchasers or assignees of
a Mortgage Loan listed on this Mortgage Loan Schedule could be liable for all
claims and defenses with respect to such Mortgage Loan that the related
Mortgagor could assert against the original lender.
<PAGE>
EXHIBIT U
LOST NOTE AND/OR MORTGAGE/DEED OF TRUST AFFIDAVIT
State of ____________________ Account #_______________
County of __________________
TO WIT:
Comes the affiant, _____________________________________________ (Name/Title) of
__________________________________________________________________________,
after being duly sworn by me, _________________________________________________,
and in my presence, a Notary Public in and for the county and state aforesaid
states that ______________________________________________ is the Noteholder or
lien creditor, under a certain Mortgage/Deed of Trust from
___________________________________ to _____________________________________,
dated ____________________________ and recorded in the Clerk's Office of the
Circuit Court of the County of ____________________, State of
____________________ in Deed Book No. _________________ at Page _____________,
as Instrument Number __________________ to secure $ _______________, and that
said _____________ Note __________ Mortgage evidencing the debt has been
inadvertently lost or destroyed and cannot be produced.
___________________________________
By:________________________________
Name:
Title:
State of ___________________
County of __________________
The foregoing instrument was acknowledged before me this __________ day of
________________, 19__ By________________________________________.
===================================
Notary Public
EX-99.1
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street
Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Telephone: (212) 688-0340
Surety Bond
Issuer: EQCC Home Equity Loan Trust 1998-1 Policy Number: AB0166BE
Insured Obligations: $738,874,072
in aggregate principal amount of EQCC
Home Equity Loan Asset Backed
Certificates, Series 1998-1, Class
A-1F, Class A-2F, Class A-3F, Class
A-4F, Class A-5F, Class A-6F, Class
A-7F, Class A-IO and Class A-1A
Certificates (the "Certificates")
Trustee: U.S. Bank National Association
Ambac Assurance Corporation ("Ambac"), a Wisconsin stock insurance company, in
consideration of its receipt of the Deposit Premium and subject to the terms of
this Surety Bond, hereby unconditionally and irrevocably agrees to pay each
Insured Payment to the Trustee name above or its successor, as trustee for the
Certificates, to the extent set forth in the Pooling and Servicing Agreement,
dated as of April 1, 1998, by and among EQCC Receivables Corporation and EQCC
Asset Backed Corporation, as Depositors, EquiCredit Corporation of America, as
Representative and Servicer, and U.S. Bank National Association, as Trustee (the
"Pooling and Servicing Agreement"). This Surety Bond does not cover, and an
Insured Payment shall not include, any LIBOR Interest Carryover.
Ambac will make an Insured Payment out of its own funds by 12:00 noon (New York
City time) in immediately available funds to the Trustee on the later of (i) the
Business Day next following the day on which Ambac shall have received Notice
that an Insured Payment is due and (ii) the Payment Date on which the Insured
Payment id distributable to Certificateholders pursuant to the Pooling and
Service Agreement, for disbursement to such Certificateholders in the same
manner as other payments with respect to the Certificates are required to be
made. Any Notice received by Ambac after 12:00 noon New York City time on a
given Business Day or on any day that is not a Business Day shall be deemed to
have been received by Ambac on the next succeeding Business Day.
Upon such payment, Ambac shall be fully subrogated to the rights of the
Certificateholders to receive the amount so paid. Ambac's obligations hereunder
with respect to each Payment Date shall be discharged to the extent funds
consisting of the Insured Payment are received by the
<PAGE>
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street
Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Telephone: (212) 688-0340
Surety Bond
Trustee on behalf of the Certificateholders for distribution of such
Certificateholders, as provided in the Pooling and Servicing Agreement and
herein, whether or not such funds are properly applied by the Trustee.
This Surety Bond is non-cancelable for any reason, including nonpayment of any
premium. The premium on this Surety Bond is not refundable for any reason,
including the payment of the Certificates prior to their respective maturities.
This Surety Bond shall expired and terminate without any action on the part of
Ambac or any other Person on the date that is one year and one day following the
date on which the Certificates shall have been paid in full.
The "Deposit Premium" shall be due and payable on the date hereof, as provided
in a letter agreement of even date herewith among Ambac and the Depositors, and
a monthly premium shall be due and payable as provided in the Pooling and
Servicing Agreement.
This Surety Bond is subject to and shall be governed by the laws of the State of
Illinois. The insurance provided by this Surety Bond is not covered by the New
York Property/Casualty Insurance Security Fund (New York Insurance Law, Article
76).
Capitalized terms used and not defined herein shall have respective meanings set
forth in the Pooling and Servicing Agreement. "Notice" means written notice in
the form of Exhibit Q to the Pooling and Servicing Agreement by registered or
certified mail or telephonic or telegraphic notice, subsequently confirmed by
written notice delivered via telecopy, telex or hand delivery from the Trustee
to Ambac specifying the information set forth therein. "Certificateholder"
means, as to a particular Certificate, the person, other than the Trust, the
Servicer, any Subservicer or the Representative or any Depositor who, on the
applicable Payment Date, is entitled under the terms of such Certificate to
payment thereof.
In the event that payments under any Certificate is accelerated, nothing herein
contained shall obligate Ambac to make any payment of principal or interest on
such Certificates on an accelerated basis, unless such acceleration of payment
by Ambac is at the sole option of Ambac.
<PAGE>
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street
Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Telephone: (212) 688-0340
Surety Bond
IN WITNESS WHEREOF, Ambac has caused this Surety Bond to be affixed with its
corporate seal and to be signed by its duly authorized officer in facsimile to
become effective and bind upon Ambac by virtue of the countersignature of its
duly authorized representative.
/s./ Warren Tong /s./ Laura L Kegg
- ------------------------------- -------------------------
First Vice President Authorized Representative
Effective Date: April 23, 1998
