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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MAY 20, 1998
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BA Mortgage Securities, Inc. (as depositor under a Pooling and Serving Agreement
dated as of May 1, 1998 providing for, inter alia, the issuance of Mortgage
Pass-Through Certificates, Series 1998-2)
BA MORTGAGE SECURITIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 333-34225-06 94-324470
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
345 MONTGOMERY STREET, LOWER LEVEL #2, UNIT #8152, SAN FRANCISCO, CA 94104
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 662-3676
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(Former name or former address if changed since last report)
Exhibit Index located on page 2
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Items 1 through 6 and Item 8 are not included because they are not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits
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<CAPTION>
Sequentially
Numbered
Exhibit Exhibit
Number Page
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4.1 Pooling and Servicing Agreement dated as of May 1, 1998 among BA
Mortgage Securities, Inc., Depositor, Bank of America, FSB, Master
Servicer, and Bankers Trust Company of California, N.A., Trustee
(providing for, inter alia, the issuance of Mortgage Pass-Through
Certificates, Series 1998-2)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BA MORTGAGE SECURITIES, INC.
By /s/ DAVID JAMES
----------------------------------
Name: David James
Title: Vice President
Dated: May 20, 1998
3
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Exhibit 4.1
Pooling and Servicing Agreement
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[EXECUTION COPY]
================================================================================
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FSB
Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1998
Mortgage Pass-Through Certificates
Series 1998-2
================================================================================
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjusted Class IA-4 Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Amount Held for Future Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Buydown Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Cash Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Account Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Register and Certificate Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-PO Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-PO Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-PO Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-PO Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class I-X Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class IA-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class IA-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class IA-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-4 Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-4 Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Class IA-4 Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-4 Priority Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-6 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-8 Accretion Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-8 Accrual Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class IA-8 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IA-9 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IA-10 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IA-11 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IA-12 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IA-12 Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-PO Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-PO Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-PO Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-PO Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class II-X Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class IIA-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IB-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IB-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IB-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IB-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IB-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIB-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIB-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIB-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIB-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIB-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IM Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class IIM Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class PO Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Class R-I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Class R-II Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Class R-III Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Class X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Combination Targeted Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Corresponding Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Curtailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Custodial Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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Custodial Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Disqualified Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Excess Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Excess Fraud Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Excess Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Extraordinary Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Extraordinary Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Final Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Foreclosure Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fraud Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Group I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Group I Credit Support Depletion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Group I Junior Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Original Subordinate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Premium Rate Mortgage Loans: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Senior Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Subordinate Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Subordinate Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Subordinate Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group I Subordinate Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Group IA Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Group IA Liquidation Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Group IA Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Group IA Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Group IA Principal Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Group II Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Credit Support Depletion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Junior Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Original Subordinate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Premium Rate Mortgage Loans: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Senior Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Subordinate Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Subordinate Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Subordinate Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group II Subordinate Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Group IIA Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Group IIA Liquidation Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Group IIA Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Group IIA Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Group IIA Principal Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Initial Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Initial Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Last Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Late Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
LIBOR Rate Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Liquidation Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Loan Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Loan Group I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Loan Group II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Lowest Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Master Servicer Remittance Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Mortgage Loan Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Net Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Non-Primary Residence Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Non-United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Nonrecoverable Subservicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Nonsubserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Planned Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Primary Mortgage Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Primary Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Principal Prepayment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Prior Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Qualified Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REMIC I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REMIC I Regular Interest IA-1-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REMIC I Regular Interest IA-2-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-3-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-4-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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REMIC I Regular Interest IA-5-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-6-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-8-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-9-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest IA-10-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest I-B-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REMIC I Regular Interest I-X-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC I Regular Interest I-PO-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC I Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II Regular Interest IIA-1-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II Regular Interest II-B-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II Regular Interest II-X-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II Regular Interest II-PO-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC II Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
REMIC Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REO Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REO Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REO Imputed Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REO Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Servicing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Special Hazard Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Step Down Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stripped Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Subordinate Certificate Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Subordinate Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Subordination Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Subserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Subservicer Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Subservicing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Transfer Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Transferee Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Transferor Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Uninsured Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Unpaid Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 2.03. Representations, Warranties and Covenants of the Master Servicer . . . . . . . . . . . . . . . . 47
Section 2.04. Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund . . . . . . . . . . . . . . . . . 49
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 3.02. Subservicing Agreements Between Master Servicer and Subservicers; Enforcement
of Subservicers' and Sellers' Obligations;
Special Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 3.03. Successor Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.04. Liability of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.05. No Contractual Relationship Between Subservicer and Trustee or Certificateholders. . . . . . . . 53
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee . . . . . . . . . . . . . . . . . 53
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to Custodial Account . . . . . . . . . . . 53
Section 3.08. Subservicing Accounts; Servicing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage Loans . . . . . . . . . . 56
Section 3.10. Permitted Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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Section 3.11. Maintenance of the Primary Insurance Policies; Collections Thereunder . . . . . . . . . . . . . . 58
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage . . . . . . . . . . . . . . . . 59
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements; Certain Assignments . 60
Section 3.14. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 3.15. Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.16. Servicing and Other Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.17. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 3.18. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . . 66
Section 3.19. Rights of the Depositor in Respect of the Master Servicer . . . . . . . . . . . . . . . . . . . . 67
Section 3.20. Administration of Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 4.02. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances by the Master Servicer . . . . 83
Section 4.05. Allocation of Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . . . . . . . . . 87
Section 4.07. Compliance with Withholding Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 4.08. REMIC I and REMIC II Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 5.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . 90
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 5.05. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer . . . . . . . . . . . . . . . . . 96
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer; Assignment of Rights
and Delegation of Duties by Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer and Others. . . . . . . . . . . . . 97
Section 6.04. Depositor and Master Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C> <C>
ARTICLE VII
DEFAULT
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 7.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 7.04. Waiver of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 8.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses; Indemnification . . . . . . . . . . . . . . . 105
Section 8.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.07. Resignation and Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.11. Appointment of Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 8.12. Appointment of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by the Master Servicer or Liquidation of All Mortgage Loans . . . . . . 110
Section 9.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 10.02. Master Servicer and Trustee Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
</TABLE>
ix
<PAGE> 12
<TABLE>
<S> <C>
Section 11.02. Recordation of Agreement; Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 11.06. Notices to Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 11.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
</TABLE>
x
<PAGE> 13
EXHIBITS
Exhibit A: Form of Class A, Class X and PO Certificate
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Residual Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, FSB Mortgage Loan Schedule
Exhibit F: Form of Mortgage Loan Purchase Agreement
Exhibit G: Form of Request for Release
Exhibit H-1: Form of Transfer Affidavit and Agreement
Exhibit H-2: Form of Transferor Certificate
Exhibit I: Form of Investment Representation Letter
Exhibit J: Form of Transferor Representation Letter
Exhibit K: Form of Rule 144A Investment Representation Letter
Exhibit L: Form of Lender Certification for Assignment of Mortgage Loan
Exhibit M: Schedule of Mortgage Loan Exceptions
Exhibit N: Information Available for Reports to Certificateholders
Exhibit O: Form of Custodial Agreement
Exhibit P: Form of Trustee's Initial Certification
Exhibit Q: Planned Principal Balances and Combination Targeted Principal
Balances
Exhibit R: Form of Special Servicing Agreement
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<PAGE> 14
This is a Pooling and Servicing Agreement, effective as of May 1,
1998, among BA MORTGAGE SECURITIES, INC., as the depositor (together with its
permitted successors and assigns, the "Depositor"), BANK OF AMERICA, FSB, as
master servicer (together with its permitted successors and assigns, the
"Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
(together with its permitted successors and assigns, the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest
in the Trust Fund, the assets of which will consist primarily of the Mortgage
Loans.
As provided herein, the Master Servicer will make an election to treat
the assets consisting of the Group I Loans and certain other related assets
described herein as a "real estate mortgage investment conduit" for federal
income tax purposes and such pool of assets will be designated as "REMIC I."
The REMIC I Regular Interests will be the "regular interests" in REMIC I and
the Class R-I Certificates will be the sole class of "residual interest" in
REMIC I for federal income tax purposes.
As provided herein, the Master Servicer will make an election to treat
the assets consisting of the Group II Loans and certain other related assets
described herein as a "real estate mortgage investment conduit" for federal
income tax purposes and such pool of assets will be designated as "REMIC II."
The REMIC II Regular Interests will be the "regular interests" in REMIC II and
the Class R-II Certificates will be the sole class of "residual interest" in
REMIC II for federal income tax purposes.
The Master Servicer will make an election to treat the pool of assets
consisting of the REMIC I Regular Interests and the REMIC II Regular Interests
as a "real estate mortgage investment conduit" for federal income tax purposes
and such pool of assets will be designated as "REMIC III." The Class A, Class
X, Class PO, Class M and Class B Certificates will represent "regular
interests" in REMIC III and the Class R- III Certificate will represent the
sole class of "residual interest" in REMIC III for federal income tax purposes.
The following table sets forth the designation, type, initial
Pass-Through Rate, aggregate Initial Certificate Principal Balance, Last
Scheduled Distribution Date and initial ratings for each Class of Certificates
comprising the interests in the Trust Fund created hereunder.
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<PAGE> 15
<TABLE>
<CAPTION>
Aggregate Initial Last
Certificate Scheduled Initial Ratings
Pass-Through Principal Distribution -------------------------
Designation Type Rate(1) Balance Date S&P Fitch
- ------------- ------- ------------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Class IA-1 Regular 7.050% $ 31,022,128.00 June 26, 2028 AAA AAA
Class IA-2 Regular 6.750% $ 3,140,000.00 June 26, 2028 AAA AAA
Class IA-3 Regular (2) $ 15,156,755.00 June 26, 2028 AAA AAA
Class IA-4 Regular 6.750% $ 18,951,940.00 June 26, 2028 AAA AAA
Class IA-5 Regular 6.750% $ 73,500,000.00 June 26, 2028 AAA AAA
Class IA-6 Regular 6.750% $ 25,717,028.00 June 26, 2028 AAA AAA
Class IA-7 Regular (3) $ 1,378,761.00 June 26, 2028 AAAr AAA
Class IA-8 Regular 6.750%(4) $ 2,937,483.00 June 26, 2028 AAA AAA
Class IA-9 Regular (5) $ 3,929,529.00 June 26, 2028 AAAr AAA
Class IA-10 Regular 6.600% $ 4,600,000.00 June 26, 2028 AAA AAA
Class IA-11 Regular 6.600% $ 9,760,000.00 June 26, 2028 AAA AAA
Class IA-12 Regular 6.750% (6) June 26, 2028 AAAr AAA
Class IIA-1 Regular 6.500% $100,392,251.00 June 25, 2013 AAA AAA
Class I-X Regular 6.750% (7) June 26, 2028 AAAr AAA
Class II-X Regular 6.500% (8) June 25, 2013 AAAr AAA
Class I-PO Regular (3) $ 43,461.00 June 26, 2028 AAAr AAA
Class II-PO Regular (3) $ 148,157.00 June 25, 2013 AAAr AAA
Class IM Regular 6.750% $ 3,664,102.00 June 26, 2028 -- AA
Class IB-1 Regular 6.750% $ 1,683,506.00 June 26, 2028 -- A
Class IB-2 Regular 6.750% $ 891,268.00 June 26, 2028 -- BBB
Class IB-3 Regular 6.750% $ 693,208.00 June 26, 2028 -- BB
Class IB-4 Regular 6.750% $ 495,148.00 June 26, 2028 -- B
Class IB-5 Regular 6.750% $ 495,151.17 June 26, 2028 -- --
Class IIM Regular 6.500% $ 874,264.00 June 25, 2013 AA AA
Class IIB-1 Regular 6.500% $ 462,846.00 June 25, 2013 -- A
Class IIB-2 Regular 6.500% $ 308,564.00 June 25, 2013 -- BBB
Class IIB-3 Regular 6.500% $ 308,564.00 June 25, 2013 -- BB
Class IIB-4 Regular 6.500% $ 154,282.00 June 25, 2013 -- B
Class IIB-5 Regular 6.500% $ 205,711.16 June 25, 2013 -- --
Class R-I Residual 6.750% $ 50.00 June 26, 2028 AAA AAA
Class R-II Residual 6.500% $ 50.00 June 25, 2013 AAA AAA
Class R-III Residual 6.750% $ 50.00 June 26, 2028 AAA AAA
============================================================================================================================
</TABLE>
(1) Interest distributed to the Certificates on each Distribution Date
will have accrued during the preceding calendar month.
(2) The initial Pass-Through Rate for the Class IA-3 Certificates will be
6.6063% per annum. Thereafter, the Class IA-3 Certificates will
accrue interest at a per annum rate equal to LIBOR plus 0.950%,
subject to a minimum and maximum Pass-Through Rate of 0.950% and
8.500% per annum, respectively.
(3) The Class IA-7, Class I-PO and Class II-PO Certificates will not bear
interest.
(4) On each Distribution Date on or before the Class IA-8 Accretion
Termination Date, an amount equal to the Class IA-8 Accrual Amount
will be added to the Class IA-8 Certificate Principal Balance, and
such amount will be distributed as principal to the Class IA-1, Class
IA- 7 and Class IA-8 Certificates as described herein.
(5) The initial Pass-Through Rate for the Class IA-9 Certificates will be
7.3045% per annum. Thereafter, the Class IA-9 Certificates will
accrue interest at a per annum rate equal to 29.1214285714% -
(3.857142851 x LIBOR), subject to a minimum and maximum Pass-Through
Rate of 0.000% and 29.1214285714%, respectively.
(6) The Class IA-12 Certificates will not receive distribution of
principal and will accrue interest on the Class IA-12 Notional Amount.
(7) The Class I-X Certificates will not receive distributions of principal
and will accrue interest on the Class I-X Notional Amount.
(8) The Class II-X Certificates will not receive distributions of
principal and will accrue interest on the Class II-X Notional Amount.
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<PAGE> 16
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in
this Article.
Accrued Certificate Interest: With respect to each Distribution Date,
as to any Class of Certificates, one month's interest accrued at the related
Pass-Through Rate on the Certificate Principal Balance or Notional Amount, as
applicable, of the Certificates of such Class immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. In each case,
Accrued Certificate Interest on any Class of Certificates will be reduced by
the amount of (i) Net Prepayment Interest Shortfalls (to the extent not offset
by the Master Servicer with a payment of Compensating Interest as provided in
Section 4.01), (ii) the interest portion (adjusted to the Net Mortgage Rate) of
Realized Losses (including Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses and Extraordinary Losses) not allocated solely to one
or more specific Classes of Certificates pursuant to Section 4.05, (iii) the
interest portion of Advances previously made with respect to a Mortgage Loan or
REO Property which remained unreimbursed following the Cash Liquidation or REO
Disposition of such Mortgage Loan or REO Property that were made with respect
to delinquencies that were ultimately determined to be Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses
and (iv) any other interest shortfalls not covered by the subordination
provided by the Subordinate Certificates, including interest that is not
collectible from the Mortgagor pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or similar legislation or regulations as in
effect from time to time, with all such reductions allocated among all of the
Certificates in proportion to their respective amounts of Accrued Certificate
Interest payable on such Distribution Date which would have resulted absent
such reductions. In addition to that portion of the reductions described in
the preceding sentence that are allocated to any Class of Subordinate
Certificates, Accrued Certificate Interest on such Class of Subordinate
Certificates will be reduced by the interest portion (adjusted to the Net
Mortgage Rate) of Realized Losses that are allocated solely to such Class of
Subordinate Certificates pursuant to Section 4.05.
Adjusted Class IA-4 Percentage: With respect to any Distribution Date
prior to the Distribution Date occurring in June 2003, 0% and (ii) for any
Distribution Date on or after the Distribution Date occurring in June 2003, the
Class IA-4 Percentage.
Administration Fee: With respect to any Mortgage Loan, the sum of the
applicable Master Servicing Fee and Trustee Fee.
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<PAGE> 17
Advance: As to any Mortgage Loan, any advance made by the Master
Servicer pursuant to Section 4.04.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Custodial Accounts at the close of business on
the preceding Determination Date on account of (i) Liquidation Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases made
pursuant to Sections 2.02 or 2.04 and Mortgage Loan substitutions made pursuant
to Sections 2.03 or 2.04 received or made in the month of such Distribution
Date (other than such Liquidation Proceeds, Insurance Proceeds, Principal
Prepayments and purchases of Mortgage Loans that the Master Servicer has deemed
to have been received in the preceding month in accordance with Section
3.07(b)) and (ii) payments which represent early receipt of scheduled payments
of principal and interest due on a date or dates subsequent to the related Due
Date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced Mortgage Loan as to which it is the
appraised value determined in an appraisal at the time of refinancing.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
Available Distribution Amount: As to any Distribution Date, an amount
equal to: (i) the aggregate amount of Monthly Payments on the Mortgage Loans
due on the related Due Date and received on or prior to the related
Determination Date, after deduction of the related Administration Fee, (ii)
certain unscheduled payments, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds and proceeds from repurchases of and
substitutions for the Mortgage Loans pursuant to Section 2.04 occurring during
the Prior Period, (iii) all Advances made for such Distribution Date, in each
case net of amounts reimbursable therefrom to the Master Servicer and any
Subservicer and (iv) any amounts payable as Compensating Interest on such
Distribution Date. With respect to any Distribution Date, the "Available
Distribution Amount for Loan Group I" and the "Available Distribution Amount
for Loan Group
4
<PAGE> 18
II" will equal the sum of the amounts set forth in clauses (i)-(iv) above in
respect of the Group I Loans and the Group II Loans, respectively, for such
Distribution Date, after giving effect to any adjustments thereto pursuant to
Section 4.02(a)(I)(c).
Bankruptcy Amount: As to any Determination Date and with respect to
Loan Group I, $100,000 less the sum of any amounts allocated solely to the
Group I Subordinate Certificates in accordance with Section 4.05 prior to such
Determination Date. As to any Determination Date and with respect to Loan
Group II, $100,000 less the sum of any amounts allocated solely to the Group II
Subordinate Certificates in accordance with Section 4.05 prior to such
Determination Date.
Bankruptcy Code: The United States Bankruptcy Code of 1978, as
amended, or any successor thereto.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer has notified the Trustee in
writing that the Master Servicer is diligently pursuing any remedies that may
exist in connection with the representations and warranties made regarding the
related Mortgage Loan and either (A) the related Mortgage Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of
principal and interest under the related Mortgage Loan are being advanced as an
Advance and any premiums on any applicable primary hazard insurance policy and
any related escrow payments in respect of such Mortgage Loan are being advanced
as a Servicing Advance on a current basis by the Master Servicer or a
Subservicer, in either case without giving effect to any Debt Service
Reduction.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, which initially shall include the Class A, Class X,
Class PO, Class M, Class IB-1, Class IB-2, Class IIB-1 and Class IIB-2
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or State of New
York (and such other state or states in which the Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Buydown Funds: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan and held by the Master Servicer, or the related
Subservicer, as applicable. Buydown Funds are not part of the Trust Fund prior
to deposit into the Custodial Account or the Certificate Account.
Buydown Mortgage Loan: Any Mortgage Loan as to which a specified
amount of interest is paid out of related Buydown Funds in accordance with a
related buydown agreement.
Cash Liquidation: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has
5
<PAGE> 19
received all Insurance Proceeds, Liquidation Proceeds and other payments or
cash recoveries which the Master Servicer reasonably and in good faith expects
to be finally recoverable with respect to such Mortgage Loan.
Certificate: Any of the Senior Certificates, the Class M
Certificates, the Class B Certificates or the Residual Certificates.
Certificate Account: The separate account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bankers Trust
Company of California, N.A., as Trustee, in trust for the registered holders of
BA Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series
1998-2" and which must be an Eligible Account.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Residual
Certificate for purposes hereof and, solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Residual Certificate, registered in the name of the Depositor, the Master
Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights necessary to effect any such consent or
direction has been obtained. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.
Certificate Group: Either of the Group I Certificates or the Group II
Certificates, as applicable.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate, as reflected on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent, if any, and otherwise on the books of a Depository
Participant, if any, and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to each Certificate of
any Class, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, reduced by (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance or amount thereof
pursuant to Section 4.02(a) and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate
6
<PAGE> 20
(or any predecessor Certificate) pursuant to Section 4.05, and increased in the
case of the Class IA-8 Certificates by any Class IA-8 Accrual Amount added
thereto.
Certificate Register and Certificate Registrar: The register
maintained and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates bearing the same
designation or all the REMIC I Regular Interests or REMIC II Regular Interests
bearing the same designation.
Class A Certificates: The Class IA-1, Class IA-2, Class IA-3, Class
IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class IA-10,
Class IA-11, Class IA-12 and Class IIA-1 Certificates, collectively.
Class I-PO Certificates: The Certificates designated as "Class I-PO"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class I-PO Fraction: For each Class I-PO Mortgage Loan, a fraction,
the numerator of which is 6.750% minus the Net Mortgage Rate on such Class I-PO
Mortgage Loan and the denominator of which is 6.750%.
Class I-PO Mortgage Loan: Any Group I Loan with a Net Mortgage Rate
of less than 6.750% per annum.
Class I-PO Principal Distribution Amount: With respect to any
Distribution Date prior to the Credit Support Depletion Date, the aggregate of
the amounts payable to the Class I-PO Certificates pursuant to Sections
4.02(a)(I)(a)(i) and 4.02(a)(I)(a)(iv), and with respect to any Distribution
Date on or after the Credit Support Depletion Date, the amount payable to the
Class I-PO Certificates pursuant to Section 4.02(a)(II)(a)(i).
Class I-X Certificates: The Certificates designated as "Class I-X" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class I-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the Group I Premium Rate Mortgage
Loans and (y) a fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Group I Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 6.750% per annum. The Class I-X
Notional Amount as of the Closing Date will be approximately $10,385,155.
Class IA-1 Certificates: The Certificates designated as "Class IA-1"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class IA-2 Certificates: The Certificates designated as "Class IA-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
7
<PAGE> 21
Class IA-3 Certificates: The Certificates designated as "Class IA-3"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-4 Certificates: The Certificates designated as "Class IA-4"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-4 Liquidation Amount: With respect to any Distribution Date,
the aggregate of, for each Group I Loan which became a Liquidated Mortgage Loan
during the Prior Period, the lesser of (i) the Class IA-4 Percentage of the
principal balance of such Mortgage Loan (exclusive of the Class I-PO Fraction
thereof, if applicable) and (ii) the Class IA-4 Percentage on any Distribution
Date occurring prior to the fifth anniversary of the first Distribution Date,
and the Class IA-4 Prepayment Percentage on any Distribution Date thereafter,
in each case, of the Liquidation Principal with respect to such Mortgage Loan.
Class IA-4 Percentage: With respect to any Distribution Date, the
lesser of (a) 100% and (b) the Class IA-4 Certificate Principal Balance divided
by the aggregate principal balance of the Group I Loans (less the Class I-PO
Certificate Principal Balance), in each case immediately prior to the
Distribution Date.
Class IA-4 Prepayment Percentage: With respect to any Distribution
Date, the product of (a) the Class IA-4 Percentage for such Distribution Date
and (b) the applicable Step Down Percentage.
Class IA-4 Priority Amount: With respect to any Distribution Date,
the sum of (i) the Adjusted Class IA-4 Percentage of the Principal Payment
Amount for Loan Group I (exclusive of the portion thereof attributable to the
Class I-PO Principal Distribution Amount), (ii) the Class IA-4 Prepayment
Percentage of the Principal Prepayment Amount for Loan Group I (exclusive of
the portion thereof attributable to the Class I-PO Principal Distribution
Amount) and (iii) the Class IA-4 Liquidation Amount.
Class IA-5 Certificates: The Certificates designated as "Class IA-5"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-6 Certificates: The Certificates designated as "Class IA-6"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-7 Certificates: The Certificates designated as "Class IA-7"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-8 Accretion Termination Date: The earlier to occur of (i)
the Distribution Date on which the Certificate Principal Balances of the Class
IA-1 and Class IA-7 Certificates have been reduced to zero and (ii) the Group I
Credit Support Depletion Date.
Class IA-8 Accrual Amount: On each Distribution Date on or before the
Class IA-8 Accretion Termination Date, and amount equal to the lesser of (i)
the accrued interest that would
8
<PAGE> 22
otherwise be distributable in respect of the Class IA-8 Certificates on such
Distribution Date and (ii) the Certificate Principal Balances of the Class IA-1
and Class IA-7 Certificates.
Class IA-8 Certificates: The Certificates designated as "Class IA-8"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-9 Certificates: The Certificates designated as "Class IA-9"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IA-10 Certificates: The Certificates designated as "Class
IA-10" on the face thereof in substantially the form attached hereto as Exhibit
A.
Class IA-11 Certificates: The Certificates designated as "Class
IA-11" on the face thereof in substantially the form attached hereto as Exhibit
A.
Class IA-12 Certificates: The Certificates designated as "Class
IA-12" on the face thereof in substantially the form attached hereto as Exhibit
A.
Class IA-12 Notional Amount: With respect to any date of
determination, (i) the aggregate of the Certificate Principal Balances of the
Class IA-10 and Class IA-11 Certificates (ii) divided by 45. The Class IA-12
Notional Amount as of the Closing Date will be approximately $319,111.
Class II-PO Certificates: The Certificates designated as "Class
II-PO" on the face thereof and in substantially the form attached hereto as
Exhibit A.
Class II-PO Fraction: For each Class II-PO Mortgage Loan, a fraction,
the numerator of which is 6.500% minus the Net Mortgage Rate on such Class
II-PO Mortgage Loan and the denominator of which is 6.500%.
Class II-PO Mortgage Loan: Any Group II Loan with a Net Mortgage Rate
of less than 6.500% per annum.
Class II-PO Principal Distribution Amount: With respect to any
Distribution Date prior to the Credit Support Depletion Date, the aggregate of
the amounts payable to the Class II-PO Certificates pursuant to Sections
4.02(a)(I)(b)(i) and 4.02(a)(I)(b)(iv), and with respect to any Distribution
Date on or after the Credit Support Depletion Date, the amount payable to the
Class II-PO Certificates pursuant to Section 4.02(a)(II)(b)(i).
Class II-X Certificates: The Certificates designated as "Class II-X"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class II-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the Group II Premium
9
<PAGE> 23
Rate Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group II Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 6.500% per annum.
The Class II-X Notional Amount as of the Closing Date will be approximately
$2,345,961.
Class IIA-1 Certificates: The Certificates designated as "Class
IIA-1" on the face thereof and in substantially the form attached hereto as
Exhibit A.
Class B Certificates: The Class IB-1, Class IB-2, Class IB-3, Class
IB-4, Class IB-5, Class IIB-1, Class IIB-2, Class IIB-3, Class IIB-4 and Class
IIB-5 Certificates, collectively.
Class IB-1 Certificates: The Certificates designated as "Class IB-1"
on the face thereof and in substantially the form attached hereto as Exhibit C.
Class IB-2 Certificates: The Certificates designated as "Class IB-2"
on the face thereof and in substantially the form attached hereto as Exhibit C.
Class IB-3 Certificates: The Certificates designated as "Class IB-3"
on the face thereof and in substantially the form attached hereto as Exhibit C.
Class IB-4 Certificates: The Certificates designated as "Class IB-4"
on the face thereof and in substantially the form attached hereto as Exhibit C.
Class IB-5 Certificates: The Certificates designated as "Class IB-5"
on the face thereof and in substantially the form attached hereto as Exhibit C.
Class IIB-1 Certificates: The Certificates designated as "Class
IIB-1" on the face thereof and in substantially the form attached hereto as
Exhibit C.
Class IIB-2 Certificates: The Certificates designated as "Class
IIB-2" on the face thereof and in substantially the form attached hereto as
Exhibit C.
Class IIB-3 Certificates: The Certificates designated as "Class
IIB-3" on the face thereof and in substantially the form attached hereto as
Exhibit C.
Class IIB-4 Certificates: The Certificates designated as "Class
IIB-4" on the face thereof and in substantially the form attached hereto as
Exhibit C.
Class IIB-5 Certificates: The Certificates designated as "Class
IIB-5" on the face thereof and in substantially the form attached hereto as
Exhibit C.
Class IM Certificates: The Certificates designated as "Class IM" on
the face thereof and in substantially the form attached hereto as Exhibit B.
Class IIM Certificates: The Certificates designated as "Class IIM" on
the face thereof and in substantially the form attached hereto as Exhibit B.
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<PAGE> 24
Class PO Certificates: The Class I-PO and Class II-PO Certificates,
collectively.
Class R-I Certificates: The Certificates designated as "Class R-I" on
the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
I.
Class R-II Certificates: The Certificates designated as "Class R-II"
on the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
II.
Class R-III Certificates: The Certificates designated as "Class
R-III" on the face thereof and in substantially the form attached hereto as
Exhibit D, which shall be designated as the single class of "residual interest"
in REMIC III.
Class X Certificates: The Class I-X and Class II-X Certificates,
collectively.
Closing Date: May 20, 1998.
Code: The Internal Revenue Code of 1986.
Combination Targeted Principal Balance: With respect to any
Distribution Date and the Class IA-1 and Class IA-7 Certificates, the aggregate
of the Certificate Principal Balances of the Class IA-1 and Class IA-7
Certificates for such Distribution Date set forth in Exhibit Q hereto.
Compensating Interest: With respect to any Distribution Date, an
amount equal to the aggregate of the Prepayment Interest Shortfalls during the
calendar month preceding such Distribution Date, but not more than the sum of
one-twelfth of the applicable annual Master Servicing Fee rate of the Stated
Principal Balance of each of the Mortgage Loans immediately preceding such
Distribution Date; provided that for purposes of this definition the amount of
the Master Servicing Fee will not be reduced pursuant to Section 7.02 except as
may be required pursuant to the second to last sentence of such Section.
Corporate Trust Office: The principal office of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this instrument is located at 3 Park Plaza, 16th Floor, Irvine, California
92614, Attention: BA Mortgage Securities, Inc., Series 1998-2.
Corresponding Class: With respect to the Group I Certificates, the
"Corresponding Class" or "Corresponding Classes" for each of such Certificates
is as set forth below:
<TABLE>
<CAPTION>
Group I Certificates REMIC I Regular Interest
-------------------- ------------------------
<S> <C>
Class IA-1, Class IA-7 Class IA-1-L
Class IA-2 Class IA-2-L
Class IA-3 Class IA-3-L
Class IA-4 Class IA-4-L
Class IA-5 Class IA-5-L
</TABLE>
11
<PAGE> 25
<TABLE>
<S> <C>
Class IA-6 Class IA-6-L
Class IA-8 Class IA-8-L
Class IA-9 Class IA-9-L
Class IA-10, Class IA-11, Class IA-10-L
Class IA-12
Class I-X Class I-X-L
Class I-PO Class I-PO-L
Class IM, Class IB-1, Class Class I-B-L
IB-2, Class IB-3, Class IB-4,
Class IB-5
</TABLE>
With respect to the Group II Certificates, the "Corresponding Class"
or "Corresponding Classes" for each of such Certificates is as set forth below:
<TABLE>
<CAPTION>
Group II Certificates REMIC II Regular Interest
--------------------- -------------------------
<S> <C>
Class IIA-1 Class IIA-1-L
Class II-X Class II-X-L
Class II-PO Class II-PO-L
Class IIM, Class IIB-1, Class Class II-B-L
IIB-2, Class IIB-3, Class IIB-4,
Class IIB-5
</TABLE>
Curtailment: Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in Full.
Custodial Account: The custodial account or accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among a
Seller, the Depositor, the Master Servicer, the Trustee and a Custodian, in
substantially the form of Exhibit O hereto.
Custodian: A custodian appointed pursuant to a Custodial Agreement.
Cut-off Date: May 1, 1998.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto, whether or not received.
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<PAGE> 26
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding under the
Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan pursuant to Section 2.04 hereof.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined
in the Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th
day (or if such 15th day is not a Business Day, the Business Day immediately
preceding such 15th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which
includes any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any
organization (other than certain farmers' cooperatives described in Section 521
of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, (v) any "electing large partnership"
described in Section 775 of the Code and (vi) any other Person so designated by
the Trustee based upon an Opinion of Counsel that the holding of an Ownership
Interest in a Residual Certificate by such Person may cause the Trust Fund, or
any Person having an Ownership Interest in any Class of Certificates (other
than such Person) to incur a liability for any federal
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<PAGE> 27
tax imposed under the Code that would not otherwise be imposed but for the
Transfer of an Ownership Interest in a Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
Distribution Date: The 25th day of any month beginning in the month
following the month of the initial issuance of the Certificates or, if such
25th day is not a Business Day, the Business Day immediately following such
25th day.
Due Date: With respect to any Distribution Date, the first day of the
month in which such Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date and ending on the related Due Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have
been rated by each Rating Agency in its highest rating available, or (ii) an
account or accounts in a depository institution in which such accounts are
fully insured to the limits established by the FDIC, provided that any deposits
not so insured shall, to the extent acceptable to each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of
Counsel delivered to the Trustee and each Rating Agency) the registered Holders
of Certificates have a claim with respect to the funds in such account or a
perfected first security interest against any collateral (which shall be
limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution with
which such account is maintained, or (iii) in the case of the Certificate
Account, a trust account or accounts maintained in the corporate trust division
of Bankers Trust Company of California, N.A., or if Bankers Trust Company is no
longer the Trustee, the trust department of a federal or state chartered
depository institution acceptable to each Rating Agency; (iv) an account or
accounts of a depository institution acceptable to each Rating Agency (as
evidenced in writing by each Rating Agency that use of any such account as the
Custodial Account or the Certificate Account will not reduce the rating
assigned to any Class of Certificates by such Rating Agency below the lower of
the then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency).
Event of Default: As defined in Section 7.01.
Excess Bankruptcy Loss: With respect to Loan Group I or Loan Group
II, any Bankruptcy Loss, or portion thereof, which exceeds the then applicable
Bankruptcy Amount for Loan Group I or Loan Group II, as applicable.
Excess Fraud Loss: With respect to Loan Group I or Loan Group II, any
Fraud Loss, or portion thereof, which exceeds the then applicable Fraud Loss
Amount for Loan Group I or Loan Group II, as applicable.
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<PAGE> 28
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
Extraordinary Events: Any of the following conditions with respect to
a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by
the fidelity bond and the errors and omissions insurance policy
required to be maintained pursuant to Section 3.12(b) but are in
excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether
such loss be direct or indirect, proximate or remote or be in whole or
in part caused by, contributed to or aggravated by a peril covered by
the definition of the term "Special Hazard Loss;"
(c) hostile or warlike action in time of peace or war,
including action in hindering, combatting or defending against an
actual, impending or expected attack:
1. by any government or sovereign power, de jure
or de facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in hindering,
combatting or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations, confiscation by
order of any government or public authority; or risks of contraband or
illegal transportation or trade.
Extraordinary Losses: Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
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<PAGE> 29
FNMA: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01 which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Fitch: Fitch IBCA, Inc., or its successor in interest.
Foreclosure Profits: As to any Mortgage Loan on any date of
determination, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to Section
3.10(a)(i)) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the immediately prior calendar month
over the sum of the unpaid principal balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 3.14) plus accrued and unpaid interest at the Mortgage Rate on such
unpaid principal balance from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
Fraud Loss Amount: As of any Determination Date after the Cut-off
Date and with respect to either of Loan Group I or Loan Group II, an amount
equal to (X) prior to the second anniversary of the Cut-off Date an amount
equal to 1% of the aggregate outstanding principal balance of all of the Group
I Loans or Group II Loans, as applicable, as of the Cut-off Date minus the
aggregate amount of Fraud Losses allocated solely to the Group I or Group II
Subordinate Certificates, as applicable, in accordance with Section 4.05 since
the Cut-off Date up to such Determination Date, (Y) from the second through the
fifth anniversary of the Cut-off Date, an amount equal to (1) the lesser of (a)
the Fraud Loss Amount as of the most recent anniversary of the Cut-off Date and
(b) 0.5% of the aggregate principal balance of all of the Group I or Group II
Loans, as applicable, as of the most recent anniversary of the Cut-off Date
minus (2) the aggregate amount of Fraud Losses allocated solely to the Group I
or Group II Subordinate Certificates in accordance with Section 4.05 since the
most recent anniversary of the Cut-off Date up to such Determination Date and
(Z) on and after the fifth anniversary of the Cut-off Date, the Fraud Loss
Amount for Loan Group I and Loan Group II shall be zero.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in
the origination of such Mortgage Loan.
Group I Certificates:The Group I Senior Certificates and Group I
Subordinate Certificates, collectively.
Group I Credit Support Depletion Date: The first Distribution Date
upon which the aggregate of the Certificate Principal Balances of the Group I
Subordinate Certificates has been or will be reduced to zero.
16
<PAGE> 30
Group I Junior Subordinate Certificates: The Class IB-3, Class IB-4
and Class IB-5 Certificates.
Group I Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group I Loans.
Group I Original Subordinate Principal Balance: The sum of the
Initial Certificate Principal Balances of the Group I Subordinate Certificates.
Group I Premium Rate Mortgage Loans: The Group I Loans having Net
Mortgage Rates equal to or greater than 6.750% per annum.
Group I Senior Certificates: The Group IA, Class I-X, Class I-PO,
Class R-I and Class R-III Certificates, collectively.
Group I Senior Subordinate Certificates: The Class IM, Class IB-1 and
Class IB-2 Certificates, collectively.
Group I Subordinate Certificates: The Group I Senior Subordinate and
Group I Junior Subordinate Certificates, collectively.
Group I Subordinate Liquidation Amount: The excess, if any, of the
aggregate of Liquidation Principal for all Group I Loans which became
Liquidated Mortgage Loans during the Prior Period over the related Group IA
Liquidation Amount for such Distribution Date.
Group I Subordinate Percentage: For any Distribution Date, the excess
of 100% over the Group IA Percentage.
Group I Subordinate Prepayment Percentage: For any Distribution Date,
the excess of 100% over the Group IA Prepayment Percentage; provided, however,
that if the Certificate Principal Balances of the Group I Senior Certificates
(other than the Class I-PO Certificates) have been reduced to zero, then the
Group I Subordinate Prepayment Percentage will equal 100%.
Group I Subordinate Principal Distribution Amount: For any
Distribution Date, the sum of (I) the excess of (A) the sum of (i) the Group I
Subordinate Percentage of the Principal Payment Amount for Loan Group I
(exclusive of the portion thereof attributable to the Class I- PO Principal
Distribution Amount), (ii) the Group I Subordinate Prepayment Percentage of the
Principal Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to the Class I-PO Principal Distribution Amount) and (iii) the
Group I Subordinate Liquidation Amount over (B) the sum of (i) the amounts
required to be distributed to the Class I-PO Certificates pursuant to Section
4.02(a)(I)(a)(iv) on such Distribution Date and (ii) any payments made from the
Available Distribution Amount for the Group I Certificates with respect to any
transfer of principal to Group II Certificates pursuant to Section
4.02(a)(I)(c) and (II) if the Group I Certificates are the Transferee Group
with respect to a Transfer Balance, then an amount equal to the Group I
Subordinate Percentage of any amount transferred from the Lowest
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<PAGE> 31
Class of a Transferor Group and any amount distributed in respect of principal
on such Transfer Balance for such Distribution Date.
Notwithstanding the foregoing, on any Distribution Date prior to
distributions on such date, if the Subordination Level for any Class of Group I
Subordinate Certificates is less than such percentage as of the Closing Date,
the pro rata portion of the Group I Subordinate Principal Prepayment
Distribution Amount (as defined below) otherwise allocable to the Class or
Classes junior to such Class will be allocated to the most senior Classes of
the Group I Subordinate Certificates for which the Subordination Level is less
than such percentage as of the Closing Date, and to the Class or Classes of
Group I Subordinate Certificates senior thereto, pro rata according to the
Certificate Principal Balances of such Classes.
Any reduction in the Group I Subordinate Principal Distribution Amount
pursuant to clause (B) of this definition shall offset: (i) first, the amount
calculated pursuant to clause (A)(i) of this definition, (ii) second, the
amount calculated pursuant to clause (A)(iii) of this definition and (iii)
third, the amount calculated pursuant to clause (A)(ii) of this definition.
The portion of the Group I Subordinate Principal Distribution Amount described
in clause (ii) of the definition thereof, as reduced in accordance with the
preceding sentence if applicable, is referred to herein as the "Group I
Subordinate Principal Prepayment Distribution Amount."
Group IA Certificates: Class IA-1, Class IA-2, Class IA-3, Class
IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class IA-10,
Class IA-11 and Class IA-12 Certificates, collectively.
Group IA Liquidation Amount: For any Distribution Date, the aggregate
of, for each Group I Loan which became a Liquidated Mortgage Loan during the
Prior Period, the lesser of (i) the Group IA Percentage of the principal
balance of such Mortgage Loan (exclusive of the Class I-PO Fraction thereof, if
applicable) and (ii) the Group IA Prepayment Percentage of the Liquidation
Principal with respect to such Mortgage Loan.
Group IA Percentage: For any Distribution Date, the lesser of (a) 100%
and (b) the sum of the Certificate Principal Balances of the Group IA
Certificates, the Class R-I Certificates and the Class R-III Certificates
divided by the aggregate principal balance of the Group I Loans (less the
Certificate Principal Balance of the Class I-PO Certificates), in each case
immediately prior to the Distribution Date.
Group IA Prepayment Percentage: (i) On any Distribution Date occurring
before the Distribution Date in the month of the fifth anniversary of the first
Distribution Date, 100%; (ii) on any other Distribution Date on which the Group
IA Percentage for such Distribution Date exceeds the initial Group IA
Percentage, as of the Cut-Off Date, 100%; and (iii) on any other Distribution
Date in each of the months of the fifth anniversary of the first Distribution
Date and thereafter, 100%, unless, with respect to the Group I Loans:
(a) the outstanding principal balance of all Group I Loans
delinquent 60 days or more (averaged over the preceding six
month period), as a percentage of the
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aggregate principal balance of the Group I Subordinate
Certificates on such Distribution Date, does not equal or
exceed 50%, and
(b) cumulative Realized Losses with respect to the Group I Loans
do not exceed (a) with respect to the Distribution Date on
the fifth anniversary of the first Distribution Date, 30% of
the Group I Original Subordinate Principal Balance, (b) with
respect to the Distribution Date on the sixth anniversary of
the first Distribution Date, 35% of the Group I Original
Subordinate Principal Balance, (c) with respect to the
Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Group I Original Subordinate
Principal Balance, (d) with respect to the Distribution Date
on the eighth anniversary of the first Distribution Date,
45% of the Group I Original Subordinate Principal Balance,
and (e) with respect to the Distribution Date on the ninth
anniversary of the first Distribution Date, 50% of the Group
I Original Subordinate Principal Balance;
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group IA Percentage for such Distribution Date plus 70% of the Group I
Subordinate Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month
of the first Distribution Date but before the seventh anniversary of the month
of the first Distribution Date, the Group IA Percentage for such Distribution
Date plus 60% of the Group I Subordinate Percentage for such Distribution Date;
(3) for any such Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the eighth
anniversary of the month of the first Distribution Date, the Group IA
Percentage for such Distribution Date plus 40% of the Group I Subordinate
Percentage for such Distribution Date; (4) for any such Distribution Date in or
after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Group IA Percentage for such Distribution Date plus 20%
of the Group I Subordinate Percentage for such Distribution Date; and (5) for
any such Distribution Date thereafter, the Group IA Percentage for such
Distribution Date.
If on any Distribution Date the allocation to the Group I Senior
Certificates (other than the Class I-PO Certificates) in the percentage
required would reduce the sum of the Certificate Principal Balances of such
Certificates below zero, the Group IA Prepayment Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce such
sum to zero.
Group IA Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Group IA Percentage of the Principal Payment Amount for Loan
Group I (exclusive of the portion thereof attributable to the Class I-PO
Principal Distribution Amount), (ii) the Group IA Prepayment Percentage of the
Principal Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to the Class I-PO Principal Distribution Amount), (iii) the Group
IA Liquidation Amount and (iv) if the Group I Certificates are the Transferee
Group with respect to a Transfer Balance, then an amount equal to the Group IA
Percentage of any amount transferred from the Lowest Class of the Transferor
Group and any amount distributed in respect of principal on such Transfer
Balance for such Distribution Date.
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Group II Certificates: The Group II Senior and the Group II
Subordinate Certificates, collectively.
Group II Credit Support Depletion Date: The first Distribution Date on
which the aggregate of the Certificate Principal Balances of the Group II
Subordinate Certificates has been or will be reduced to zero.
Group II Junior Subordinate Certificates: The Class IIB-3, Class IIB-4
and Class IIB-5 Certificates, collectively.
Group II Loan:The Mortgage Loans designated on the Mortgage Loan
Schedule as Group II Loans.
Group II Original Subordinate Principal Balance: The sum of the
Initial Certificate Principal Balances of the Group II Subordinate
Certificates.
Group II Premium Rate Mortgage Loans: The Group II Loans having Net
Mortgage Rates equal to or greater than 6.500% per annum.
Group II Senior Certificates: The Group IIA, Class II-X, Class II-PO
and Class R-II Certificates, collectively.
Group II Senior Subordinate Certificates: The Class IIM, Class IIB-1
and Class IIB-2 Certificates, collectively.
Group II Subordinate Certificates: The Group II Senior Subordinate and
Group II Junior Subordinate Certificates, collectively.
Group II Subordinate Liquidation Amount: The excess, if any, of the
aggregate of Liquidation Principal for all Group II Loans which became
Liquidated Mortgage Loans during the Prior Period over the Group IIA
Liquidation Amount for such Distribution Date.
Group II Subordinate Percentage: For any Distribution Date, the
excess of 100% over the Group IIA Percentage.
Group II Subordinate Prepayment Percentage: For any Distribution
Date, the excess of 100% over the Group IIA Prepayment Percentage; provided,
however, that if the Certificate Principal Balances of the Group II Senior
Certificates (other than the Class II-PO Certificates) have been reduced to
zero, then the Group II Subordinate Prepayment Percentage will equal 100%.
Group II Subordinate Principal Distribution Amount: For any
Distribution Date, the sum of (I) the excess of (A) the sum of (i) the Group II
Subordinate Percentage of the Principal Payment Amount for Loan Group II
(exclusive of the portion thereof attributable to the Class II-PO Principal
Distribution Amount), (ii) the Group II Subordinate Prepayment Percentage of
the Principal Prepayment Amount for Loan Group II (exclusive of the portion
thereof attributable
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to the Class II-PO Principal Distribution Amount) and (iii) the Group II
Subordinate Liquidation Amount over (B) the sum of (i) the amounts required to
be distributed to the Class II-PO Certificates pursuant to Section
4.02(a)(I)(b)(iv) on such Distribution Date and (ii) any payments made from the
Available Distribution Amount for the Group II Certificates with respect to any
transfer of principal to Group I Certificates pursuant to Section 4.02(a)(I)(c)
and (II) if the Group II Certificates are the Transferee Group with respect to
a Transfer Balance, then an amount equal to the Group II Subordinate Percentage
of any amount transferred from the Lowest Class of the Transferor Group and any
amount distributed in respect of principal on such Transfer Balance for such
Distribution Date.
Notwithstanding the foregoing, on any Distribution Date prior to
distributions on such date, if the Subordination Level for any Class of Group
II Subordinate Certificates is less than such percentage as of the Closing
Date, the pro rata portion of the Group II Subordinate Principal Prepayment
Distribution Amount (as defined below) otherwise allocable to the Class or
Classes junior to such Class will be allocated to the most senior Classes of
the Group II Subordinate Certificates for which the Subordination Level is less
than such percentage as of the Closing Date, and to the Class or Classes of
Group II Subordinate Certificates senior thereto, pro rata according to the
Certificate Principal Balances of such Classes.
Any reduction in the Group II Subordinate Principal Distribution
Amount pursuant to clause (B) of this definition shall offset: (i) first, the
amount calculated pursuant to clause (A)(i) of this definition, (ii) second,
the amount calculated pursuant to clause (A)(iii) of this definition and (iii)
third, the amount calculated pursuant to clause (A)(ii) of this definition.
The portion of the Group II Subordinate Principal Distribution Amount described
in clause (ii) of the definition thereof, as reduced in accordance with the
preceding sentence if applicable, is referred to herein as the "Group II
Subordinate Principal Prepayment Distribution Amount."
Group IIA Certificates: The Class IIA-1 Certificates.
Group IIA Liquidation Amount: For any Distribution Date, the aggregate
of, for each Group II Loan which became a Liquidated Mortgage Loan during the
Prior Period, the lesser of (i) the Group IIA Percentage of the principal
balance of such Mortgage Loan (exclusive of the Class II-PO Fraction thereof,
if applicable) and (ii) the Group IIA Prepayment Percentage of the Liquidation
Principal with respect to such Mortgage Loan.
Group IIA Percentage: For any Distribution Date, the lesser of (a)
100% and (b) the sum of the Certificate Principal Balances of the Class IIA-1
Certificates and the Class R-II Certificates divided by the aggregate principal
balance of the Group II Loans (less the Certificate Principal Balance of the
Class II-PO Certificates), in each case immediately prior to the Distribution
Date.
Group IIA Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group IIA Percentage for such Distribution Date exceeds the initial Group
IIA Percentage, as of the Cut-Off Date, 100%; and (iii) on any
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other Distribution Date in each of the months of the fifth anniversary of the
first Distribution Date and thereafter, 100%, unless, with respect to the Group
II Loans:
(a) the outstanding principal balance of all Group II Loans delinquent
60 days or more (averaged over the preceding six month period), as
a percentage of the aggregate principal balance of the Group II
Subordinate Certificates on such Distribution Date, does not equal
or exceed 50%, and
(b) cumulative Realized Losses with respect to the Group II Loans do
not exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Group II
Original Subordinate Principal Balance, (b) with respect to the
Distribution Date on the sixth anniversary of the first
Distribution Date, 35% of the Group II Original Subordinate
Principal Balance, (c) with respect to the Distribution Date on the
seventh anniversary of the first Distribution Date, 40% of the
Group II Original Subordinate Principal Balance, (d) with respect
to the Distribution Date on the eighth anniversary of the first
Distribution Date, 45% of the Group II Original Subordinate
Principal Balance, and (e) with respect to the Distribution Date on
the ninth anniversary of the first Distribution Date, 50% of the
Group II Original Subordinate Principal Balance;
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group IIA Percentage for such Distribution Date plus 70% of the Group II
Subordinate Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month
of the first Distribution Date but before the seventh anniversary of the month
of the first Distribution Date, the Group IIA Percentage for such Distribution
Date plus 60% of the Group II Subordinate Percentage for such Distribution
Date; (3) for any such Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the eighth
anniversary of the month of the first Distribution Date, the Group IIA
Percentage for such Distribution Date plus 40% of the Group II Subordinate
Percentage for such Distribution Date; (4) for any such Distribution Date in or
after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Group IIA Percentage for such Distribution Date plus 20%
of the Group II Subordinate Percentage for such Distribution Date; and (5) for
any such Distribution Date thereafter, the Group IIA Percentage for such
Distribution Date.
If on any Distribution Date the allocation to the Group II Senior
Certificates (other than the Class II-PO Certificates) in the percentage
required would reduce the sum of the Certificate Principal Balances of such
Certificates below zero, the Group IIA Prepayment Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce such
sum to zero.
Group IIA Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Group IIA Percentage of the Principal Payment Amount for Loan
Group II (exclusive of the portion thereof attributable to the Class II-PO
Principal Distribution Amount), (ii) the Group IIA Prepayment Percentage of the
Principal Prepayment Amount for Loan Group II (exclusive of the
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portion thereof attributable to the Class II-PO Principal Distribution Amount),
(iii) the Group IIA Liquidation Amount and (iv) if the Group II Certificates
are the Transferee Group with respect to a Transfer Balance, then an amount
equal to the Group IIA Percentage of any amount transferred from the Lowest
Class of the Transferor Group and any amount distributed in respect of
principal on such Transfer Balance for such Distribution Date.
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicers
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the
Depositor, the Master Servicer or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicer or the Trustee
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Initial Certificate Principal Balance: With respect to each Class of
Certificates (other than the Class X Certificates), the Certificate Principal
Balance of such Class of Certificates as of the Closing Date as set forth in
the Preliminary Statement hereto.
Initial Notional Amount: With respect to the Class IA-12 Certificates
and each Class of Class X Certificates, the Notional Amount of such Class of
Certificates as of the Closing Date.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Mortgage Insurance Policy or any other related
insurance policy, covering a Mortgage Loan, to the extent such proceeds are
payable to the mortgagee under the Mortgage, any Subservicer, the Master
Servicer or the Trustee and are not applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account.
Insurer: Any named insurer under any Primary Mortgage Insurance Policy
or any successor thereto or the named insurer in any replacement policy.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the date set forth in the Preliminary Statement hereto.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIBOR: With respect to each Distribution Date, the London Interbank
Offered Rate for one-month United States dollar-denominated deposits determined
by the Trustee on the basis of quotations as of approximately 11:00 a.m.
(London time) on the applicable LIBOR Rate Adjustment Date appearing on the
display designated as page 3750 on the Telerate Service (or such other page as
may replace that page on that service for the purpose of displaying London
interbank offered rates of major banks). In the event that such rate does not
appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the
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Trustee after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. dollars are offered by the reference
banks (which shall be three major banks that are engaged in transactions in the
London interbank market, selected by the Trustee after consultation with the
Master Servicer) as of 11:00 a.m., London time, on the LIBOR Rate Adjustment
Date to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Certificate Principal Balance of
the LIBOR Certificates then outstanding. The Trustee will request the
principal London office of each of the reference banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate will be
the arithmetic mean of the quotations. If on such date fewer than two
quotations are provided as requested, the rate will be the arithmetic means of
the rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Master Servicer, as of 11:00 a.m., New York
City time, on such date for loans in U.S. dollars to leading European banks for
a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the LIBOR Certificates then outstanding. If
no such quotations can be obtained, the rate will be LIBOR for the prior
Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
LIBOR Rate Adjustment Date: The LIBOR Business Day immediately prior to
the 25th day of the month preceding such Distribution Date.
LIBOR Certificates: The Class IA-3 and Class IA-9 Certificates.
Liquidated Mortgage Loan: A Mortgage Loan as to which the Master
Servicer or any applicable Subservicer has determined in accordance with its
customary servicing practices that all amounts which it expects to recover from
or on account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise have been recovered. For purposes of this
definition, acquisition of a Mortgaged Property by the Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
Liquidation Principal: With respect to any Distribution Date, the
principal portion of Liquidation Proceeds received with respect to each
Mortgage Loan which became a Liquidated Mortgage Loan (but not in excess of the
principal balance thereof) during the Prior Period, exclusive of the portion
thereof attributable to the Class I-PO Principal Distribution Amount or the
Class II-PO Principal Distribution Amount.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by the Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.
Loan Group: Loan Group I or Loan Group II, as applicable.
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Loan Group I: The group of Mortgage Loans comprised of the Group I
Loans.
Loan Group II: The group of Mortgage Loans comprised of the Group II
Loans.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
Lowest Class: With respect to any Distribution Date, the Class of Group
I Subordinate Certificates or Group II Subordinate Certificates then
outstanding which has the lowest priority of payment, with the relative
priority of each of the Group I Subordinate Certificates and Group II
Subordinate Certificates determined in accordance with the definition of
"Subordination Level."
Master Servicer Remittance Amount: As to any Distribution Date, an
amount equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Account as of the close of business on the immediately
preceding Determination Date, (ii) the amount of any Advance made on the
immediately preceding Certificate Account Deposit Date, (iii) any amount
deposited in the Custodial Account pursuant to Section 3.12(a), reduced by (b)
the sum as of the close of business on the immediately preceding Determination
Date of (w) aggregate Foreclosure Profits, (x) the Amount Held for Future
Distribution, and (y) amounts permitted to be withdrawn by the Master Servicer
from the Custodial Account in respect of the Mortgage Loans pursuant to clauses
(i)-(xi), inclusive, of Section 3.10(a).
Master Servicing Fee: With respect to any Mortgage Loan, the fee
payable monthly to the Master Servicer in respect of master servicing
compensation that accrues at an annual rate designated on the Mortgage Loan
Schedule for such Mortgage Loan, as may be adjusted with respect to successor
Master Servicers as provided in Section 7.02. In addition, the Master
Servicing Fee shall include any increase in payments of interest on any
Mortgage Loan following an increase in the Mortgage Rate on such Mortgage Loan
as a result of (i) the termination of the Mortgagor's employment by either of
the Sellers or any of their Affiliates or (ii) the Mortgagor's discontinuation
of electronic debiting for payments of the related Mortgage Loan.
Maturity Date: The latest possible maturity date, solely for purposes
of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which the
Certificate Principal Balance of each Class of Certificates representing a
regular interest in REMIC III and the principal balance of each REMIC I Regular
Interest and REMIC II Regular Interest would be reduced to zero, which is
indicated in the table contained in the Preliminary Statement hereto and is the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon
in accordance with the amortization schedule at the time applicable thereto
(after adjustment, if any, for curtailments and for Deficient Valuations
occurring prior to such Due Date but before any adjustment to such
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amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period).
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Purchase Agreement: A Mortgage Loan Purchase Agreement
between a Seller and the Depositor, dated May 20, 1998, substantially in the
form attached hereto as Exhibit F.
Mortgage Loan Schedule: The list of the Mortgage Loans attached hereto
as Exhibit E-1 and Exhibit E-2 (as amended from time to time to reflect the
removal of Deleted Mortgage Loans and the addition of Qualified Substitute
Mortgage Loans), which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property including state
and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate;
(vi) the Net Mortgage Rate;
(vii) the initial scheduled monthly payment of principal, if any,
and interest;
(viii) the principal balance of the Mortgage Loan at origination;
(ix) the Cut-off Date Principal Balance;
(x) the Loan-to-Value Ratio at origination;
(xi) the rate at which the Master Servicing Fee accrues;
(xii) a code indicating that the Mortgage Loan is secured by a
second or vacation residence;
(xiii) a code indicating that the Mortgage Loan is secured by a
non-owner occupied residence;
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(xiv) a code indicating whether or not a Primary Mortgage Policy
exists for the Mortgage Loan; and
(xv) a code indicating that the Mortgage Loan is a Group I Loan
or a Group II Loan.
Such schedule may consist of multiple reports that collectively set forth all
of the information requested.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.01 as from time to time are held or deemed
to be held as part of the Trust Fund, the Mortgage Loans originally so held
being identified in the initial Mortgage Loan Schedule, and Qualified
Substitute Mortgage Loans held or deemed held as part of the Trust Fund
including, without limitation, each related Mortgage Note, Mortgage and
Mortgage File and all rights appertaining thereto.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate borne by
the related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate borne by the related Mortgage Note less the
per annum rate at which the related Administration Fee accrues.
Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
Master Servicer as Compensating Interest.
Non-Primary Residence Loans: The Mortgage Loans designated as secured
by second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
Non-United States Person: Any Person other than a United States
Person.
Nonrecoverable Advance: Any Advance or Servicing Advance previously
made or proposed to be made by the Master Servicer in respect of a Mortgage
Loan (other than a Deleted Mortgage Loan) which, in the good faith judgment of
the Master Servicer, will not, or, in the case of a proposed Advance or
Servicing Advance, would not, be ultimately recoverable by the Master Servicer
from related Late Collections, Insurance Proceeds, Liquidation Proceeds, REO
Proceeds or amounts reimbursable to the Master Servicer pursuant to Section
4.02(a) hereof.
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Nonrecoverable Subservicer Advance: Any Subservicer Servicing Advance
previously made or proposed to be made by a Subservicer in respect of a
Mortgage Loan (other than a Deleted Mortgage Loan) which, in the good faith
judgment of Subservicer, will not, or, in the case of a proposed Subservicer
Servicing Advance, would not, be ultimately recoverable by such Subservicer
from related Late Collections, Insurance Proceeds, Liquidation Proceeds, or REO
Proceeds.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Notional Amount: With respect to the Class I-X Certificates, the
Class I-X Notional Amount, with respect to the Class II-X Certificates, the
Class II-X Notional Amount and with respect to the Class IA-12 Certificates,
the Class IA-12 Notional Amount.
Officers' Certificate: A certificate signed by (i) the Chairman of
the Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of a Seller or the Depositor,
as the case may be, or (ii) a Servicing Officer of the Master Servicer, and
delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Master Servicer, who may be counsel for a Seller, the Depositor
or the Master Servicer, provided that any opinion of counsel (i) referred to in
the definition of "Permitted Transferee" or (ii) relating to the qualification
of either REMIC I, REMIC II or REMIC III as a REMIC or compliance with the
REMIC Provisions must, unless otherwise specified, be an opinion of Independent
counsel.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased,
deleted or substituted for prior to such Due Date pursuant to Section 2.02 or
2.04.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Pass-Through Rate: With respect to any Class of Certificates and any
Distribution Date, the per annum rate set forth or described in the Preliminary
Statement hereto.
Paying Agent: Bankers Trust Company of California, N.A., or any
successor Paying Agent appointed by the Trustee.
Percentage Interest: With respect to any Certificate (other than a
Residual Certificate), the undivided percentage ownership interest in the
related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the Initial Certificate Principal Balance or Initial
Notional Amount thereof divided by the aggregate Initial Certificate Principal
Balance or
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Initial Notional Amount of all of the Certificates of the same Class. With
respect to a Residual Certificate, the interest in distributions to be made
with respect to such Class evidenced thereby, expressed as a percentage, as
stated on the face of each such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof
when such obligations are backed by the full faith and
credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of
acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest
short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each
have an original maturity of not more than 90 days and, in
the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company
incorporated under the laws of the United States or any
state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the
debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated
by each Rating Agency in its next to highest short-term
rating available;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the
date of acquisition has been rated by each Rating Agency in
its highest short-term rating available; provided that such
commercial paper shall have a remaining maturity of not more
than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating
available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will
not reduce the rating assigned to any Class of Certificates
by such Rating Agency below the lower of the then-current
rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency as evidenced in writing;
provided, however, (A) such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury regulations and (B)
that no instrument shall be a Permitted Investment if it represents, either (1)
the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments
derived from obligations underlying such instrument and the principal and
interest
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payments with respect to such instrument provide a yield to maturity greater
than 120% of the yield to maturity at par of such underlying obligations.
References herein to the highest rating available and the next to highest
rating available on unsecured long-term debt shall mean AAA and AA,
respectively, in the case of each of DCR and S&P, and references herein to the
highest rating available on unsecured commercial paper and short-term debt
obligations shall mean D-1 in the case of DCR and A-1 in the case of S&P.
Permitted Transferee: Any Transferee of a Residual Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Planned Principal Balance: With respect to any Distribution Date and
the Class IA-2, Class IA-10 and Class IA-11 Certificates, the Certificate
Principal Balances of the Class IA-2, Class IA-10 and Class IA-11 Certificates,
respectively, for such Distribution Date set forth in Exhibit Q hereto.
Pool Stated Principal Balance: As to any Determination Date, the
aggregate of the Stated Principal Balances of each Mortgage Loan that was an
Outstanding Mortgage Loan on the Due Date in the month preceding the month of
such date of determination.
Prepayment Assumption: A prepayment assumption of 250% of the
standard prepayment assumption, used for determining the accrual of original
issue discount and market discount and premium on the Certificates for federal
income tax purposes. The standard prepayment assumption assumes a constant
rate of prepayment of mortgage loans of 0.2% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans, increasing by an additional 0.2% per annum in each succeeding
month until the thirtieth month, and a constant 6% per annum rate of prepayment
thereafter for the life of the mortgage loans.
Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the Prior Period, an
amount equal to the excess of one month's interest at the Net Mortgage Rate on
the Stated Principal Balance of such Mortgage Loan over the amount of interest
(adjusted to the Net Mortgage Rate) paid by the Mortgagor for the calendar
month preceding such Distribution Date to the date of such Principal Prepayment
in Full or (b) a Curtailment during the Prior Period, an amount equal to the
excess of one month's interest at the Net Mortgage Rate on the amount of such
Curtailment over the amount of interest (adjusted to the Net Mortgage Rate)
paid by the Mortgagor for the calendar month preceding such Distribution Date
to the date of such Curtailment.
Primary Mortgage Insurance Policy: A policy of mortgage guaranty
insurance, if any, or any replacement policy therefor, as evidenced by a policy
or certificate, providing coverage as required by clause (xi) of Exhibit 3 to
each Mortgage Loan Purchase Agreement.
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Primary Servicing Fee: As to any Mortgage Loan, that portion of the
Master Servicing Fee that constitutes the fee payable monthly to the related
Subservicer in respect of servicing and other compensation that accrues at an
annual rate as set forth in the applicable Subservicing Agreement.
Principal Payment Amount: For any Distribution Date and with respect
to each Loan Group, the sum, with respect to the Mortgage Loans in such Loan
Group, of (i) Monthly Payments on the Mortgage Loans due on the related Due
Date, (ii) the principal portion of repurchase proceeds received with respect
to any Mortgage Loan which was repurchased as permitted or required herein
during the Prior Period and (iii) any other unscheduled payments of principal
which were received during the Prior Period, other than Curtailments, Principal
Prepayments in Full or Liquidation Principal.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment Amount: For any Distribution Date and with
respect to each Loan Group, the sum, with respect to the Mortgage Loans in such
Loan Group, of all Curtailments and Principal Prepayments in Full which were
received during the Prior Period.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Prior Period: The calendar month immediately preceding any
Distribution Date.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be purchased on any date pursuant to Section 2.02 or 2.04, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof
plus the principal portion of any related unreimbursed Advances and Servicing
Advances and (ii) unpaid accrued interest at the Mortgage Rate on the Stated
Principal Balance thereof to the first day of the month following the month of
purchase from the Due Date to which interest was last paid by the Mortgagor.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the
Trustee, (i) have an outstanding principal balance, after deduction of the
principal portion of the monthly payment due in the month of substitution (or
in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of (and not substantially less than) the Stated
Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to
be remitted by the applicable Seller to the Master Servicer of such Deleted
Mortgage Loan for deposit in the applicable Custodial Account in the month of
substitution); (ii) have a Mortgage Rate and a Net Mortgage Rate no lower than
and not more than 1% per annum higher than the Mortgage Rate and Net Mortgage
Rate, respectively, of the Deleted
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Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value Ratio
at the time of substitution no higher than that of the Deleted Mortgage Loan at
the time of substitution; (iv) have a remaining term to stated maturity not
greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (v) comply with each representation and warranty set forth in
Exhibit 3 to the applicable Mortgage Loan Purchase Agreement.
Rating Agency: S&P and Fitch. If either agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Master Servicer.
Realized Loss: With respect to each Mortgage Loan (or REO Property)
as to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
(or REO Property) as of the date of Cash Liquidation or REO Disposition, plus
(ii) interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from
the Due Date as to which interest was last paid or advanced to
Certificateholders up to the last day of the month in which the Cash
Liquidation (or REO Disposition) occurred on the Stated Principal Balance of
such Mortgage Loan (or REO Property) outstanding during each Due Period that
such interest was not paid or advanced, minus (iii) the proceeds, if any,
received during the month in which such Cash Liquidation (or REO Disposition)
occurred, to the extent applied as recoveries of interest at the Net Mortgage
Rate and to principal of the Mortgage Loan, net of the portion thereof
reimbursable to the Master Servicer or any Subservicer with respect to related
Advances, Servicing Advances, Subservicer Servicing Advances or expenses as to
which the Master Servicer or any Subservicer is entitled to reimbursement
thereunder but which have not been previously reimbursed. With respect to each
Mortgage Loan for which the Master Servicer has forgiven the payment of any
principal, the amount of such forgiven principal. With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan which has become the object of a Debt Service Reduction, the
amount of such Debt Service Reduction.
Record Date: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in
which the related Distribution Date occurs.
Regular Certificate: Any of the Certificates other than a Residual
Certificate.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code, including REMIC I, REMIC II and REMIC III.
REMIC I: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of the Group I Loans.
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<PAGE> 46
REMIC I Regular Interest IA-1-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the aggregate
Certificate Principal Balance of the Class IA-1 and Class IA-7 Certificates and
which bears interest at 6.750% per annum.
REMIC I Regular Interest IA-2-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-2 Certificates and which bears interest at
the same per annum rate as the Class IA-2 Certificates.
REMIC I Regular Interest IA-3-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-3 Certificates and which bears interest at
the same per annum rate as the Class IA-3 Certificates.
REMIC I Regular Interest IA-4-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-4 Certificates and which bears interest at
the same per annum rate as the Class IA-4 Certificates.
REMIC I Regular Interest IA-5-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-5 Certificates and which bears interest at
the same per annum rate as the Class IA-5 Certificates.
REMIC I Regular Interest IA-6-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-6 Certificates and which bears interest at
the same per annum rate as the Class IA-6 Certificates.
REMIC I Regular Interest IA-8-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-8 Certificates and which bears interest at the
same per annum rate as the Class IA-8 Certificates.
REMIC I Regular Interest IA-9-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class IA-9 Certificates and which bears interest at
the same per annum rate as the Class IA-9 Certificates.
REMIC I Regular Interest IA-10-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the aggregate
Certificate Principal Balance of the Class IA-10 and Class IA-11 Certificates
and which bears interest at 6.750% per annum.
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<PAGE> 47
REMIC I Regular Interest I-B-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balances of the Class IM, Class IB-1, Class IB-2, Class IB-3, Class
IB-4 and Class IB-5 Certificates and which bears interest at 6.750% per annum.
REMIC I Regular Interest I-X-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated notional amount equal to the Class I-X
Notional Amount and which bears interest at the same per annum rate as the
Class I-X Certificates.
REMIC I Regular Interest I-PO-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class I-PO Certificates and which bears no interest.
REMIC I Regular Interests: Class IA-1-L, Class IA-2-L, Class IA-3-L,
Class IA-4-L, Class IA-5-L, Class IA-6-L, Class IA-8-L, Class IA- 9-L, Class
IA-10-L, Class I-B-L, Class I-X-L and Class I-PO-L.
REMIC II: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of the Group II Loans.
REMIC II Regular Interest IIA-1-L: The uncertificated partial
undivided beneficial ownership interest in REMIC I which constitutes a REMIC I
Regular Interest having an uncertificated principal balance equal to the
Certificate Principal Balance of the Class IIA-1 Certificates and which bears
interest at the same per annum rate as the Class IIA-1 Certificates.
REMIC II Regular Interest II-B-L: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balances of the Class IIM, Class IIB-1, Class IIB-2, Class IIB-3,
Class IIB-4 and Class IIB-5 Certificates and which bears interest at 6.500% per
annum..
REMIC II Regular Interest II-X-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest having an uncertificated notional amount equal to the Class II-X
Notional Amount and which bears interest at the same per annum rate as the
Class II-X Certificates.
REMIC II Regular Interest II-PO-L: The uncertificated partial
undivided beneficial ownership interest in REMIC I which constitutes a REMIC I
Regular Interest having an uncertificated principal balance equal to the
Certificate Principal Balance of the Class I-PO Certificates and which bears no
interest.
REMIC II Regular Interests: Class IIA-1-L, Class II-B-L, Class II-X-L
and Class II-PO-L.
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REMIC III: The segregated pool of assets consisting of the REMIC I
Regular Interests and the REMIC II Regular Interests conveyed in trust to the
Trustee for the benefit of the Certificateholders (other than the Holders of
the Class R-I and Class R-II Certificates) pursuant to Section 2.01(a), with
respect to which a separate REMIC election is to be made.
REMIC Administrator: Bankers Trust Company of California, N.A., or
any successor REMIC Administrator. If Bankers Trust Company of California,
N.A. or any successor REMIC Administrator is found by a court of competent
jurisdiction to no longer be able to fulfill its obligations as REMIC
Administrator under this Agreement, the Depositor shall appoint a successor
REMIC Administrator, subject to assumption of the REMIC Administrator
obligations under this Agreement.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations (or, to the extent not inconsistent with
such temporary or final regulations, proposed regulations) and published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
REO Acquisition: The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.14.
REO Disposition: As to any REO Property, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds, REO Proceeds and other payments and recoveries (including proceeds of
a final sale) which the Master Servicer expects to be finally recoverable from
the sale or other disposition of the REO Property.
REO Imputed Interest: As to any REO Property, for any period, an
amount equivalent to interest (at the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into
the Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by the Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request for Release: A request for release, the form of which is
substantially in the form attached as Exhibit G hereto.
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Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under
this Agreement or any related Subservicing Agreement in respect of such
Mortgage Loan.
Residual Certificates: The Class R-I, Class R-II and Class R-III
Certificates, collectively.
Responsible Officer: When used with respect to the Trustee, any
officer of the Corporate Trust Department of the Trustee, including any Senior
Vice President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers to whom, with respect to a particular
matter, such matter is referred.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.
Seller: An institution from which the Depositor purchased any
Mortgage Loans pursuant to a Mortgage Loan Purchase Agreement. Bank of America
National Trust and Savings Association is the Seller with respect to the
Mortgage Loans set forth on Exhibit E-1 and Bank of America, FSB is the Seller
with respect to the Mortgage Loans set forth on Exhibit E-2.
Senior Certificates: The Class A Certificates, the Class X
Certificates, the Class PO Certificates and the Residual Certificates,
collectively.
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary and reasonable "out of pocket"
costs and expenses incurred in connection with a default, delinquency or other
unanticipated event by the Master Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.08, 3.12(a) and 3.14; and any amount that is stated herein to
be a "Servicing Advance."
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer, as such list may from time to time be
amended.
Special Hazard Amount: As of any Distribution Date, an amount equal
to $3,009,143 minus the sum of (i) the aggregate amount of Special Hazard
Losses allocated solely to the Group I and Group II Subordinate Certificates in
accordance with Section 4.05 and (ii) the Adjustment Amount (as defined below)
as most recently calculated. For each anniversary of the Cut-off Date, the
Adjustment Amount shall be equal to the amount, if any, by which the amount
calculated in accordance with the preceding sentence (without giving effect to
the deduction of
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the Adjustment Amount for such anniversary) exceeds the greater of (A) 1% (or,
if greater than 1%, the highest percentage of Mortgage Loans, by principal
balance, in any California zip code area) times the aggregate principal balance
of all of the Mortgage Loans in the Mortgage Pool on such anniversary and (ii)
twice the principal balance of the single Mortgage Loan in the Mortgage Pool
having the largest principal balance.
Special Hazard Loss: Any Realized Loss not in excess of the cost of
the lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any
loss of a type covered by a hazard policy or a flood insurance policy required
to be maintained in respect of such Mortgaged Property pursuant to Section
3.12(a), except to the extent of the portion of such loss not covered as a
result of any coinsurance provision and (ii) any Extraordinary Loss.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property, at any given time, (i) the Cut-off Date Principal Balance
of the Mortgage Loan, minus (ii) the sum of (a) the principal portion of the
Monthly Payments due with respect to such Mortgage Loan or REO Property during
each Due Period ending prior to the last succeeding Distribution Date which
were received or with respect to which an Advance was made, and (b) all
Principal Prepayments with respect to such Mortgage Loan or REO Property, and
all Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent
applied by the Master Servicer as recoveries of principal in accordance with
Section 3.14 with respect to such Mortgage Loan or REO Property, in each case
which were distributed pursuant to Section 4.02 on any previous Distribution
Date, and (c) any Realized Loss allocated to Certificateholders with respect
thereto for any previous Distribution Date.
Step Down Percentage: With respect to any Distribution Date occurring
from June 1998 through May 2003, 0%; with respect to any Distribution Date
occurring from June 2003 through May 2004, 30%; with respect to any
Distribution Date occurring from June 2004 through May 2005, 40%; with respect
to any Distribution Date occurring from June 2005 through May 2006, 60%; with
respect to any Distribution Date occurring from June 2006 through May 2007,
80%; with respect to any Distribution Date occurring from and after June 2007,
100%.
Stripped Interest Rate: For each Group I Loan, the excess, if any, of
the Net Mortgage Rate for such Mortgage Loan over 6.750%. For each Group II
Mortgage Loan, the excess, if any, of the Net Mortgage Rate for such Mortgage
Loan over 6.500%.
Subordinate Certificate Pass-Through Rate: With respect to the
Subordinate Certificates, the Pass-Through Rate for each such Class of
Certificates set forth in the Preliminary Statement hereto.
Subordinate Certificates: The Group I Subordinate Certificates and
the Group II Subordinate Certificates, collectively.
Subordination Level: On any specified date, with respect to any Class
of Group I Subordinate Certificates or Group II Subordinate Certificates, the
percentage obtained by dividing the sum of (i) the aggregate Certificate
Principal Balance of all Classes of Group I
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Certificates or Group II Certificates, as applicable, which are subordinate in
right of payment to such Class by (ii) the sum of the aggregate Certificate
Principal Balances of all of the Group I Certificates or Group II Certificates,
as applicable, as of such date prior to giving effect to distributions of
principal or interest or allocations of Realized Losses on the Group I Loans or
Group II Loans, as applicable, on such date. For purposes of this definition,
the relative seniority, from highest to lowest, of the Classes of Group I
Subordinate Certificates shall be as follows: Class IM, Class IB-1, Class
IB-2, Class IB-3, Class IB-4 and Class IB-5. For purposes of this definition,
the relative seniority, from highest to lowest, of the Classes of Group II
Subordinate Certificates shall be as follows: Class IIM, Class IIB-1, Class
IIB- 2, Class IIB-3, Class IIB-4 and Class IIB-5.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement.
Subservicer Servicing Advances: All customary and reasonable "out of
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event by a Subservicer in the performance of its
servicing obligations as required by the related Subservicing Agreement,
including, but not limited to, the cost of (i) the preservation, restoration
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures, and (iii) the management and liquidation
of any REO Property; and any amount that is stated herein to be a "Subservicer
Servicing Advance."
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
Tax Returns: The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the REMICs due to their classifications as REMICs
under the REMIC Provisions, together with any and all other information,
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Balance: As defined in Section 4.02(a)(I)(c).
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Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferee Group: As defined in Section 4.02(a)(I)(c).
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Transferor Group: As defined in Section 4.02(a)(I)(c).
Trust Fund: The corpus of the trust created by this Agreement
consisting of all of the assets of the REMICs, including:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date,
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by
foreclosure or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance
Policies, if any, and certain proceeds thereof.
Trustee Fee: With respect to each Mortgage Loan and each Distribution
Date, the per annum rate set forth in that certain letter agreement between
Bank of America National Trust and Savings Association and the Trustee (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) payable from interest collections on such Mortgage
Loan.
Underwriter: Donaldson, Lufkin & Jenrette Securities Corporation, or
its successor in interest.
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof (except, in the
case of a partnership, to the extent provided in regulations) or an estate
whose income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the
Treasury, which have not yet been issued, a trust which was in existence on
August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part 1
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of subchapter J of chapter 1 of the Code), and which was treated as a United
States Person on August 20, 1996 may elect to continue to be treated as a
United States Person notwithstanding the previous sentence.
Unpaid Accrued Certificate Interest: With respect to each
Distribution Date and any Class of interest-bearing Certificates, any portion
of the related Accrued Certificate Interest remaining unpaid from any prior
Distribution Date.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 99.0% of all of the Voting
Rights shall be allocated among Holders of Certificates, respectively, other
than the Residual Certificates, in proportion to the outstanding Certificate
Principal Balances of their respective Certificates; 1% of all Voting Rights
shall be allocated to the Holders of the Residual Certificates, allocated among
the Certificates of such Class in accordance with their respective Percentage
Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to REMIC I without recourse, all the right, title
and interest of the Depositor in and to the Group I Loans, including all
interest and principal received on or with respect to the Group I Loans after
the Cut-off Date (other than payments of principal and interest due on the
Group I Loans on or before the Cut-off Date) and its rights as purchaser under
the Mortgage Loan Purchase Agreements with each Seller to the extent related to
the Group I Loans. The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to REMIC II without recourse, all the right, title
and interest of the Depositor in and to the Group II Loans, including all
interest and principal received on or with respect to the Group II Loans after
the Cut-off Date (other than payments of principal and interest due on the
Group II Loans on or before the Cut-off Date) and its rights as purchaser under
the Mortgage Loan Purchase Agreements with each Seller to the extent related to
the Group II Loans. The Depositor, concurrently with the execution and
delivery hereof, does hereby assign to REMIC III without recourse, all the
right, title and interest of the Depositor in and to the REMIC I Regular
Interests and the REMIC II Regular Interests for the benefit of the
Certificateholders (other than the Holders of the Class R-I and Class R-II
Certificates).
(b) In connection with such assignment, except as set forth in
Section 2.01(c) below, the Depositor does hereby deliver to, and deposit with,
the Trustee, or to and with one or more Custodians, as the duly appointed agent
or agents of the Trustee, the following documents or instruments (or copies
thereof as permitted by this Section):
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(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such assignment or
intervening assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title, which in each case may be a copy of the original thereof.
(c) In the event that in connection with any Mortgage Loan the
Depositor cannot deliver the Mortgage, any assignment, modification or
assumption agreement (or copy thereof certified by the public recording office)
with evidence of recording thereon concurrently with the execution and delivery
of this Agreement solely because of a delay caused by the public recording
office where such Mortgage, assignment, modification or assumption agreement
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee or any respective Custodian a true and correct
photocopy of such Mortgage, assignment, modification or assumption agreement.
The Trustee or the Custodian, as the case may be, shall promptly
complete the endorsement in blank of each Mortgage Note and stamp each
Assignment referred to in Section 2.01(b) as follows: "Bankers Trust Company
of California, N.A., as Trustee for the benefit of the registered holders of BA
Mortgage Securities, Inc., Mortgage Pass-Through Certificates Series 1998-2"
and shall return such Assignments to the Depositor for recordation.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of
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the Depositor) acceptable to the Rating Agencies, the Trustee and the Master
Servicer, such recording is not required to protect the Trustee's interests in
the Mortgage Loan against the claim of any subsequent transferee or any
successor to or creditor of the Depositor or the originator of such Mortgage
Loan. If any Assignment is lost or returned unrecorded to the Depositor
because of any defect therein, the Depositor shall prepare a substitute
Assignment or cure such defect and cause such Assignment to be recorded in
accordance with this paragraph. The Depositor shall promptly deliver or cause
to be delivered to the Trustee or any respective Custodian such Mortgage or
assignment, as applicable (or copy thereof certified by the public recording
office) with evidence of recording indicated thereon upon receipt thereof from
the public recording office or from the related Subservicer.
(d) It is the express intent of the parties hereto that the
conveyance of the Group I Loans by the Depositor to the Trustee as provided in
this Agreement be construed as a sale of the Group I Loans by the Depositor to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Group I Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event, notwithstanding the intent of the parties, the Group I Loans are held to
be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Group I Loans, then, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable
state; (b) the conveyance provided for in this Agreement shall be deemed to be
a grant by the Depositor to the Trustee of a security interest in and to all of
the Depositor's right, title, and interest, whether now owned or hereafter
acquired, in and to:
(I) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and investment property consisting of, arising from or
relating to any of the property described below: (a) the Group
I Loans, including all Qualified Mortgage Loans and including
the related Mortgage Note, the Mortgage, and all distributions
with respect to such Mortgage Loans and Qualified Substitute
Mortgage Loans payable on and after the Cut-Off Date; (b) the
Certificate Account and the Custodial Account and all money or
other property held therein; (c) amounts paid or payable by
the insurer under any insurance policy related to any Group I
Loan; (d) each Mortgage Loan Purchase Agreement to the extent
related to the Group I Loans; (e) any and all of any Seller's
right, title and interest, if any, whether now owned or
hereafter acquired, in and to the property described in
clauses (a), (b) and (c) above granted by such Seller to the
Depositor pursuant to the related Mortgage Loan Purchase
Agreement to the extent related to the Group I Loans; (f) all
property or rights arising from or by virtue of the
disposition of, or collections with respect to, or insurance
proceeds payable with resect to, or claims against other
persons with respect to, all or any part of the collateral
described in (a) through (e) above (including any accrued
discount realized on liquidation of any investment purchased
at a discount), and (g) all cash and non-cash proceeds of the
collateral described in (a) through (f) above;
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(II) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, investment property, and other rights arising from or
by virtue of the disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the
collateral described in (I) above (including any accrued
discount realized on liquidation of any investment purchased
at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(e) It is further the express intent of the parties hereto that
the conveyance of Group II Loans to the Trustee by the Depositor as provided in
this Agreement be, and be construed as, an absolute sale of Group II Loans. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge of Group II Loans by the Depositor to the Trustee to secure a debt or
other obligation of the Depositor. However, in the event that, notwithstanding
the intent of the parties, Group II Loans are held to be the property of the
Depositor, or if for any other reason this Agreement is held or deemed to
create a security interest in Group II Loans, then, (a) this Agreement shall
also be deemed to be a security agreement within the meaning of Articles 8 and
9 of the Uniform Commercial Code in effect in the applicable state; and (b) the
conveyance provided for in this Agreement shall be deemed to be a grant by the
Depositor to the Trustee of a security interest in and to all of the
Depositor's right, title, and interest, whether now owned or hereafter
acquired, in and to:
(I) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and investment property consisting of, arising from or
relating to any of the property described below: (a) the
Group II Loans, including all Qualified Mortgage Loans and
including the related Mortgage Note, the Mortgage, and all
distributions with respect to such Mortgage Loans and
Qualified Substitute Mortgage Loans payable on and after the
Cut-Off Date; (b) the Certificate Account and the Custodial
Account and all money or other property held therein; (c)
amounts paid or payable by the insurer under any insurance
policy related to any Group II Loan; (d) each Mortgage Loan
Purchase Agreement to the extent related to the Group II
Loans; (e) any and all of any Seller's right, title and
interest, if any, whether now owned or hereafter acquired, in
and to the property described in clauses (a), (b) and (c)
above granted by such Seller to the Depositor pursuant to the
related Mortgage Loan Purchase Agreement to the extent related
to the Group II Loans; (f) all property or rights arising from
or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with resect to, or
claims against other persons with respect to, all or any part
of the collateral described in (a) through (e) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount), and (g) all cash and
non-cash proceeds of the collateral described in (a) through
(f) above;
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(II) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, investment property, and other rights arising from or
by virtue of the disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the
collateral described in (I) above (including any accrued
discount realized on liquidation of any investment purchased
at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(f) It is further the express intent of the parties hereto that
the conveyance of the REMIC I Regular Interests and the REMIC II Regular
Interests to the Trustee by the Depositor as provided in this Agreement be, and
be construed as, an absolute sale of such interests. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the REMIC I
Regular Interests and the REMIC II Regular Interests by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the intent of the parties, the REMIC I Regular
Interests and the REMIC II Regular Interests are held to be the property of the
Depositor, or if for any other reason this Agreement is held or deemed to
create a security interest in the REMIC I Regular Interests and the REMIC II
Regular Interests, then, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code in effect in the applicable state; and (b) the conveyance
provided for in this Agreement shall be deemed to be a grant by the Depositor
to the Trustee of a security interest in and to all of the Depositor's right,
title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and investment property consisting of, arising from or
relating to any of the property described below: The REMIC I
Regular Interests and the REMIC II Regular Interests,
including without limitation, all rights represented thereby
in and to: (a) the Mortgage Loans, including all Qualified
Mortgage Loans and including the related Mortgage Note, the
Mortgage, and all distributions with respect to such Mortgage
Loans and Qualified Substitute Mortgage Loans payable on and
after the Cut-Off Date; (b) the Certificate Account and the
Custodial Account and all money or other property held
therein; (c) amounts paid or payable by the insurer under any
insurance policy related to any Mortgage Loan; (d) each
Mortgage Loan Purchase Agreement; and (e) any and all of any
Seller's right, title and interest, if any, whether now owned
or hereafter acquired, in and to the property described in
clauses (a), (b) and (c) above granted by such Seller to the
Depositor pursuant to the related Mortgage Loan Purchase
Agreement; (f) all property or rights arising from or by
virtue of the disposition of, or collections with respect to,
or insurance proceeds payable with resect to, or claims
against other persons with respect to, all or any part of the
collateral described in (a) through (e) above (including any
accrued discount
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realized on liquidation of any investment purchased at a
discount), and (g) all cash and non-cash proceeds of the
collateral described in (a) through (f) above;
(II) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, investment property, and other rights arising from or
by virtue of the disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the
collateral described in (I) above (including any accrued
discount realized on liquidation of any investment purchased
at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(g) The possession by the Trustee or its designee of the Mortgage
Notes, the Mortgages and such other goods, letters of credit, advices of
credit, instruments, money, documents, chattel paper or certificated securities
shall be deemed to be "possession by the secured party," or possession by a
purchaser, for purposes of perfecting the security interest pursuant to the
Uniform Commercial Code (including, without limitation, Sections 9-305 and
9-115 thereof) as in force in the relevant jurisdiction. Notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed to be notifications to, or
acknowledgments, receipts or confirmations from, securities intermediaries,
bailees or agents (as applicable) of, or person holding for the Trustee, or its
designee for the purpose of perfecting such security interest under applicable
law. In connection herewith, the Trustee shall have all of the rights and
remedies of a secured party and creditor under the Uniform Commercial Code as
in force in the relevant jurisdiction.
The Depositor and, at the Depositor's direction, the Sellers and the
Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, the REMIC I Regular
Interests, the REMIC II Regular Interests and the other property described
above, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement. Without limiting the generality of the
foregoing, the Depositor shall prepare and deliver to the Trustee not less than
15 days prior to any filing date and, the Trustee shall sign and return to the
Depositor for filing, at the expense of the Depositor, all filings necessary to
maintain the effectiveness of any original filings necessary under the Uniform
Commercial Code as in effect in any jurisdiction to perfect the Trustee's
security interest in or lien on the Mortgage Loans, as evidenced by an
Officer's Certificate of the Depositor, including without limitation (x)
continuation statements, and (y) such other statements as may be occasioned by
(1) any change of name of the Depositor or the Trustee (such preparation and
filing shall be at the expense of the Trustee, if occasioned by a change in the
Trustee's name), or (2) any change of location of the place of business or the
chief executive office of the Depositor.
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Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon receipt or
certification executed by the Custodian and delivered to the Trustee, receipt
by the respective Custodian as the duly appointed agent of the Trustee) of the
documents referred to in Section 2.01(b)(i) through (vi) above and declares
that it, or a Custodian as its agent, holds and will hold such documents and
the other documents constituting a part of the Mortgage Files delivered to it,
or a Custodian as its agent, in trust for the use and benefit of all present
and future Certificateholders. Within 45 days following the Closing Date, the
Trustee or Custodian (such Custodian being so obligated under a Custodial
Agreement) agrees, for the benefit of the Certificateholders, to review each
Mortgage File delivered to it by the Depositor or Sellers to ascertain that (i)
the documents required to be delivered in the definition of Mortgage File are
in its possession; (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct. If
the Trustee or a Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Mortgage File to be missing or defective in
any material respect, the Trustee or the Custodian (such Custodian being so
obliged under a Custodial Agreement) shall promptly so notify the Depositor.
Upon completion of such review by the Trustee or the Custodian, as applicable,
the Trustee shall promptly deliver to the Depositor a certification in the form
of Exhibit P (if applicable, based solely upon receipt of a certificate from
the Custodian) with respect to the Mortgage Loans on the related Mortgage Loan
Schedule, with any exceptions listed on an attachment thereto. The Trustee
shall be under no duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in any Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
If the Trustee or a Custodian, as the Trustee's agent, finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, the Trustee or the Custodian, as applicable,
shall promptly so notify the Master Servicer and the Depositor. The Master
Servicer shall promptly notify the related Seller of such omission or defect
and request that such Seller correct or cure such omission or defect within 60
days from the date the Master Servicer was notified of such omission or defect
and, if such Seller does not correct or cure such omission or defect within
such period, that such Seller purchase such Mortgage Loan from the Trust Fund
at its Purchase Price, in either case within 90 days from the date the Master
Servicer was notified of such omission or defect. The Purchase Price for any
such Mortgage Loan shall be deposited or caused to be deposited by the Master
Servicer in the Custodial Account maintained by it pursuant to Section 3.07
and, upon receipt by the Trustee of written notification of such deposit signed
by a Servicing Officer, the Trustee or any Custodian, as the case may be, shall
release to the Master Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest
in the Seller or its designee any Mortgage Loan released pursuant hereto and
thereafter such Mortgage Loan shall not be part of the Trust Fund. It is
understood and agreed that the obligation of the Seller
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to so cure or purchase any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to Certificateholders or the
Trustee on behalf of Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer.
The Master Servicer hereby represents and warrants to the Trustee for
the benefit of Certificateholders that:
(i) The Master Servicer is a federal savings bank
duly organized, validly existing and in good standing under the laws
governing its creation and existence and is or will be in compliance
with the laws of each state in which any Mortgaged Property serviced
by it is located to the extent necessary to ensure the enforceability
of each Mortgage Loan in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement
by the Master Servicer and its performance and compliance with the
terms of this Agreement will not violate its Articles of Association
or Bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result
in the breach of, any material contract, agreement or other instrument
to which it is a party or which may be applicable to it or any of its
assets;
(iii) This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation of the Master Servicer,
enforceable against it in accordance with the terms hereof subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally or
the rights of creditors of banking institutions the accounts of which
are insured by the Federal Deposit Insurance Corporation or any other
instrumentalities of the federal government, and to general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(iv) The Master Servicer is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any Federal, state, municipal or governmental agency,
which default might have consequences that would materially and
adversely affect its condition (financial or other), operations or
properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of
the Master Servicer's knowledge, threatened against the Master
Servicer which would prohibit its entering into this Agreement or
which would adversely affect the legality and validity of this
Agreement or the Master Servicer's performance of its obligations
under this Agreement;
(vi) Subject to Section 4.04(c) hereof, the Master
Servicer will comply in all material respects in the performance of
this Agreement with all reasonable rules and requirements of each
insurer under each Required Insurance Policy; and
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(vii) The Master Servicer has examined each
existing, and will examine each new, Subservicing Agreement and is or
will be familiar with the terms thereof. The terms of each existing
Subservicing Agreement and each designated Subservicer are acceptable
to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02.
It is understood and agreed that the representations and warranties set forth
in this Section 2.03 shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Section 2.04. Representations and Warranties of Sellers.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to each Mortgage Loan. Insofar as
such Seller's Mortgage Loan Purchase Agreement relates to the representations
and warranties made by the related Seller in respect of such Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer on behalf of the Trustee and the Certificateholders or by the Trustee
if the Master Servicer is the applicable Seller. Upon the discovery by the
Depositor, the Master Servicer, the Trustee or any Custodian of a breach of any
of the representations and warranties made in a Mortgage Loan Purchase
Agreement (which, for purposes hereof, will be deemed to include any other
cause giving rise to a repurchase obligation under the Mortgage Loan Purchase
Agreement) in respect of any Mortgage Loan which materially and adversely
affects the interests of the Certificateholders in such Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other
parties (any Custodian being so obligated under a Custodial Agreement). The
Master Servicer shall promptly notify the related Seller of such breach and
request that such Seller either (i) cure such breach in all material respects
within 90 days from the date the Master Servicer was notified of such breach or
(ii) purchase such Mortgage Loan from the Trust Fund at the Purchase Price and
in the manner set forth in Section 2.02; provided that such Seller shall have
the option to substitute a Qualified Substitute Mortgage Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the
Closing Date, except that if the breach would cause the Mortgage Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such substitution must occur within 90 days from the date the Master
Servicer was notified of the breach if such 90 day period expires before two
years following the Closing Date. In the event that the applicable Seller
elects to substitute a Qualified Substitute Mortgage Loan or Loans for a
Deleted Mortgage Loan pursuant to this Section 2.04, such Seller shall deliver
to the Trustee or the Custodian, as the case may be, for the benefit of the
Certificateholders with respect to such Qualified Substitute Mortgage Loan or
Loans, the original Mortgage Note, the Mortgage, an Assignment of the Mortgage
in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date
for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the Master Servicer and remitted by the Master Servicer
to the related Seller on the next succeeding Distribution Date. For the month
of substitution, distributions to Certificateholders will include the Monthly
Payment due on a Deleted Mortgage Loan for such
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month and thereafter the related Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Master Servicer shall
amend or cause to be amended the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Qualified Substitute Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon
such substitution, the Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement and any related Subservicing Agreement
in all respects, the related Seller shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute
Mortgage Loan contained in the related Mortgage Loan Purchase Agreement as of
the date of substitution.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (in each case after application of the principal portion
of the Monthly Payments due in the month of substitution that are to be
distributed to Certificateholders in the month of substitution) and promptly
shall collect such amounts from the applicable Seller. The Master Servicer
shall deposit the amount of such shortfall into the Custodial Account on the
day of substitution. The Master Servicer shall give notice in writing to the
Trustee of such event, which notice shall be accompanied by an Officers'
Certificate as to the calculation of such shortfall and by an Opinion of
Counsel to the effect that such substitution will not cause (a) any federal tax
to be imposed on REMIC I, REMIC II or REMIC III, including without limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1)
of the Code or on "contributions after the start up date" under Section
860G(d)(1) of the Code or (b) any portion of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificate is outstanding.
It is understood and agreed that the obligation of the applicable
Seller to cure such breach or purchase (or to substitute for) such Mortgage
Loan as to which such a breach has occurred and is continuing shall constitute
the sole remedy respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders. If the Master Servicer is the related
Seller, then the Trustee shall also have the right to give the notification and
require the purchase or substitution provided for in the second preceding
paragraph in the event of such a breach of a representation or warranty made by
the related Seller in the applicable Mortgage Loan Purchase Agreement. In
connection with the purchase of or substitution for any such Mortgage Loan by
the related Seller, the Trustee shall assign to the related Seller all of the
right, title and interest in respect of the Mortgage Loan Purchase Agreement
applicable to such Mortgage Loan.
Section 2.05. Issuance of Certificates Evidencing Interests in the
Trust Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted in the 45 day review (such exceptions based
solely upon receipt by the Trustee of a certificate from the Custodian, if
applicable), together with the assignment to it of all other assets included in
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the Trust Fund, receipt of which is hereby acknowledged. Concurrently with
such delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor, executed by an officer of the Depositor, has executed
and caused to be authenticated and delivered to or upon the order of the
Depositor the Certificates in authorized denominations which evidence ownership
of the Trust Fund. The rights of the Certificateholders to receive
distributions from the proceeds of the Trust Fund in respect of the
Certificates, and all ownership interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and shall have full power and authority, acting alone or through
Subservicers as provided in Section 3.02, to do any and all things which it may
deem necessary or desirable in connection with such servicing and
administration. Without limiting the generality of the foregoing, the Master
Servicer in its own name or in the name of a Subservicer is hereby authorized
and empowered by the Trustee when the Master Servicer or the Subservicer, as
the case may be, believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Certificateholders and the Trustee or any of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, or of consent to assumption or modification in connection
with a proposed conveyance, or of assignment of any Mortgage and Mortgage Note
in connection with the repurchase of a Mortgage Loan and all other comparable
instruments, or with respect to the modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage, the subordination of the lien of
the Mortgage in favor of a public utility company or government agency or unit
with powers of eminent domain, the taking of a deed in lieu of foreclosure, the
completion of judicial or non-judicial foreclosure, the conveyance of a
Mortgaged Property to an Insurer, the acquisition of any property acquired by
foreclosure or deed in lieu of foreclosure, or the management, marketing and
conveyance of any property acquired by foreclosure or deed in lieu of
foreclosure with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. Notwithstanding the foregoing, subject to Section
3.07(a), the Master Servicer shall not permit any modification with respect to
any Mortgage Loan that would both constitute a sale or exchange of such
Mortgage Loan within the meaning of Section 1001 of the Code and any proposed,
temporary or final regulations promulgated thereunder (other than in connection
with a proposed conveyance or assumption of such Mortgage Loan that is treated
as a Principal Prepayment in Full pursuant to Section 3.13(d) hereof) and cause
either REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under the
Code. The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans within five Business Days
of receipt of request therefor from the Master Servicer. The Trustee shall not
be liable
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for any action taken by the Master Servicer or any Subservicer pursuant to such
powers of attorney.
(b) All costs incurred by the Master Servicer or by Subservicers
in effecting the timely payment of taxes and assessments on the properties
subject to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be treated as Servicing Advances or Subservicer
Servicing Advances and shall be recoverable to the extent permitted by Section
3.10(a).
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' and
Sellers' Obligations; Special Servicing Agreements.
(a) The Master Servicer may continue in effect Subservicing
Agreements entered into by Sellers and Subservicers prior to the execution and
delivery of this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans it services. Each Subservicer of a Mortgage Loan shall be
entitled to receive and retain, as provided in the related Subservicing
Agreement and in Section 3.07, the related Primary Servicing Fee from payments
of interest received on such Mortgage Loan after payment of all amounts
required to be remitted to the Master Servicer in respect of such Mortgage
Loan. Unless the context otherwise requires, references in this Agreement to
actions taken or to be taken by the Master Servicer in servicing the Mortgage
Loans include actions taken or to be taken by a Subservicer on behalf of the
Master Servicer. Each Subservicing Agreement will be upon such terms and
conditions as are not inconsistent with this Agreement and as the Master
Servicer and the Subservicer have agreed. With the approval of the Master
Servicer, a Subservicer may delegate its servicing obligations to third-party
servicers, but such Subservicer will remain obligated under the related
Subservicing Agreement.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts to enforce the obligations of each Subservicer
under the related Subservicing Agreement and of each Seller under the related
Mortgage Loan Purchase Agreement, to the extent that the non-performance of any
such obligation would have a material and adverse effect on a Mortgage Loan,
including, without limitation, the obligation to purchase a Mortgage Loan on
account of defective documentation, as described in Section 2.02, or on account
of a breach of a representation or warranty, as described in Section 2.04.
Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Subservicing Agreements or Mortgage Loan Purchase
Agreements, as appropriate, and the pursuit of other appropriate remedies,
shall be in such form and carried out to such an extent and at such time as the
Master Servicer would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loan or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such
enforcement is directed.
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(c) The Master Servicer may enter into a special servicing
agreement with an unaffiliated Holder of 100% Percentage Interest of a Class of
Class B Certificate or a holder of a class of securities representing a 100%
Percentage Interest in a Class of Class B Certificates, such agreement to be
substantially in the form of Exhibit R hereto or subject to each Rating
Agency's acknowledgment that the ratings of the Certificates in effect
immediately prior to the entering into of such agreement would not be qualified
(except for possible upgrading) as a result of such agreement. Any such
agreement may contain provisions whereby such holder may instruct the Master
Servicer to commence or delay foreclosure proceedings with respect to
delinquent Mortgage Loans and will contain provisions for the deposit of cash
by the Holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had the Master
Servicer acted in accordance with its normal procedures.
Section 3.03. Successor Subservicers.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement. If the Master Servicer or any
Affiliate of the Master Servicer acts as servicer, it will not assume liability
for the representations and warranties of the Subservicer which it replaces.
If the Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans
and, in the event of any such assumption by the successor Subservicer, the
Master Servicer may, in the exercise of its business judgment, release the
terminated Subservicer from liability for such representations and warranties.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Master
Servicer shall, for any reason, no longer be the Master Servicer hereunder
(including termination due to an Event of Default).
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Master Servicer shall remain obligated and liable to the
Trustee and Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
or the Depositor and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. The Master Servicer shall be entitled to enter into any agreement with
a
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Subservicer for indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Subservicer and
Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
such Subservicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Subservicer in its capacity as such except as set forth in Section 3.06.
Section 3.06. Assumption or Termination of Subservicing Agreements
by Trustee.
(a) In the event the Master Servicer shall for any reason no
longer be the master servicer hereunder (including by reason of an Event of
Default), the Trustee, its designee or its successor shall thereupon assume, at
its sole discretion, all of the rights and obligations of the Master Servicer
under each Subservicing Agreement that may have been entered into. If the
Trustee so elects, the Trustee, its designee or the successor servicer for the
Trustee shall be deemed to have assumed all of the Master Servicer's interest
therein and to have replaced the Master Servicer as a party to the Subservicing
Agreement to the same extent as if the Subservicing Agreement had been assigned
to the assuming party except that the Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) The outgoing Master Servicer shall promptly, upon request of
the Trustee but at the expense of the Master Servicer, 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 each Subservicing Agreement to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Account.
(a) The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Primary Mortgage
Insurance Policy, follow such collection procedures as it would employ in its
good faith business judgment and which are normal and usual in its general
mortgage servicing activities. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive payments of interest or principal,
(ii) accept a deed in lieu of foreclosure, (iii) waive any late payment charge
or any prepayment charge or penalty interest in connection with the prepayment
of a Mortgage Loan and (iv) extend the Due Date for payments due on a Mortgage
Loan; provided, however, that the Master Servicer shall first determine that
any such waiver or extension will not impair the coverage of any related
Primary Mortgage Insurance Policy or materially adversely affect the lien of
the related Mortgage. Subject in all instances to the
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provisions of Section 4.04(c), the Master Servicer must continue to make
Advances as set forth herein without regard to any such waiver or indulgence,
in accordance with the original terms of the Mortgage Loan. Consistent with
the terms of this Agreement, the Master Servicer may also waive, modify or vary
any term of a Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor if in the
Master Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the
Certificateholders; provided, however, that the Master Servicer may not modify
materially or permit any Subservicer to modify a Mortgage Loan, including
without limitation any modification that would change the Mortgage Rate,
forgive the payment of any principal or interest (unless in connection with the
liquidation of the related Mortgage Loan or except in connection with
prepayments to the extent that such reamortization is not inconsistent with the
terms of such Mortgage Loan), or extend the final maturity date of such
Mortgage Loan, unless such Mortgage Loan is in default or, in the judgment of
the Master Servicer, such default is reasonably foreseeable.
(b) The Master Servicer shall establish and maintain a Custodial
Account in which the Master Servicer shall deposit or cause to be deposited on
a daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Mortgage Loans subsequent to the Cut-off Date (other than in respect of
principal and interest on the Mortgage Loans due on or before the Cut-off
Date):
(i) All payments on account of principal,
including Principal Prepayments made by Mortgagors on the Mortgage
Loans and the principal component of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has
occurred;
(ii) All payments on account of interest on the
Mortgage Loans, including Buydown Funds, if any, and the interest
component of any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred, less any
applicable Primary Servicing Fee;
(iii) Insurance Proceeds and Liquidation Proceeds
(net of any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased
pursuant to Section 2.02 or 2.04 and all amounts required to be
deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.04;
(v) Any amounts required to be deposited pursuant
to Section 3.07(c) or 3.20; and
(vi) All amounts transferred from the Certificate
Account to the Custodial Account in accordance with Section 4.02(a).
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the
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Mortgage Loans which are not part of the Trust Fund (consisting of payments in
respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date) and payments or collections in the nature of prepayment charges
or late payment charges or assumption fees may but need not be deposited by the
Master Servicer in the Custodial Account. In the event any amount not required
to be deposited in the Custodial Account is so deposited by the Master
Servicer, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
created for mortgage pass-through certificates of other series and may contain
other funds respecting payments on mortgage loans belonging to the Master
Servicer or serviced or master serviced by them on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans.
(c) The Master Servicer may cause the institution maintaining the
Custodial Account to invest the funds in the Custodial Account attributable to
the Mortgage Loans in Permitted Investments which shall mature not later than
the Certificate Account Deposit Date next following the date of such investment
(with the exception of the Amount Held for Future Distribution) and which shall
not be sold or disposed of prior to their maturities. All income and gain
realized from any such investment shall be for the benefit of the Master
Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of any such investments attributable to the investment of amounts in
respect of the Mortgage Loans shall be deposited in the Custodial Account by
the Master Servicer out of its own funds immediately as realized, without right
of reimbursement.
(d) The Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account.
Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if
such account is not an Eligible Account, shall be otherwise acceptable to the
Master Servicer and each Rating Agency. The Subservicer will be required
thereby to deposit into the Subservicing Account on a daily basis all proceeds
of the Mortgage Loans received by the Subservicer, less its Primary Servicing
Fees and unreimbursed advances and expenses, to the extent permitted hereby and
by the Subservicing Agreement. The Master Servicer shall be deemed to have
received such monies upon receipt thereof by the Subservicer. The Subservicer
shall not be required to deposit in the Subservicing Account payments or
collections in the nature of prepayment charges or late charges or assumption
fees. On or before the date specified in the Subservicing Agreement, but in no
event later than the Determination Date, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to remit to the Master
Servicer for deposit in the Custodial Account all funds held in the
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Subservicing Account with respect to each Mortgage Loan serviced by such
Subservicer that are required to be remitted to the Master Servicer.
(b) In addition to the Custodial Account, the Master Servicer
shall for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers
for Subserviced Mortgage Loans to, establish and maintain one or more Servicing
Accounts and deposit and retain therein all collections from the Mortgagors (or
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
or comparable items for the account of the Mortgagors. Each Servicing Account
shall satisfy the requirements for a Subservicing Account and, to the extent
acceptable to the Master Servicer, may also function as a Subservicing Account.
Withdrawals of amounts related to the Mortgage Loans from the Servicing
Accounts may be made only to effect timely payment of taxes, assessments,
hazard insurance premiums, Primary Mortgage Insurance Policy premiums, if
applicable, or comparable items, to reimburse the Master Servicer or
Subservicer out of related collections for any payments made pursuant to
Sections 3.11 (with respect to the Primary Mortgage Insurance Policy) and
3.12(a) (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required, to
Mortgagors on balances in the Servicing Account or to clear and terminate the
Servicing Account at the termination of this Agreement in accordance with
Section 9.01. As part of its servicing duties, the Master Servicer shall, and
the Subservicers will, pursuant to the Subservicing Agreements, be required to
pay to the Mortgagors interest on funds in this account to the extent required
by law.
(c) Subject to the provisions of Section 4.04(c) hereof, the
Master Servicer shall advance as a Servicing Advance the payments for taxes,
premiums or other costs referred to in the preceding subsection that are not
timely paid by the Mortgagors or advanced by the Subservicers as a Subservicer
Servicing Advance to the same extent as the Master Servicer would advance such
payments on loans similar to the Mortgage Loans that the Master Servicer owns.
Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any
Class of Certificates legal for investment by federally insured savings
associations, the Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, the Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the
Master Servicer. The Master Servicer shall permit such representatives to
photocopy any such documentation and shall provide equipment for that purpose
at a charge reasonably approximating the cost of such photocopying to the
Master Servicer.
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Section 3.10. Permitted Withdrawals.
(a) The Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.07 that are attributable to the Mortgage Loans for the
following purposes:
(i) to reimburse itself or the related
Subservicer for previously unreimbursed advances or expenses made
pursuant to Sections 3.01(b), 3.08(c), 3.11, 3.12(a), 3.14 and 4.04 or
otherwise reimbursable pursuant to the terms of this Agreement, such
withdrawal right being limited to amounts received on particular
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance
Proceeds, Liquidation Proceeds and proceeds from the purchase of a
Mortgage Loan pursuant to Section 2.02 or 2.04) which represent (A)
Late Collections of Monthly Payments for which any such advance was
made in the case of Advances pursuant to Section 4.04 and (B) late
recoveries of the payments for which such advances were made in the
case of Servicing Advances;
(ii) to pay to itself the Master Servicing Fee (if
not previously retained by the Master Servicer) and to the related
Subservicer (if not previously retained by such Subservicer) the
Primary Servicing Fee;
(iii) to remit funds to the Trustee for deposit
into the Certificate Account in the amounts and in the manner provided
for in Section 4.01;
(iv) to pay to itself as additional servicing
compensation any interest or investment income earned on funds
deposited in the Custodial Account that it is entitled to withdraw
pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing
compensation any Foreclosure Profits;
(vi) to pay to itself, a Seller, the Depositor or
any other appropriate Person, as the case may be, with respect to each
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred pursuant to Section 2.02, 2.04 or
9.01, all amounts received thereon and not required to be distributed
to Certificateholders as of the date on which the related Stated
Principal Balance or Purchase Price is determined;
(vii) to reimburse itself or any Subservicer for
any Nonrecoverable Advance or Nonrecoverable Subservicer Advances in
the manner and to the extent provided in subsection (c) below or any
Advance reimbursable to the Master Servicer pursuant to Section
4.02(a);
(viii) to reimburse itself, the Depositor or the
REMIC Administrator for expenses incurred by and reimbursable to it,
the Depositor or the REMIC Administrator pursuant to Sections 3.13,
3.14(c), 6.03 or 10.01;
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(ix) to reimburse itself for amounts expended by
it (a) pursuant to Section 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b) in
connection with the liquidation of a Mortgage Loan or disposition of
an REO Property to the extent not otherwise reimbursed pursuant to
clause (i) or (viii) above;
(x) to withdraw any amount deposited in the
Custodial Account that was not required to be deposited therein
pursuant to Section 3.07; and
(xi) to clear and terminate the Custodial Account
pursuant to Section 9.01.
(b) The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to clauses (i),
(ii), (v) and (vi) above.
(c) The Master Servicer shall be entitled to reimburse itself or
the related Subservicer for any Advance or Servicing Advance or Subservicer
Servicing Advance made in respect of a Mortgage Loan that the Master Servicer
determines in its sole discretion to be a Nonrecoverable Advance or a
Nonrecoverable Subservicer Advance by withdrawal from the Custodial Account,
prior to any other withdrawals therefrom, of amounts on deposit therein on any
Certificate Account Deposit Date succeeding the date of such determination.
Section 3.11. Maintenance of the Primary Insurance Policies;
Collections Thereunder.
(a) Subject to Section 4.04(c) hereof, the Master Servicer shall
not take, or permit any Subservicer to take, any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Master Servicer or Subservicer, would have
been covered thereunder. To the extent coverage is available, the Master
Servicer shall keep or cause to be kept in full force and effect each such
Primary Mortgage Insurance Policy until the principal balance of the related
Mortgage Loan secured by a Mortgaged Property is reduced to 80% or less of the
Appraised Value in the case of such a Mortgage Loan having a Loan-to-Value
Ratio at origination in excess of 80%, provided that such Primary Mortgage
Insurance Policy was in place as of the Cut-off Date and the Depositor had
knowledge of such Primary Mortgage Insurance Policy. Except with respect to
the Mortgage Loans listed on Exhibit M, in the event that the Depositor gains
knowledge that as of the Closing Date, a Mortgage Loan had a Loan-to-Value
Ratio at origination in excess of 80% and is not the subject of a Primary
Mortgage Insurance Policy and that such Mortgage Loan has a current
Loan-to-Value Ratio in excess of 80%, then the Master Servicer shall or use its
reasonable efforts to obtain and maintain a Primary Mortgage Insurance Policy
to the extent that such a policy is obtainable at a reasonable price. The
Master Servicer shall not cancel or refuse to renew any such Primary Mortgage
Insurance Policy applicable to a Nonsubserviced Mortgage Loan, or consent to
any Subservicer canceling or refusing to renew any such Primary Mortgage
Insurance Policy applicable to a Mortgage Loan subserviced by it, that is in
effect at the date of the initial issuance of the Certificates and is required
to be kept in force hereunder unless the replacement Primary Mortgage Insurance
Policy for such canceled or non-renewed policy is
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maintained with an insurer whose claims-paying ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to
or better than the lower of the then-current rating or the rating assigned to
the Certificates as of the Closing Date by such Rating Agency. Any premium on
a Primary Mortgage Insurance Policy paid by the Master Servicer or a
Subservicer from its own funds shall constitute a Servicing Advance or a
Subservicer Servicing Advance, as the case may be, hereunder.
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans the Master Servicer agrees to present or to
cause the related Subservicer to present, on behalf of the Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the Insurer
under any Primary Insurance Policies, in a timely manner in accordance with
such policies, and, in this regard, to take or cause to be taken, subject to
Section 4.04(c) hereof, such reasonable action as shall be necessary to permit
recovery under any Primary Insurance Policies respecting defaulted Mortgage
Loans. Pursuant to Section 3.07, any Insurance Proceeds collected by or
remitted to the Master Servicer under any Primary Insurance Policies shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage in an amount which is equal
to the lesser of the principal balance owing on such Mortgage Loan or 100
percent of the insurable value of the improvements; provided, however, that
such coverage may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. To the extent
it may do so without breaching the related Subservicing Agreement, the Master
Servicer shall replace any Subservicer that does not cause such insurance, to
the extent it is available, to be maintained. The Master Servicer shall also
cause to be maintained on property acquired upon foreclosure, or deed in lieu
of foreclosure, of any Mortgage Loan, fire insurance with extended coverage in
an amount which is at least equal to the amount necessary to avoid the
application of any co-insurance clause contained in the related hazard
insurance policy. Pursuant to Section 3.07, any amounts collected by the
Master Servicer under any such policies (other than amounts to be applied to
the restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.10. Any cost incurred by
the Master Servicer or any Subservicer in maintaining any insurance described
in this Section 3.12(a) shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit,
but shall be treated as a Servicing Advance or Subservicer Servicing Advance,
as applicable. Such costs shall be recoverable by the Master Servicer or the
Subservicer out of related late payments by the Mortgagor or out of Insurance
Proceeds and Liquidation Proceeds to the extent permitted by Section 3.10 and
otherwise as permitted by Section 3.10(a). It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage Loan other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. When the improvements
securing a Mortgage Loan are located at the time of origination of such
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Mortgage Loan in a federally designated special flood hazard area, the Master
Servicer shall cause flood insurance (to the extent available) to be maintained
in respect thereof. Such flood insurance shall be in an amount equal to the
lesser of (i) the amount required to compensate for any loss or damage to the
Mortgaged Property on a replacement cost basis and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
(b) The Master Servicer shall obtain and maintain at its own
expense and keep in full force and effect throughout the term of this Agreement
a blanket fidelity bond and an errors and omissions insurance policy covering
the Master Servicer's officers and employees and other persons acting on behalf
of the Master Servicer in connection with its activities under this Agreement.
The amount of coverage shall be at least equal to the coverage that would be
required by FNMA or FHLMC, whichever is greater, with respect to the Master
Servicer if the Master Servicer were servicing and administering the Mortgage
Loans for FNMA or FHLMC. In the event that any such bond or policy ceases to
be in effect, the Master Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer acceptable to the Depositor. Coverage of the
Master Servicer under a policy or bond obtained by an Affiliate of the Master
Servicer and providing the coverage required by this Section 3.12(b) shall
satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be
in default under this Section 3.13(a) by reason of any transfer or
assumption which the Master Servicer is restricted by law from
preventing; and
(ii) if the Master Servicer determines that it is
reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid
enforcement of a due-on-sale clause contained in any Mortgage Note or
Mortgage, the Master Servicer shall not be required to enforce the
due-on-sale clause or to contest such action.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property is to be conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption or modification agreement or
supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor
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from liability on the Mortgage Loan, the Master Servicer is authorized, subject
to the requirements of the sentence next following, to execute and deliver, on
behalf of the Trustee, the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person; provided, however, none of
such terms and requirements shall both constitute a "significant modification"
effecting an exchange or reissuance of such Mortgage Loan under the Code (or
final, temporary or proposed Treasury Regulations promulgated thereunder) and
cause any REMIC to fail to qualify as a REMIC under the Code. The Master
Servicer shall execute and deliver such documents only if it reasonably
determines that (i) its execution and delivery thereof will not conflict with
or violate any terms of this Agreement or cause the unpaid balance and interest
on the Mortgage Loan to be uncollectible in whole or in part, (ii) any required
consents of insurers under any Required Insurance Policies have been obtained
and (iii) subsequent to the closing of the transaction involving the assumption
or transfer (A) the Mortgage Loan will continue to be secured by a first
mortgage lien pursuant to the terms of the Mortgage, (B) such transaction will
not adversely affect the coverage under any Required Insurance Policies, (C)
the Mortgage Loan will fully amortize over the remaining term thereof, (D) no
material term of the Mortgage Loan (including the interest rate on the Mortgage
Loan) will be altered nor will the term of the Mortgage Loan be changed and (E)
if the seller/transferor of the Mortgaged Property is to be released from
liability on the Mortgage Loan, such release will not (based on the Master
Servicer's or Subservicer's good faith determination) adversely affect the
collectability of the Mortgage Loan. Upon receipt of appropriate instructions
from the Master Servicer in accordance with the foregoing, the Trustee shall
execute any necessary instruments for such assumption or substitution of
liability as directed by the Master Servicer. Upon the closing of the
transactions contemplated by such documents, the Master Servicer shall cause
the originals or true and correct copies of the assumption agreement, the
release (if any), or the modification or supplement to the Mortgage Note or
Mortgage to be delivered to the Trustee or the Custodian and deposited with the
Mortgage File for such Mortgage Loan. Any fee collected by the Master Servicer
or such related Subservicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer or such Subservicer
as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the case
may be, shall be entitled to approve a request from a Mortgagor for a partial
release of the related Mortgaged Property, the granting of an easement thereon
in favor of another Person, any alteration or demolition of the related
Mortgaged Property or other similar matters if it has determined, exercising
its good faith business judgment in the same manner as it would if it were the
owner of the related Mortgage Loan, that the security for, and the timely and
full collectability of, such Mortgage Loan would not be adversely affected
thereby and that neither REMIC I, REMIC II nor REMIC III would fail to continue
to qualify as a REMIC under the Code as a result thereof and that no tax on
"prohibited transactions" or "contributions" after the start-up day would be
imposed on any such REMIC as a result thereof. Any fee collected by the Master
Servicer or the related Subservicer for processing such a request will be
retained by the Master Servicer or Subservicer as additional servicing
compensation.
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(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and the Master Servicer shall be entitled to approve an
assignment in lieu of satisfaction with respect to a Mortgage Loan, provided
the obligee with respect to such Mortgage Loan following such proposed
assignment provides the Trustee and the Master Servicer with a "Lender
Certification for Assignment of Mortgage Loan" in the form attached hereto as
Exhibit L, in form and substance satisfactory to the Trustee and the Master
Servicer, providing the following: (i) that such Mortgage Loan is secured by
Mortgaged Property located in a jurisdiction in which an assignment in lieu of
satisfaction is required to preserve lien priority, minimize or avoid mortgage
recording taxes or otherwise comply with, or facilitate a refinancing under,
the laws of such jurisdiction; (ii) that the substance of the assignment is,
and is intended to be, a refinancing of such Mortgage Loan and that the form of
the transaction is solely to comply with, or facilitate the transaction under,
such local laws; (iii) that such Mortgage Loan following the proposed
assignment will have a rate of interest at least 0.25 percent below or above
the rate of interest on such Mortgage Loan prior to such proposed assignment;
and (iv) that such assignment is at the request of the borrower under the
related Mortgage Loan. Upon approval of an assignment in lieu of satisfaction
with respect to any Mortgage Loan, the Master Servicer shall receive cash in an
amount equal to the unpaid principal balance of and accrued interest on such
Mortgage Loan, and the Master Servicer shall treat such amount as a Principal
Prepayment in Full with respect to such Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise
comparably convert (which may include an REO Acquisition) the ownership of
properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 3.07. In connection with such
foreclosure or other conversion, the Master Servicer shall, consistent with
Section 3.11, follow such practices and procedures as it shall deem necessary
or advisable, as shall be normal and usual in its general mortgage servicing
activities; provided that the Master Servicer shall not be liable in any
respect hereunder if the Master Servicer is acting in connection with any such
foreclosure or other conversion in a manner that is consistent with the
provisions of this Agreement. The Master Servicer, however, shall not be
required to expend its own funds in connection with any foreclosure, or
attempted foreclosure which is not completed, or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan to Holders of
Certificates of one or more Classes after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds, Insurance Proceeds or REO Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Custodial Account
pursuant to Section 3.10, whether or not such expenses are actually recoverable
from related Liquidation Proceeds, Insurance Proceeds or REO Proceeds); any
such expenditure shall be treated as a Servicing Advance hereunder. In the
event of a determination by the Master Servicer pursuant to this Section
3.14(a), the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.10. Concurrently with the foregoing, the Master
Servicer may pursue any remedies that may be available in connection with a
breach of a representation and warranty with respect to any such Mortgage Loan
in accordance with Section 2.04. Upon the occurrence of a Cash Liquidation or
REO Disposition,
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following the deposit in the Custodial Account of all Insurance Proceeds,
Liquidation Proceeds and other payments and recoveries referred to in the
definition of "Cash Liquidation" or "REO Disposition," as applicable, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee or any Custodian, as the case may be, shall
release to the Master Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest
in the designee of the Master Servicer the related Mortgaged Property, and
thereafter such Mortgaged Property shall not be part of the Trust Fund.
Notwithstanding the foregoing or any other provision of this Agreement, in the
Master Servicer's sole discretion with respect to any defaulted Mortgage Loan
or REO Property as to either of the following provisions, (i) a Cash
Liquidation or REO Disposition may be deemed to have occurred if substantially
all amounts expected by the Master Servicer to be received in connection with
the related defaulted Mortgage Loan or REO Property have been received, and
(ii) for purposes of determining the amount of any Liquidation Proceeds,
Insurance Proceeds, REO Proceeds or any other unscheduled collections or the
amount of any Realized Loss, the Master Servicer may take into account minimal
amounts of additional receipts expected to be received or any estimated
additional liquidation expenses expected to be incurred in connection with the
related defaulted Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired
by the Trust Fund as an REO Property by foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be issued to the Trustee or
to its nominee on behalf of Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Property shall (except as otherwise expressly provided herein) be considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such time as the
REO Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be
an Outstanding Mortgage Loan it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been discharged,
such Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such REO Property within
three full years after the taxable year of its acquisition by the Trust Fund
for purposes of Section 860G(a)(8) of the Code (or such shorter period as may
be necessary under applicable state (including any state in which such property
is located) law to maintain the status of REMIC I, REMIC II and REMIC III as
REMICs under applicable state law and avoid taxes resulting from such property
failing to be foreclosure property under applicable state law) unless (i) at
the expense of the Trust Fund, the Master Servicer requests and receives an
extension of such period in which case the Master Servicer shall sell such REO
property within the applicable extension period or (ii) the Master Servicer
obtains for the Trustee an Opinion of Counsel, addressed to the Trustee and the
Master Servicer, to the effect that the holding by the Trust Fund of such REO
Property subsequent to such period will not result in the imposition of taxes
on "prohibited transactions" as defined in Section 860F
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of the Code or cause REMIC I, REMIC II or REMIC III to fail to qualify as
REMICs (for federal (or any applicable state or local) income tax purposes) at
any time that any Certificates are outstanding, in which case the Trust Fund
may continue to hold such REO Property (subject to any conditions contained in
such Opinion of Counsel). The Master Servicer shall be entitled to be
reimbursed from the applicable Custodial Account for any costs incurred in
obtaining such Opinion of Counsel, as provided in Section 3.10, and such costs
shall be treated as Servicing Advances hereunder. Notwithstanding any other
provision of this Agreement, no REO Property acquired by the Trust Fund shall
be rented (or allowed to continue to be rented) or otherwise used by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or (ii) subject the Trust Fund to
the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) and
860F(a)(2)(B) of the Code.
(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer or the related
Subservicer in accordance with Section 3.10(a)(i); second, to all Master
Servicing Fees and Primary Servicing Fees payable therefrom (and the Master
Servicer and the Subservicer shall have no claims for any deficiencies with
respect to such fees which result from the foregoing allocation); third, to the
Certificateholders to the extent of accrued and unpaid interest on the Mortgage
Loan, and any related REO Imputed Interest, at the Net Mortgage Rate to the Due
Date prior to the Distribution Date on which such amounts are to be
distributed; fourth, to the Certificateholders as a recovery of principal on
the Mortgage Loan (or REO Property); and fifth, to Foreclosure Profits.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of a Mortgage Loan,
or upon the receipt by the Master Servicer of a notification that payment in
full will be escrowed in a manner customary for such purposes, the Master
Servicer will immediately notify the Trustee and the Custodian, if applicable,
by a certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Custodial Account pursuant to Section 3.07 have been or will be so deposited),
substantially in one of the forms attached hereto as Exhibit G requesting
delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Trustee shall promptly release, or cause the Custodian to release,
the related Mortgage File to the Master Servicer. The Master Servicer is
authorized to execute and deliver to the Mortgagor the request for
reconveyance, deed of reconveyance or release or satisfaction of mortgage or
such instrument releasing the lien of the Mortgage, together with the Mortgage
Note with, as appropriate, written evidence of cancellation thereon. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account or the Certificate
Account.
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(b) From time to time as is appropriate for the servicing or
foreclosure of a Mortgage Loan, the Master Servicer shall deliver to the
Trustee (if it holds the related Mortgage File) or the Custodian, with a copy
to the Trustee, a certificate of a Servicing Officer substantially in one of
the forms attached as Exhibit G hereto, requesting that possession of all, or
any document constituting part of, the Mortgage File be released to the Master
Servicer and certifying as to the reason for such release and that such release
will not invalidate any insurance coverage provided in respect of such Mortgage
Loan under any Required Insurance Policy. Upon receipt of the foregoing, the
Trustee shall deliver, or cause the Custodian to deliver, the Mortgage File or
any document therein to the Master Servicer. The Master Servicer shall cause
each Mortgage File or any document therein so released to be returned to the
Trustee, or the Custodian as agent for the Trustee, when the need therefor by
the Master Servicer no longer exists, unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or (ii) the Mortgage File or such document
has been delivered directly or through a Subservicer to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered directly or through a Subservicer to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. In the event that the Mortgage File or
any document therein is retained for purposes of initiating or pursuing
foreclosure of the Mortgage Property, if such foreclosure proceedings are
terminated or the need for the Mortgage File or other document no longer exists
and the Mortgage Loan is still part of the Trust Fund, the Master Servicer
shall cause the Mortgage File or any document therein to be returned to the
Trustee. In the event of the liquidation of a Mortgage Loan, the Trustee shall
deliver the Request for Release with respect thereto to the Master Servicer of
such Mortgage Loan upon deposit of the related Liquidation Proceeds in the
Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf
shall execute and deliver to the Master Servicer, if necessary, any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Together with such documents or pleadings (if
signed by the Trustee), the Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee and certifying as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate any insurance coverage under any Required Insurance
Policy or invalidate or otherwise affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale.
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Section 3.16. Servicing and Other Compensation; Compensating
Interest.
(a) The Master Servicer, as compensation for its activities
hereunder, shall be entitled to retain from collections on the Mortgage Loans
the amounts provided for by clauses (ii), (iv), (v) and (vi) of Section
3.10(a), subject to clause (e) below. The amount of servicing compensation
provided for in such clauses shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income on amounts in
the Custodial Account or otherwise shall be retained by the Master Servicers or
the Subservicer to the extent provided herein, subject to clause (e) below.
(c) The Master Servicers shall be required to pay, or cause to be
paid, all expenses incurred by it in connection with its servicing activities
hereunder (including the fees and expenses of the Trustees any co-trustee and
any Custodian) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation
may not be transferred in whole or in part except in connection with the
transfer of all of its responsibilities and obligations as Master Servicer
under this Agreement.
(e) Notwithstanding any other provision herein, the amount of
servicing compensation that the Master Servicer shall be entitled to receive
for its activities hereunder for the period ending on each Distribution Date
shall be reduced (but not below zero) by an amount equal to Compensating
Interest (if any) for such Distribution Date. Such reduction shall be applied
during such period in reduction of the Master Servicing Fee to which the Master
Servicer is entitled pursuant to Section 3.10(a)(ii). Such reduction in the
Master Servicing Fee shall be effectuated by the remittance of Compensating
Interest (if any) to the Trustee for deposit in the Certificate Account
pursuant to Section 4.01(a).
Section 3.17. Annual Statement as to Compliance.
The Master Servicer will deliver to the Depositor and the Trustee not
later than March 31 of each year beginning in 1999, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of the
Master Servicer during the preceding calendar year and of its performance under
the pooling and servicing agreements, including this Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, the Master Servicer has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has
been a default in the fulfillment in all material respects of any such
obligation relating to this Agreement, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officers' knowledge, each related Subservicer has fulfilled its material
obligations under its Subservicing Agreement in all material respects, or if
there has been a material default in the fulfillment of such obligations
relating to this Agreement, specifying such default known to such officer and
the nature and status thereof.
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Section 3.18. Annual Independent Public Accountants' Servicing
Report.
Not later than March 31 of each year beginning in 1999, the Master
Servicer at its expense shall cause a firm of Independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Depositor and the Trustee to the effect that such
firm has examined certain documents and records relating to the servicing of
the mortgage loans under pooling and servicing agreements (including this
Agreement) substantially similar one to another (such statement to have
attached thereto a schedule setting forth the pooling and servicing agreements
covered thereby, including this Agreement) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC, such servicing has been conducted in compliance with such
pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC requires it to report. In rendering such statement, such
firm may rely, as to matters relating to direct servicing of mortgage loans by
Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC
(rendered within one year of such statement) of Independent public accountants
with respect to the related Subservicer. For purposes of such statement, such
firm may conclusively assume that all pooling and servicing agreements among
the Depositor, the Master Servicer and the Trustee relating to Mortgage
Pass-Through Certificates evidencing an interest in first mortgage loans are
substantially similar one to another except for any such pooling and servicing
agreement which, by its terms, specifically states otherwise.
Section 3.19. Rights of the Depositor in Respect of the Master
Servicer.
The Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by the
Master Servicer in respect of its rights and obligations hereunder and access
to officers of the Master Servicer responsible for such obligations. Upon
request, the Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as the Master Servicer
possesses regarding its business, affairs, property and condition, financial or
otherwise. The Master Servicer shall also cooperate with all reasonable
requests for information including, but not limited to, notices, tapes and
copies of files, regarding itself, the Mortgage Loans or the Certificates from
any Person or Persons identified by the Depositor or the Master Servicer. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicer hereunder. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicer and is not
obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
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Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master Servicer
or the related Subservicer has deposited Buydown Funds in an account that
satisfies the requirements for a Custodial Account (the "Buydown Account").
Upon receipt from the Mortgagor of the amount due on a Due Date for each
Buydown Mortgage Loan, the Master Servicer or the related Subservicer, as
applicable, will withdraw from the Buydown Account the predetermined amount
that, when added to the amount due on such date from the Mortgagor, equals the
full Monthly Payment and deposit that amount in the Custodial Account in
accordance with the terms hereof or transmit that amount in accordance with the
terms of the Subservicing Agreement to the Master Servicer, in either case
together with the related payment made by the Mortgagor or advanced by the
Subservicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan
in its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Master Servicer or
the related Subservicer shall be required to withdraw from the Buydown Account
and remit any Buydown Funds remaining in the Buydown Account in accordance with
the related buydown agreement. The amount of Buydown Funds which may be
remitted in accordance with the related buydown agreement may reduce the amount
required to be paid by the Mortgagor to fully prepay the related Mortgage Loan.
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the property securing such Buydown Mortgage Loan
is sold in the liquidation thereof (either by the Master Servicer or the
insurer under any related Primary Mortgage Insurance Policy), the Master
Servicer or the related Subservicer shall be required to withdraw from the
Buydown Account the Buydown Funds for such Buydown Mortgage Loan still held in
the Buydown Account and deposit that amount in the Custodial Account in
accordance with the terms hereof or remit the same to the Master Servicer in
accordance with the terms of the Subservicing Agreement for deposit in the
Custodial Account, as applicable, or pay to the insurer under any related
Primary Mortgage Insurance Policy if the Mortgaged Property is transferred to
such insurer and such insurer pays all of the loss incurred in respect of such
default. Any amount so remitted pursuant to the preceding sentence will be
deemed to reduce the amount owed on the Mortgage Loan.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Trustee shall establish and maintain a Certificate
Account. On or before 11:00 A.M. Los Angeles time on each Certificate Account
Deposit Date the Master Servicer shall remit to the Trustee for deposit into
the Certificate Account, by wire transfer of immediately available funds, an
amount equal to the sum of (i) any Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be remitted to the Trustee for
deposit in the Certificate Account pursuant to Section 3.16(e), (iii) any
amount required to be paid
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pursuant to Section 9.01 and (iv) all other amounts constituting the Master
Servicer Remittance Amount attributable to collections made or payments owed by
the Master Servicer for the immediately succeeding Distribution Date. The
Trustee shall promptly deposit such funds in the Certificate Account. Funds
remitted by the Master Servicer as set forth above shall include the amount
required to be remitted to the Trustee and any co-trustee pursuant to Section
8.05(a).
(b) The Trustee shall be entitled to all investment earnings on
the funds in the Certificate Account from the receipt of such funds from the
Master Servicer as set forth in Section 4.01(a) until the distribution of such
funds to the Certificateholders as set forth in Section 4.02.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee or the Paying Agent
shall, from funds received by the Trustee pursuant to Section 4.01(a) (i)
distribute to the Master Servicer or a Subservicer, by remitting for deposit to
the Custodial Account, to the extent of and in reimbursement for any Advances
previously made by the Master Servicer or Subservicer with respect to any
Mortgage Loan it services or REO Property which remain unreimbursed in whole or
in part following the Cash Liquidation or REO Disposition of such Mortgage Loan
or REO Property as evidenced by an Officer's Certificate received by the
Trustee by the Determination Date; (ii) distribute to the Trustee and any
co-trustee the Trustee Fee with respect to each Mortgage Loan for such
Distribution Date; and then (iii) distribute to each Certificateholder of
record on the next preceding Record Date (other than as provided in Section
9.01 respecting the final distribution) either in immediately available funds
(by wire transfer or otherwise) to the account of such Certificateholder
holding Certificates in the amount of at least $5,000,000 at a bank or other
entity having appropriate facilities therefor, if such Certificateholder has so
notified the Trustee or the Paying Agent at least five (5) Business Days prior
to the related Record Date, as the case may be, or, if such Certificateholder
has not so notified the Trustee or the Paying Agent at least five (5) Business
Days prior to the related Record Date, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register such Certificateholder's share (based on the aggregate of the
Percentage Interests represented by Certificates of the applicable Class held
by such Holder) of the following amounts, in the following order of priority
(subject to the provisions of Section 4.02(b)), to the extent of the Available
Distribution Amount on deposit in the Certificate Account on the Distribution
Date:
(I) For any Distribution Date prior to the Group I Credit Support
Depletion Date or the Group II Credit Support Depletion Date, as applicable,
(a) with respect to the Group I Certificates, the Class R-I
Certificates and the Class R-III Certificates prior to the
Group I Credit Support Depletion Date, to the extent of the
Available Distribution Amount for Loan Group I on such
Distribution Date:
(i) First, to the Class I-PO Certificates, the Class I-PO
Fraction of all principal received on or in respect of each Class I-PO
Mortgage Loan;
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(ii) Second, to the Group IA Certificates entitled to
interest, the Class I-X Certificates, the Class R-I Certificates and
the Class R-III Certificates, Accrued Certificate Interest and any
Unpaid Accrued Certificate Interest, reduced in the case of the Class
IA-8 Certificates on or before the Class IA-8 Accretion Termination
Date by the Class IA-8 Accrual Amount, with such amount being
distributed, as principal, to the following Certificates:
(1) first, pro rata in proportion to their
respective Certificate Principal Balances, to the Class IA-1
and Class IA-7 Certificates, to the extent necessary to reduce
the aggregate of their Certificate Principal Balances for such
Distribution Date to their Combination Targeted Principal
Balance for such Distribution Date; and
(2) second, to the Class IA-8 Certificates;
(iii) Third, to the Group IA Certificates entitled to
principal, Class R-I and Class R-III Certificates, the Group IA
Principal Distribution Amount as follows:
(1) first, to the Class IA-4 Certificates, an
amount, up to the amount of the Class IA-4 Priority Amount for
such Distribution Date, until the Certificate Principal
Balance thereof has been reduced to zero;
(2) second, to the Class R-I and Class R-III
Certificates, pro rata, according to their respective
Certificate Principal Balances, until the Certificate
Principal Balances thereof have been reduced to zero;
(3) third, concurrently, until the Certificate
Principal Balance of the Class IA-6 Certificates has been
reduced to zero, as follows:
(A) 72.613383017% of the amount distributable under
this clause (3) sequentially as follows:
(I) concurrently, 75.8369935517% of the
amount distributable under clause
(3)(A) to the Class IA-5 Certificates
until the Certificate Principal Balance
thereof has been reduced to zero, and
24.1630064483% of the amount
distributable under clause (3)(A)
sequentially as follows:
(a) first, concurrently,
17.9428571429% of the amount
distributable under this clause
(3)(A)(I)(a) to the Class IA-2
Certificates to the extent
necessary to reduce their
Certificate Principal Balance for
such Distribution Date to their
Planned Principal Balance for
such Distribution Date and
82.0571428571% of the amount
distributable under this clause
(3)(A)(I)(a) sequentially as
follows:
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<PAGE> 84
(x) to the Class IA-10
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date to their
Planned Principal Balance
for such Distribute Date;
and
(y) to the Class IA-11
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date to their
Planned Principal Balance
for such Distribution Date;
(b) second, currently, to the Class
IA-1 Certificates and the Class
IA-7 Certificates, pro rata,
based on their respective
Certificate Principal Balances,
to the extent necessary to reduce
the aggregate of their
Certificate Principal Balances to
their Combination Targeted
Principal Balance for such
Distribution Date (after giving
effect to any distributions to
the Class IA-1 and Class IA-7
Certificates of the Class IA-8
Accrual Amount as principal);
(c) third, to the Class IA-8
Certificates until the
Certificate Principal Balance
thereof has been reduced to zero;
(d) fourth, to the Class IA-1
Certificates and the Class IA-7
Certificates, pro rata, based on
their respective Certificate
Principal Balances, without
regard to their Combination
Targeted Principal Balance for
such Distribution Date and until
the Certificate Principal
Balances thereof have been
reduced to zero;
(e) fifth, concurrently,
17.9428571429% of the amount
distributable under this clause
(3)(A)(I)(e) to the Class IA-2
Certificates without regard to
their Planned Principal Balance
for such Distribution Date and
until the Certificate Principal
Balance thereof has been reduced
to zero and 82.0571428571% of the
amount distributable under this
clause (3)(A)(I)(e) sequentially
as follows:
(x) to the Class IA-10
Certificates without regard
to their Planned Principal
Balance for such
Distribution Date and until
the
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<PAGE> 85
Certificate Principal
Balance thereof has been
reduced to zero; and
(y) to the Class IA-11
Certificates without regard
to their Planned Principal
Balance for such
Distribution Date and until
the Certificate Principal
Balance thereof has been
reduced to zero;
(II) concurrently, 17.9428571429% of the
remaining amount distributable under
clause (3)(A) to the Class IA-2
Certificates to the extent necessary to
reduce their Certificate Principal
Balance to their Planned Principal
Balance for such Distribution Date, and
82.0571428571% of the remaining amount
distributable under clause (3)(A)
sequentially as follows:
(x) first, to the Class IA-10
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date to their
Planned Principal Balance
for such Distribute Date;
and
(y) second, to the Class IA-11
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date to their
Planned Principal Balance
for such Distribution Date;
(III) to the Class IA-1 Certificates and the
Class IA-7 Certificates, pro rata,
based on their respective Certificate
Principal Balances, to the extent
necessary to reduce the aggregate of
their Certificate Principal Balances to
their Combination Targeted Principal
Balance for such Distribution Date
(after giving effect to any
distributions to the Class IA-1 and
Class IA-7 Certificates of the Class
IA-8 Accrual Amount as principal);
(IV) to the Class IA-8 Certificates until
the Certificate Principal Balance
thereof has been reduced to zero;
(V) to the Class IA-1 Certificates and the
Class IA-7 Certificates, pro rata,
based on their respective Certificate
Principal Balances, without regard to
their Combination Targeted Principal
Balance for such Distribution Date and
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<PAGE> 86
until the Certificate Principal
Balances thereof have been reduced
to zero;
(VI) concurrently, 17.9428571429% of the
remaining amount distributable under
clause (3)(A) to the Class IA-2
Certificates, without regard to their
Planned Principal Balance for such
Distribution Date and until the
Certificate Principal Balance thereof
has been reduced to zero and
82.0571428571% of the remaining amount
distributable under clause (3)(A)
sequentially as follows:
(x) first, to the Class IA-10
Certificates without regard
to their Planned Principal
Balance for such
Distribution Date and until
the Certificate Principal
Balance thereof has been
reduced to zero; and
(y) second, to the Class IA-11
Certificates without regard
to their Planned Principal
Balance for such
Distribution Date and until
the Certificate Principal
Balance thereof has been
reduced to zero;
(B) 27.3866169830% of the amount distributable
under clause (3) sequentially as follows:
(I) the first $15,925,802 of the aggregate
of the amount distributable under this
clause (3)(B) on such Distribution Date
and the preceding Distribution Dates,
sequentially as follows:
(a) first, concurrently,
17.9428571429% of the amount
distributable under clause
(3)(B)(I) to the Class IA-2
Certificates to the extent
necessary to reduce their
Certificate Principal Balance to
their Planned Principal Balance
for such Distribution Date, and
82.0571428571% of the amount
distributable under clause
(3)(B)(I) sequentially as
follows:
(x) to the Class IA-10
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date to their
Planned Principal Balance
for such Distribution Date;
and
(y) to the Class IA-11
Certificates to the extent
necessary to reduce their
Certificate Principal
Balance for such
Distribution Date
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<PAGE> 87
to their Planned Principal
Balance for such
Distribution Date;
(b) second, to the Class IA-1
Certificates and the Class IA-7
Certificates, pro rata, based on
their respective Certificate
Principal Balances, to the extent
necessary to reduce the aggregate
of their Certificate Principal
Balances to their Combination
Targeted Principal Balance for
such Distribution Date (after
giving effect to any
distributions to the Class IA-1
and Class IA-7 Certificates of
the Class IA-8 Accrual Amount as
principal);
(c) third, to the Class IA-8
Certificates until the
Certificate Principal Balance
thereof has been reduced to zero;
(d) fourth, to the Class IA-1
Certificates and the Class IA-7
Certificates, pro rata, based on
their respective Certificate
Principal Balances, without
regard to their Combination
Targeted Principal Balance for
such Distribution Date and until
the Certificate Principal
Balances thereof have been
reduced to zero;
(e) fifth, concurrently,
17.9428571429% of the remaining
amount distributable under clause
(3)(B)(I) to the Class IA-2
Certificates without regard to
their Planned Principal Balance
for such Distribution Date and
until the Certificate Principal
Balance thereof has been reduced
to zero, and 82.0571428571% of
the remaining amount
distributable under clause
(3)(B)(I) sequentially as
follows:
(x) first, to the Class IA-10
Certificates without regard
to their Planned Principal
Balance for such
Distribution Date and until
the Certificate Principal
Balance thereof has been
reduced to zero; and
(y) second, to the Class IA-11
Certificates without regard to
their Planned Principal Balance
for such Distribution Date and
until the Certificate Principal
Balance thereof has been reduced
to zero;
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<PAGE> 88
(II) the remainder of the amount
distributable under clause (3)(B) to
the Class IA-6 Certificates until the
Certificate Principal Balance thereof
has been reduced to zero;
(4) fourth, to the Class IA-3 and Class IA-9
Certificates, pro rata, based on their respective Certificate
Principal Balances, until the Certificate Principal Balances
thereof have been reduced to zero; and
(5) fifth, to the Class IA-4 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero.
(iv) Fourth, to the Class I-PO Certificates, as principal,
the sum of: (a) an amount equal to the Class I-PO Fraction of any
Realized Loss on a Class I-PO Mortgage Loan, other than an Excess
Special Hazard Loss, an Excess Fraud Loss, an Excess Bankruptcy Loss
or an Extraordinary Loss to the extent of amounts otherwise available
to pay the Group I Subordinate Principal Distribution Amount (without
regard to clause (B) of the definition thereof) on such Distribution
Date and (b) the sum of amounts, if any, by which the amount described
in clause (a) above on each prior Distribution Date exceeded the
amount actually distributed in respect thereof on such prior
Distribution Dates and not subsequently distributed to the extent of
the Group I Subordinate Principal Distribution Amount on such
Distribution Date, provided that any amounts distributed in respect of
losses pursuant to this paragraph shall not cause a further reduction
in the Class I-PO Certificate Principal Balance;
(v) fifth, to the Class IM Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(vi) sixth, to the Class IM Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Group I
Subordinate Principal Distribution Amount;
(vii) seventh, to the Class IB-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) eighth, to the Class IB-1 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the Group
I Subordinate Principal Distribution Amount;
(ix) ninth, to the Class IB-2 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(x) tenth, to the Class IB-2 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Group I
Subordinate Principal Distribution Amount;
(xi) eleventh, to the Class IB-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
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<PAGE> 89
(xii) twelfth, to the Class IB-3 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the Group
I Subordinate Principal Distribution Amount;
(xiii) thirteenth, to the Class IB-4 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xiv) fourteenth, to the Class IB-4 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the Group
I Subordinate Principal Distribution Amount;
(xv) fifteenth, to the Class IB-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xvi) sixteenth, to the Class IB-5 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the Group
I Subordinate Principal Distribution Amount;
(xvii) seventeenth, to each Class of Group I Subordinate
Certificates, in order of seniority, the remaining portion, if any, of
the sum of the Available Distribution Amount for Loan Group I, up to
the amount of unreimbursed Realized Losses previously allocated to
such Class; and
(xviii) eighteenth, to the Class R-I Certificates the
remaining portion, if any, of the Available Distribution Amount for
Loan Group I for such Distribution Date.
(b) with respect to the Group II and Class R-II Certificates and
prior to the Group II Credit Support Depletion Date, to the
extent of the Available Distribution Amount for Loan Group II
on such Distribution Date:
(i) First, to the Class II-PO Certificates, the
Class II-PO Fraction of all principal received on or in
respect of each Class II-PO Mortgage Loan;
(ii) Second, to the Group IIA Certificates
entitled to interest, the Class II-X Certificates and the
Class R-II Certificates, Accrued Certificate Interest and any
Unpaid Accrued Certificate Interest;
(iii) Third, to the Group IIA and Class R-II
Certificates, the Group IIA Principal Distribution Amount,
first to the Class R-II Certificates until the Certificate
Principal Balance thereof has been reduced to zero and then to
the Class IIA-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;
(iv) Fourth, to the Class II-PO Certificates, as
principal, the sum of (a) an amount equal to the Class II-PO
Fraction of any Realized Loss on a Class II-PO Mortgage Loan,
other than an Excess Special Hazard Loss, an Excess Fraud
Loss, an Excess Bankruptcy Loss, or an Extraordinary Loss to
the extent of
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<PAGE> 90
amounts otherwise available to pay the Group II Subordinate Principal
Distribution Amount (without regard to clause (B) of the definition
thereof) on such Distribution Date and (b) the sum of amounts, if any,
by which the amount described in clause (a) above on each prior
Distribution Date exceeded the amount actually distributed in respect
thereof on such prior Distribution Dates and not subsequently
distributed to the extent of the Group II Subordinate Principal
Distribution Amount on such Distribution Date, provided that any
amounts distributed in respect of losses pursuant to this paragraph
shall not cause a further reduction in the Class II-PO Certificate
Principal Balance;
(v) fifth, to the Class IIM Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(vi) sixth, to the Class IIM Certificates, their
pro rata share, based on their Certificate Principal Balance,
of the Group II Subordinate Principal Distribution Amount;
(vii) seventh, to the Class IIB-1 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(viii) eighth, to the Class IIB-1 Certificates,
their pro rata share, based on their Certificate Principal
Balance, of the Group II Subordinate Principal Distribution
Amount;
(ix) ninth, to the Class IIB-2 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(x) tenth, to the Class IIB-2 Certificates, their
pro rata share, based on their Certificate Principal Balance,
of the Group II Subordinate Principal Distribution Amount;
(xi) eleventh, to the Class IIB-3 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(xii) twelfth, to the Class IIB-3 Certificates,
their pro rata share, based on their Certificate Principal
Balance, of the Group II Subordinate Principal Distribution
Amount;
(xiii) thirteenth, to the Class IIB-4 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(xiv) fourteenth, to the Class IIB-4 Certificates,
their pro rata share, based on their Certificate Principal
Balance, of the Group II Subordinate Principal Distribution
Amount;
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<PAGE> 91
(xv) fifteenth, to the Class IIB-5 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(xvi) sixteenth, to the Class IIB-5 Certificates,
their pro rata share, based on their Certificate Principal
Balance, of the Group II Subordinate Principal Distribution
Amount;
(xvii) seventeenth, to each Class of Group II
Subordinate Certificates, in order of seniority, the remaining
portion, if any, of the sum of the Available Distribution
Amounts for Loan Group II, up to the amount of unreimbursed
Realized Losses previously allocated to such Class; and
(xviii) eighteenth, to the Class R-II Certificates
the remaining portion, if any, of the Available Distribution
Amount for Loan Group II for such Distribution Date.
(c) Notwithstanding the foregoing, if on any Distribution Date,
Special Hazard Losses (other than Excess Special Hazard Losses) are allocated
to the Group I or Group II Subordinate Certificates then outstanding which have
the lowest priority of payment (the "Allocated Lowest Class") in accordance
with the allocations of Special Hazard Losses set forth in Section 4.05 hereof,
then all or a portion of the payments of principal otherwise payable in respect
of the Lowest Class of the other Certificate Group (the "Unallocated Lowest
Class") will be transferred to the Available Distribution Amount of the Loan
Group related to the Allocated Lowest Class up to the amount of the Special
Hazard Losses allocated to the Allocated Lowest Class and paid as principal to
such Allocated Lowest Class in reduction of the Certificate Principal Balance
thereof. For purposes of such allocations, the Certificate Group which
receives such funds is referred to as the "Transferee Group" and the
Certificate Group which such funds are to be transferred from is referred to as
the "Transferor Group". To the extent that the amounts payable in respect of
principal from the Unallocated Lowest Class are less than the amount of the
Special Hazard Losses allocated to the Allocated Lowest Class, such amounts
will constitute a "Transfer Balance". Any Distribution Date upon which a
Transfer Balance is created is referred to herein as a "Cross-Collateralization
Date."
The Transfer Balance will bear interest at 6.750% per annum if
the Group I Certificates are the Transferee Group and 6.500% per annum if the
Group II Certificates are the Transferee Group, in each case subject to
interest shortfalls, including Net Prepayment Interest Shortfalls, for the
Certificates related to the Transferor Group.
For purposes of calculating principal distributions to be made
on a Transfer Balance on any Distribution Date, (i) principal distributions
will be allocated among the Subordinate Certificates of the Transferor Group as
provided herein, except that solely for this purpose the Certificate Principal
Balance of the Lowest Class of the Transferor Group will be deemed to include
the Transfer Balance (provided that such Certificate Principal Balance will not
be deemed to include the Transfer Balance for purposes of calculating the
Subordination Level), and (ii) the principal distribution allocable to the
Lowest Class of the Transferor Group in accordance with (i) above will be
allocated as between the Transfer Balance and the Lowest
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<PAGE> 92
Class of the Transferor Group on a pro rata basis for purposes of actual
principal distributions thereon. A Transfer Balance will not be reduced in
connection with Realized Losses or any other reductions in the Certificate
Principal Balance of the Lowest Class in the applicable Transferor Group.
(II) For any Distribution Date on or after the Group I Credit Support
Depletion Date or the Group II Credit Support Depletion Date, as applicable,
(a) with respect to the Group I Certificates, the Class R-I
Certificates and the Class R-III Certificates and on or after
the Group I Credit Support Depletion Date, to the extent of
the Available Distribution Amount for Loan Group I remaining
following prior distributions, if any, on such Distribution
Date:
(i) First, to the Class I-PO Certificates, the Class I-PO
Fraction of all principal received on or in respect of each Class I-PO
Mortgage Loan;
(ii) Second, to the Group IA Certificates entitled to
interest, the Class I-X Certificates, the Class R-I Certificates and
the Class R-III Certificates, Accrued Certificate Interest and Unpaid
Accrued Certificate Interest;
(iii) Third, to the Group IA Certificates entitled to
principal, the Class R-I Certificates and the Class R-III
Certificates, the Group IA Principal Distribution Amount, pro rata,
according to their respective Certificate Principal Balances; and
(iv) Fourth, to the Class R-I Certificates, the remaining
portion, if any, of the Available Distribution Amount for Loan Group I
for such Distribution Date;
(b) with respect to the Group II Certificates and the Class R-II
Certificates on or after the Group II Credit Support Depletion
Date, to the extent of the Available Distribution Amount for
Loan Group II remaining following prior distributions, if any,
on such Distribution Date:
(i) First, to the Class II-PO Certificates, the Class
II-PO Fraction of all principal received on or in respect of each
Class II-PO Mortgage Loan;
(ii) Second, to the Class IIA-1 Certificates and the Class
R-II Certificates, Accrued Certificate Interest and Unpaid Accrued
Certificate Interest;
(iii) Third, to the Class IIA-1 and the Class R-II
Certificates, the Group IIA Principal Distribution Amount, pro rata,
according to their respective Certificate Principal Balances; and
(iv) Fourth, to the Class R-II Certificates, the remaining
portion, if any, of the Available Distribution Amount for Loan Group
II for such Distribution Date.
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<PAGE> 93
(b) In addition to the foregoing distributions, with respect to
any Mortgage Loan that was previously the subject of a Cash Liquidation or an
REO Disposition that resulted in a Realized Loss, in the event that within two
years of the date on which such Realized Loss was determined to have occurred
the Master Servicer receives amounts, which the Master Servicer reasonably
believes to represent subsequent recoveries (net of any related liquidation
expenses), or determines that it holds surplus amounts previously reserved to
cover estimated expenses, specifically related to such Mortgage Loan
(including, but not limited to, recoveries in respect of the representations
and warranties made by the related Seller pursuant to the applicable Mortgage
Loan Purchase Agreement) the Master Servicer shall notify the Trustee of the
existence of such amounts by means of an Officer's Certificate delivered on the
related Determination Date and, the Trustee shall distribute such amounts to
the applicable Certificateholders of the Class or Classes to which such
Realized Loss was allocated (with the amounts to be distributed allocated among
such Classes in the same proportions as such Realized Loss was allocated),
subject to the following: No such distribution shall be in an amount that would
result in total distributions on the Certificates of any such Class in excess
of the total amounts of principal and interest that would have been
distributable thereon if such Cash Liquidation or REO Disposition had occurred
but had resulted in a Realized Loss equal to zero. Any amount to be so
distributed with respect to the Certificates of any Class shall be remitted by
the Master Servicer to the Trustee for distribution to the Certificateholders
of record as of the Record Date immediately preceding the date of such
distribution, on a pro rata basis based on the Percentage Interest represented
by each Certificate of such Class as of such Record Date. Any amounts to be so
distributed shall not be remitted to or distributed from the Trust Fund, and
shall constitute subsequent recoveries with respect to Mortgage Loans that are
no longer assets of the Trust Fund.
(c) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing
funds to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) If the Master Servicer or the Trustee anticipates that a final
distribution with respect to any Class of Certificates will be made on the next
Distribution Date, the Master Servicer, if applicable, shall, no later than the
Determination Date in the month of such final distribution, notify the Trustee
and the Trustee shall, no later than two (2) Business Days after such
Determination Date, mail on such date to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates that the
final distribution with respect to such Class of Certificates will be made on
such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein,
and (ii) no interest shall accrue on such Certificates from and after the end
of the prior calendar month. In the event that Certificateholders required to
surrender their Certificates pursuant to Section 9.01(c) do not surrender their
Certificates for final cancellation, the Trustee shall cause funds
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<PAGE> 94
distributable with respect to such Certificates to be withdrawn from the
Certificate Account and credited to a separate escrow account for the benefit
of such Certificateholders as provided in Section 9.01(d).
Section 4.03. Statements to Certificateholders.
(a) No later than two Business Days after the Determination Date
for the immediately succeeding Distribution Date, the Master Servicer shall
deliver to the Trustee a report in computer-readable form containing such date
such information as the Trustee shall reasonably require in order to make, or
cause its agents to make, distributions on the Certificates and prepare reports
to Certificateholders. The Trustee may conclusively rely upon the accuracy of
and shall be under no duty to recalculate, verify or recompute the information
provided to it by the Master Servicer.
(b) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Trustee shall forward by
mail to each Holder, the Underwriter, the Master Servicer and the Depositor a
statement setting forth the following information as to each Class of
Certificates to the extent applicable and to the extent the Trustee has
received the Master Servicer tape in a timely manner:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
(ii) the amount of such distribution to Holders of
such Class of Certificates allocable to interest;
(iii) if the distribution to the Holders of such
Class of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds available
therefor, the amount of the shortfall;
(iv) the amount of any Advances by the Master
Servicer pursuant to Section 4.04 by Loan Group;
(v) the number and Pool Stated Principal Balance
of the Mortgage Loans by Loan Group after giving effect to the
distribution of principal on such Distribution Date;
(vi) the aggregate Certificate Principal Balance
of each Class of Certificates, after giving effect to the amounts
distributed on such Distribution Date, separately identifying any
reduction thereof due to Realized Losses other than pursuant to an
actual distribution of principal;
(vii) the related Subordinate Principal
Distribution Amount;
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<PAGE> 95
(viii) on the basis of the most recent reports
furnished to it by Subservicers, if applicable, the number and
aggregate principal balances of Mortgage Loans by Loan Group (not
including REO Properties) that are delinquent (A) one month, (B) two
months and (C) three months and the number and aggregate principal
balance of Mortgage Loans (not including REO Properties) that are in
foreclosure;
(ix) the number, aggregate principal balance and
book value of any REO Properties;
(x) the aggregate Accrued Certificate Interest
remaining unpaid, if any, for each Class of Certificates, after giving
effect to the distribution made on such Distribution Date;
(xi) the Special Hazard Amount, Fraud Loss Amount
and Bankruptcy Amount as of the close of business on such Distribution
Date and a description of any change in the calculation of such
amounts;
(xii) the occurrence of the Group I Credit Support
Depletion Date or the Group II Credit Support Depletion Date;
(xiii) the Group IA Percentage and the Group IIA
Percentage for such Distribution Date;
(xiv) the aggregate amount of Realized Losses by
Loan Group for such Distribution Date;
(xv) the aggregate amount of any recoveries on
previously foreclosed loans from Sellers due to a breach of
representation or warranty;
(xvi) the weighted average remaining term to
maturity of the Mortgage Loans after giving effect to the amounts
distributed on such Distribution Date;
(xvii) the weighted average Mortgage Rates of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
(xviii) the Group IA Prepayment Percentage and Group
IIA Prepayment Percentage for such Distribution Date;
(xix) Extraordinary Losses by Loan Group for the
Prior Period; and
(xx) the cumulative Realized Losses by Loan Group.
In the case of information furnished pursuant to clauses (i) and (ii) above,
the amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination.
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(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Certificate other than a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Code.
(d) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Residual Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Residual Certificate. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code.
(e) Upon the written request of any Holder of a Group I or Group
II Junior Subordinate Certificate, the Master Servicer, as soon as reasonably
practicable, shall provide the requesting Certificateholder with such
information as is necessary and appropriate, in the Master Servicer's sole
discretion, for purposes of satisfying applicable reporting requirements under
Rule 144A.
(f) Upon request to the Trustee by any Holder of a Certificate who
is a Holder thereof at the time of making such request (an "Eligible
Certificateholder"), the Trustee shall provide, in the form of a
computer-readable tape or disk, loan by loan data with respect to the payment
experience on the Mortgage Loans containing at least the fields of information
listed on Exhibit N hereto (based on information provided by the Master
Servicer). In addition, upon the written request of any Eligible
Certificateholder, the Trustee shall provide similar loan by loan data with
respect to any prior monthly remittance report to the Certificateholders
pursuant to this Agreement (as and when such information becomes available).
The expense of providing any tape or disk pursuant to this subsection shall be
the expense of the Eligible Certificateholder. The Trustee shall include in
each monthly remittance report pursuant to this Agreement a statement that the
monthly loan by loan information described in this subsection is available upon
the request and at the expense of any Eligible Certificateholder directed to
the Trustee.
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicer.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, the Master Servicer shall furnish a written
(or in such electronic format as the Trustee and the Master Servicer shall
mutually agree) statement to the Trustee, any Paying Agent and the Depositor
(the information in such statement to be made available to Certificateholders
by the Master Servicer on request) setting forth (i) the portion of the Master
Servicer Remittance Amount to be remitted by the Master Servicer, (ii) the
aggregate amount
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of Special Hazard Losses, Fraud Losses and Bankruptcy Losses attributable to
the Mortgage Loans for such Distribution Date and (iii) the amounts required to
be withdrawn from the Custodial Account and remitted to the Trustee for deposit
into the Certificate Account on the immediately succeeding Certificate Account
Deposit Date pursuant to clause (iii) of Section 4.01(a) and (iv) the aggregate
book value of REO Properties. The determination by the Master Servicer of such
amounts shall, in the absence of obvious error, be presumptively deemed to be
correct for all purposes hereunder and the Trustee shall be protected in
relying upon the same without any independent check or verification.
(b) On or before 11:00 A.M. Los Angeles time on each Certificate
Account Deposit Date, the Master Servicer shall either (i) remit to the Trustee
for deposit in the Certificate Account from its own funds, or funds received
therefor from the Subservicers, an amount equal to the Advances to be made by
the Master Servicer in respect of the related Distribution Date, which shall be
in an aggregate amount equal to the aggregate amount of Monthly Payments (with
each interest portion thereof adjusted to the Net Mortgage Rate), less the
amount of any related Debt Service Reductions or reductions in the amount of
interest collectable from the Mortgagor pursuant to the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended, or similar legislation or regulations
then in effect, on the Outstanding Mortgage Loans as of the related Due Date,
which Monthly Payments were delinquent as of the close of business as of the
related Determination Date; provided that no Advance shall be made if it would
be a Nonrecoverable Advance, (ii) withdraw from amounts on deposit in the
applicable Custodial Account and deposit in the Certificate Account all or a
portion of the Amount Held for Future Distribution in discharge of any such
Advance, or (iii) make advances in the form of any combination of (i) and (ii)
aggregating the amount of such Advance. Any portion of the Amount Held for
Future Distribution so used shall be replaced by the Master Servicer by
remittance to the Trustee for deposit in the Certificate Account on or before
11:00 A.M. Los Angeles time on any future Certificate Account Deposit Date to
the extent that funds attributable to the Mortgage Loans that are available in
the Custodial Account for remittance to the Trustee on such Certificate Account
Deposit Date shall be less than payments to Certificateholders required to be
made on the following Distribution Date.
The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute
a Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and the Trustee by 11:00 A.M. Los Angeles
time on the related Determination Date.
In the event that the Master Servicer determines as of the Business
Day preceding any Certificate Account Deposit Date that it will be unable to
remit to the Trustee an amount equal to the Advance required to be made by it
for the immediately succeeding Distribution Date, it shall give written notice
to the Trustee of its inability to advance (such notice may be given by
telecopy), not later than 12:00 P.M. Los Angeles time on such Business Day,
specifying the portion of such amount that it will be unable to remit. Not
later than 12:00 P.M. Los Angeles time on the Certificate Account Deposit Date
the Trustee shall (a) terminate all of the rights and obligations of the Master
Servicer under this Agreement in accordance with Section 7.01 and (b) assume
the rights and obligations of the Master Servicer hereunder, including the
obligation
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to advance funds in an amount equal to the Advance required to be made by the
Master Servicer for the immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 4.04 into the Certificate Account.
(c) Notwithstanding any other provision of this Agreement or any
provision of any Subservicing Agreement, (i) the Master Servicer shall not make
any Advance or any Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Advance or Servicing Advance, if
made, would be a Nonrecoverable Advance, (B) a Cash Liquidation or REO
Disposition has occurred with respect to the related Mortgage Loan, or (C) the
related Mortgage Loan is a Deleted Mortgage Loan, and (ii) any Subservicer
shall not make any Subservicer Servicing Advance if (A) it determines in its
good faith judgment after reasonable inquiry that such Subservicer Servicing
Advance, if made, would be a Nonrecoverable Subservicer Advance, (B) a Cash
Liquidation or REO Disposition has occurred with respect to the related
Mortgage Loan, or (C) the related Mortgage Loan is a Deleted Mortgage Loan.
Section 4.05. Allocation of Realized Losses.
Prior to each Determination Date, the Master Servicer shall determine
the total amount of Realized Losses with respect to the Mortgage Loans, if any,
that resulted from any Cash Liquidation, Debt Service Reduction, Deficient
Valuation or REO Disposition that occurred during the Prior Period. The amount
of each Realized Loss shall be evidenced by an Officers' Certificate delivered
to the Trustee no later than the Determination Date.
All Realized Losses on Group I Loans other than Special Hazard Losses,
Excess Special Hazard Losses, Extraordinary Losses, Excess Bankruptcy Losses or
Excess Fraud Losses in each case, for Loan Group I, shall be allocated by the
Trustee as follows: first, to the Class IB- 5 Certificates until the Class
IB-5 Certificate Principal Balance has been reduced to zero; second, to the
Class IB-4 Certificates until the Class IB-4 Certificate Principal Balance has
been reduced to zero; third, to the Class IB-3 Certificates until the Class
IB-3 Certificate Principal Balance has been reduced to zero; fourth, to the
Class IB-2 Certificates until the Class IB-2 Certificate Principal Balance has
been reduced to zero; fifth, to the Class IB-1 Certificates until the Class
IB-1 Certificate Principal Balance has been reduced to zero; sixth, to the
Class IM Certificates until the Class IM Certificate Principal Balance has been
reduced to zero; and seventh, to the Group I Senior Certificates and the Class
R-I and Class R-III Certificates, pro rata according to their Certificate
Principal Balances in reduction thereof; provided, however, that in each case
if any such Realized Losses in on Class I-PO Mortgage Loan, the Class I-PO
Fraction of such loss will first be allocated to the Class I-PO Certificates,
and the remainder of such Realized Losses will be allocated as described above
in this paragraph.
All Realized Losses on Group II Loans other than Special Hazard
Losses, Excess Special Hazard Losses, Extraordinary Losses, Excess Bankruptcy
Losses or Excess Fraud Losses in each case, for Loan Group II, shall be
allocated by the Trustee as follows: first, to the Class IIB-5 Certificates
until the Class IIB-5 Certificate Principal Balance has been reduced to zero;
second,
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to the Class IIB-4 Certificates until the Class IIB-4 Certificate Principal
Balance has been reduced to zero; third, to the Class IIB-3 Certificates until
the Class IIB-3 Certificate Principal Balance has been reduced to zero; fourth,
to the Class IIB-2 Certificates until the Class IIB-2 Certificate Principal
Balance has been reduced to zero; fifth, to the Class IIB-1 Certificates until
the Class IIB-1 Certificate Principal Balance has been reduced to zero; sixth,
to the Class IIM Certificates until the Class IIM Certificate Principal Balance
has been reduced to zero; and seventh, to the Group II Senior Certificates and
the Class R-II Certificates, pro rata according to their Certificate Principal
Balances in reduction thereof; provided, however, that in each case if any such
Realized Losses is on a Class II-PO Mortgage Loan, the Class II-PO Fraction of
such loss will first be allocated to the Class II-PO Certificates, and the
remainder of such Realized Losses will be allocated as described above in this
paragraph.
Special Hazard Losses incurred on a Mortgage Loan in either Loan Group
up to the Special Hazard Amount will be allocated (i) first to the Class of
Subordinate Certificates outstanding with the lowest priority, regardless of
Certificate Group, or, if there are both Group I Subordinate and Group II
Subordinate Certificates outstanding with the same priority level, then pro
rata to such Classes according to their respective Certificate Principal
Balances, (ii) second, to the Class or Classes of Subordinate Certificates
outstanding with the next lowest priority, in the manner described in clause
(i) above until the Certificate Principal Balances of all of the Subordinate
Certificates have been reduced to zero, and (iii) third, pro rata to the Senior
Certificates related to the Loan Group in which the loss occurred; provided,
however, that in the event any Special Hazard Loss is incurred with respect to
a Class I-PO Mortgage Loan or a Class II-PO Mortgage Loan, the applicable Class
I-PO Fraction or Class II-PO Fraction of such loss will first be allocated to
such Class I-PO Certificates or Class II-PO Certificates and the remainder of
such loss will be allocated as described above.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses or other losses of a type not covered
by Subordination will be allocated on a pro rata basis among the Senior
Certificates (other than the Class PO Certificates) and the Subordinate
Certificates (any such Realized Losses so allocated to the Senior Certificates
and the Subordinate Certificates will be allocated without priority among the
various Classes of Certificates (other than the Class PO Certificates) in the
related Certificate Group). The principal portion of such losses on Class I-PO
Mortgage Loans and Class II-PO Mortgage Loans will be allocated to the Class
I-PO and the Class II-PO Certificates, respectively, in an amount equal to the
related Class I-PO Fraction or Class II-PO Fraction thereof, and the remainder
of such losses on Class I-PO Mortgage Loans or Class II-PO Mortgage Loans will
be allocated among the remaining Certificates in the related Certificate Group
on a pro rata basis.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a
pro rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such
Distribution Date in the case of the principal portion of a Realized Loss or
based on the Accrued Certificate Interest thereon payable on such Distribution
Date (without regard to any Compensating Interest for such Distribution Date)
in the case of an interest portion of a Realized Loss. Except as provided in
the following sentence, any allocation of Realized Losses (other than
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Debt Service Reductions) to a Class of Certificates shall be made by reducing
the Certificate Principal Balance thereof in the case of the principal portion
of such Realized Loss and the Accrued Certificate Interest thereon, in the case
of the interest portion of such Realized Loss by the amount so allocated, which
allocation shall be deemed to have occurred on such Distribution Date. Any
allocation of the principal portion of Realized Losses (other than Debt Service
Reductions) to the most junior Subordinate Certificates then outstanding shall
be made by operation of the definition of "Certificate Principal Balance" and
by operation of the provisions of Section 4.02(a). Allocations of the interest
portions of Realized Losses shall be made by operation of the definition of
"Accrued Certificate Interest" and by operation of the provisions of Section
4.02(a). Allocations of the principal portion of Debt Service Reductions shall
be made by operation of the provisions of Section 4.02(a). All Realized Losses
and all other losses allocated to a Class of Certificates hereunder will be
allocated among the Certificates of such Class in proportion to the Percentage
Interests evidenced thereby.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
The Master Servicer or the related Subservicers shall file information
returns with respect to the receipt of mortgage interests received in a trade
or business, the reports of foreclosures and abandonments of any Mortgaged
Property and the information returns relating to cancellation of indebtedness
income with respect to any Mortgaged Property required by Sections 6050H, 6050J
and 6050P, respectively, of the Code, and deliver to the Trustee an Officers'
Certificate on or before March 31 of each year stating that such reports have
been filed. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by Sections 6050H, 6050J and 6050P of the Code.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Master
Servicer shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that the
Master Servicer reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for any such withholding. Without
limiting the foregoing, the Master Servicer agrees that it will not withhold
with respect to payments of interest or original issue discount in the case of
a Certificateholder that has furnished or caused to be furnished an effective
Form W-8 or an acceptable substitute form or a successor form and who is not a
"10 percent shareholder" within the meaning of Code Section 871(h)(3)(B) or a
"controlled foreign corporation" described in Code Section 881(c)(3)(C) with
respect to the Trust Fund or the Depositor. In the event a Paying Agent
withholds any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Paying Agent shall indicate the amount withheld to such
Certificateholder.
Section 4.08. REMIC I and REMIC II Distributions. On each
Distribution Date, the Trustee shall be deemed to distribute to itself, as
holder of the REMIC I Regular Interests, the following amounts in the order set
forth below:
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(a) to the extent of the Available Distribution Amount for Loan
Group I, for each REMIC I Regular Interest, in the same priority as the
Corresponding Class or Classes of Certificates relating thereto as provided in
Section 4.02(a), an amount equal to the interest accrued on the aggregate
principal balance of such REMIC I Regular Interest at the applicable interest
rate for such REMIC I Regular Interest (as set forth in the definition for such
REMIC I Regular Interest) during the Prior Period, plus any unpaid portion of
accrued interest for any prior period with interest thereon at the applicable
interest rate for such REMIC I Regular Interest, reduced by the amount of any
interest shortfalls (including Prepayment Interest Shortfalls, to the extent
not covered by Compensating Interest) allocable to such REMIC I Regular
Interest (in the same proportion as the Corresponding Class or Classes of
Certificates as provided in Section 4.02(a));
(b) to the extent of the Available Distribution Amount for Loan
Group I remaining after the distributions deemed made under clause (a), an
amount of principal equal to the Principal Payment Amount for Loan Group I on
such Distribution Date in the same priority as the Corresponding Class or
Classes of Certificates as provided in Section 4.02(a);
(c) after the principal balance of each REMIC I Regular Interest
is reduced to zero, to the Class R-I Certificate, all other amounts remaining
in REMIC I;
(d) to the extent of the Available Distribution Amount for Loan
Group II, for each REMIC II Regular Interest, in the same priority as the
Corresponding Class or Classes of Certificates relating thereto as provided in
Section 4.02(a), an amount equal to the interest accrued on the aggregate
principal balance of such REMIC II Regular Interest at the applicable interest
rate for such REMIC II Regular Interest (as set forth in the definition for
such REMIC II Regular Interest) during the Prior Period, plus any unpaid
portion of accrued interest for any prior period with interest thereon at the
applicable interest rate for such REMIC II Regular Interest, reduced by the
amount of any interest shortfalls (including Prepayment Interest Shortfalls, to
the extent not covered by Compensating Interest) allocable to such REMIC II
Regular Interest (in the same proportion as the Corresponding Class or Classes
of Certificates as provided in Section 4.02(a));
(e) to the extent of the Available Distribution Amount for Loan
Group II remaining after the distributions deemed made under clause (d), an
amount of principal equal to the Principal Payment Amount for Loan Group II on
such Distribution Date in the same priority as the Corresponding Class or
Classes of Certificates as provided in Section 4.02(a);
(f) after the principal balance of each REMIC II Regular Interest
is reduced to zero, to the Class R-II Certificate, all other amounts remaining
in REMIC II;
provided, however, that notwithstanding the deemed distributions set forth in
clauses (a), (b), (c), (d), (e) or (f) above, distributions from the
Certificate Account shall only be made to the holders of the Certificates; and
provided, further, that each Realized Loss and interest shortfall (including
Prepayment Interest Shortfalls, to the extent not covered by Compensating
Interest), shall be deemed allocated, and adjustments or distributions as a
consequence thereof shall be
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deemed made to the REMIC I Regular Interests and the REMIC II Regular Interests
in the same amounts and in the same manner as were made to its Corresponding
Class or Classes.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A, Class X and Class PO Certificates shall be
substantially in the form set forth in Exhibit A. The Class M, Class B and
Residual Certificates, respectively, shall be substantially in the forms set
forth in Exhibits B, C and D. Each of the foregoing Certificates shall, on
original issue, be executed and delivered by the Trustee to the Certificate
Registrar for authentication and delivery to or upon the order of the Depositor
upon receipt by the Trustee of the documents specified in Section 2.01. The
Certificates, other than the Class I-PO Certificates and Residual Certificates,
shall be issuable in minimum dollar denominations of $100,000 initial
Certificate Principal Balance (or initial Notional Amount in the case of the
Notional Amount Certificates) each and integral multiples of $1 in excess
thereof. The Class I-PO Certificates shall be issuable in a single Certificate
with the initial Certificate Principal Balance set forth in the Preliminary
Statement hereto. The Residual Certificates shall be issuable in minimum
denominations of not less than a 99.99% Percentage Interest; provided, however,
that one Class R-I Certificate, one Class R-II Certificate and one Class R-III
Certificate will be issuable to the Master Servicer as "tax matters person"
pursuant to Section 10.01(c) and (e) in a minimum denomination representing a
Percentage Interest of not less than 0.01%.
The Certificates shall be executed by manual or facsimile signature on
behalf of an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were at the time of issuance
of such Certificates the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Class A, Class X, Class PO, Class M, Class IB-1, Class
IB-2, Class IIB-1 and Class IIB-2 Certificates shall initially be issued as one
or more Certificates registered in the name of the Depository or its nominee
and, except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to each of the Book-Entry Certificates through the
book-entry facilities of the Depository and, except as provided below, shall
not be entitled to Definitive Certificates in respect of such Ownership
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Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall
transfer the Ownership Interests only in the Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to the Book-Entry Certificates and
(B) the Trustee and the Depositor are unable to locate a qualified successor,
(ii) the Depositor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository or (iii) after an
Event of Default, holders of 51% of the Book-Entry Certificates notify the
Trustee that the book-entry system is not in their best interest, the Trustee
shall notify all Certificate Owners, through the Depository, of the occurrence
of any such event and of the availability of Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee
shall issue the Definitive Certificates. Neither the Depositor, the Master
Servicer nor the Trustee shall be liable for any actions taken by the
Depository or its nominee, including, without limitation, any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates
all references herein to obligations imposed upon or to be performed by the
Depository in connection with the issuance of the Definitive Certificates
pursuant to this Section 5.01 shall be deemed to be imposed upon and performed
by the Trustee, and the Trustee and the Master Servicer shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
Section 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the
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registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee is initially appointed Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided. Upon the request of the Master Servicer, the
Certificate Registrar or the Trustee shall provide the Master Servicer with a
certified list of Certificateholders.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.11 and, in the case of any Class M, Class B or Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver within five (5)
Business Days, in the name of the designated transferee or transferees, one or
more new Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class
and aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver within five (5) Business Days the
Certificates of such Class which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Group I or
Group II Junior Subordinate Certificate shall be made unless such transfer,
sale, pledge or other disposition is exempt from the registration requirements
of the Securities Act of 1933, as amended, or is made in accordance with said
Act. In the event that a transfer of a Junior Subordinate Certificate is to be
made, either (i)(A) the Trustee shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act or is being made
pursuant to said Act, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor or the Master Servicer or (B) the Trustee shall require
the transferee to execute a representation letter, substantially in the form of
Exhibit I hereto, and the Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit J hereto,
certifying to the Depositor and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the Trustee,
the Depositor or the Master Servicer or (ii) the prospective transferee of such
a Certificate shall be required to provide the Trustee, the Depositor and the
Master Servicers with an investment letter substantially in the form of Exhibit
K attached hereto, or such other form as the Depositor in its sole discretion
deems acceptable, which investment letter shall not be an expense of the
Trustee, the Depositor or the Master Servicer, and which investment letter
states that, among other things, such transferee (A) is a "qualified
institutional buyer" as defined under Rule 144A, acting for its own account or
the accounts of other "qualified institutional buyers" as defined under Rule
144A, and (B) is aware that the proposed transferor intends to rely on the
exemption from registration requirements under the Securities Act of 1933, as
amended, provided by Rule
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144A. The Holder of any such Certificate desiring to effect any such transfer,
sale, pledge or other disposition shall, and does hereby agree to, indemnify
the Trustee, the Depositor, the Master Servicer and the Certificate Registrar
against any liability that may result if the transfer, sale, pledge or other
disposition is not so exempt or is not made in accordance with the Securities
Act of 1933, as amended, or any similar state laws.
(e) In the case of any Class M, Class B or Residual Certificate
presented for registration in the name of any Person, either (i) the Trustee
shall require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicer to the
effect that the purchase or holding of such Class M, Class B or Residual
Certificate will not constitute or result in any non-exempt prohibited
transaction under Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), and will not subject the Trustee, the
Depositor or the Master Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Master Servicer or (ii) the
prospective transferee shall be required to provide the Trustee, the Depositor
and the Master Servicer with a certification to the effect set forth in
paragraph six of Exhibit I (with respect to any Class M or Class B
Certificate), or paragraph five of Exhibit H-1 (with respect to any Residual
Certificate), which the Trustee may rely upon without further inquiry or
investigation, or such other certifications as the Trustee may deem desirable
or necessary in order to establish that such transferee or the Person in whose
name such registration is requested is not an employee benefit plan or other
plan subject to the prohibited transaction provisions of ERISA or Section 4975
of the Code, or any Person (including an investment manager, a named fiduciary
or a trustee of any such plan) who is using "plan assets" of any such plan to
effect such acquisition.
So long as the Group I and Group II Senior Subordinate
Certificates are Book-Entry Certificates, any purchaser of a Senior Subordinate
Certificate will be deemed to have represented by such purchases that either
(a) such purchaser is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code and is
not purchasing such certificates on behalf of or with "plan assets" of any Plan
or (b) that the transferee is an insurance company, and the source of funds
used to purchase such Certificate is an "insurance company general account" (as
such term is defined in PTCE 95-60) and the conditions set forth in Sections I
and III of PTCE 95-60 have been satisfied.
(f) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
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(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in
its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Residual Certificate until its receipt of, (I) an affidavit and
agreement (a "Transfer Affidavit and Agreement," in the form attached
hereto as Exhibit H-1) from the proposed Transferee, representing and
warranting, among other things, that it is a Permitted Transferee,
that it is not acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed Transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee,
that for so long as it retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 5.02(f) and agrees
to be bound by them, and (II) a certificate, in the form attached
hereto as Exhibit H-2, from the Holder wishing to transfer the
Residual Certificate, representing and warranting, among other things,
that no purpose of the proposed Transfer is to impede the assessment
or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require a
Transfer Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Residual
Certificate and (y) not to transfer its Ownership Interest unless it
provides a certificate to the Trustee in the form attached hereto as
Exhibit H-2.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Certificate, by purchasing an Ownership
Interest in such Certificate, agrees to give the Trustee written
notice that it is a "pass-through interest holder" within the meaning
of Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Residual
Certificate, if it is, or is holding an Ownership Interest in a
Residual Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any
Residual Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the form
attached hereto as Exhibit H-2. Transfers of the Residual Certificates to
Non-United States Persons and Disqualified Organizations (as defined in Section
860E(e)(5) of the Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become
a holder of a Residual Certificate, then the last preceding Permitted
Transferee shall be restored, to the extent
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permitted by law, to all rights and obligations as Holder thereof retroactive
to the date of registration of such Transfer of such Residual Certificate. If
a Non-United States Person shall become a holder of a Residual Certificate,
then the last preceding United States Person shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof retroactive
to the date of registration of such Transfer of such Residual Certificate. If
a transfer of a Residual Certificate is disregarded pursuant to the provisions
of Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then the last
preceding Permitted Transferee shall be restored, to the extent permitted by
law, to all rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this Section 5.02(f) or
for making any payments due on such Certificate to the holder thereof or for
taking any other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a Holder of
a Residual Certificate in violation of the restrictions in this Section 5.02(f)
and to the extent that the retroactive restoration of the rights of the Holder
of such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then the Master Servicer shall have the
right, without notice to the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser selected by the
Master Servicer on such terms as the Master Servicer may choose. Such
purported Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the Master Servicer. Such
purchaser may be the Master Servicer itself or any Affiliate of the Master
Servicer. The proceeds of such sale, net of the commissions (which may include
commissions payable to the Master Servicer or its Affiliates), expenses and
taxes due, if any, will be remitted by the Master Servicer to such purported
Transferee. The terms and conditions of any sale under this clause (iii)(B)
shall be determined in the sole discretion of the Master Servicer, and the
Master Servicer shall not be liable to any Person having an Ownership Interest
in a Residual Certificate as a result of its exercise of such discretion.
(iv) The Master Servicer, on behalf of the Trustee, shall
make available, upon written request from the Trustee, all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a result of
any regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section 1381 of
the Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person who is a Disqualified
Organization. Reasonable compensation for providing such information may be
required by the Master Servicer from such Person.
(v) The provisions of this Section 5.02(f) set forth
prior to this clause (v) may be modified, added to or eliminated pursuant to
Section 11.01, provided that there shall have also been delivered to the
Trustee the following:
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(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current ratings, if any, of any Class of the Class A, Class X,
Class PO, Class M, Class B or Residual Certificates below the lower of
the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency; and
(B) a certificate of the Master Servicer stating that the
Master Servicer has received an Opinion of Counsel, in form and
substance satisfactory to the Master Servicer, to the effect that such
modification, addition to or absence of such provisions will not cause
REMIC I, REMIC II or REMIC III to cease to qualify as a REMIC and will
not cause (x) REMIC I, REMIC II or REMIC III to be subject to an
entity-level tax caused by the Transfer of any Residual Certificate to
a Person that is a Disqualified Organization or (y) a
Certificateholder or another Person to be subject to a REMIC-related
tax caused by the Transfer of a Residual Certificate to a Person that
is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange
of Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall
be destroyed by the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
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Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any of their respective agents may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 4.02 and for all other purposes
whatsoever, and neither the Depositor, the Master Servicer, the Trustee, the
Certificate Registrar nor any of their respective agents shall be affected by
notice to the contrary except as provided in Section 5.02(f).
Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date, the Trustee shall
deposit or cause to be deposited with the Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided
for in Section 4.02, such sum to be held in trust for the benefit of
Certificateholders.
The Trustee shall cause each Paying Agent to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee that such Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so
held by such Paying Agent shall be held only in Eligible Accounts to the extent
such sums are not distributed to the Certificateholders on the date of receipt
by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer.
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and the Master
Servicer herein. By way of illustration and not limitation, the Depositor is
not liable for the servicing and administration of the Mortgage Loans, nor is
it obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicer or to appoint a designee to assume such obligations, nor is it
liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
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Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicer; Assignment of Rights and Delegation
of Duties by Master Servicer.
(a) The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation or federal savings
bank, as applicable, under the laws governing its incorporation, and will each
obtain and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
(b) Any Person into which the Depositor or the Master Servicer may
be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party,
or any Person succeeding to the business of the Depositor or the Master
Servicer, shall be the successor of the Depositor or the Master Servicer, as
the case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Master Servicer shall be qualified to service mortgage loans on
behalf of FNMA or FHLMC; and provided further that each Rating Agency's
ratings, if any, of the Class A, Class X, Class PO, Class M, Class B or
Residual Certificates in effect immediately prior to such merger or
consolidation will not be qualified, reduced or withdrawn as a result thereof
(as evidenced by a letter to such effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section
6.04 to the contrary, the Master Servicer may assign its rights and delegate
its duties and obligations under this Agreement; provided that the Person
accepting such assignment or delegation shall be a Person which is qualified to
service mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory
to the Trustee and the Depositor, has a minimum net worth of $50,000,000, is
willing to service the Mortgage Loans previously serviced by the Master
Servicer assigning its rights or delegating its duties and obligations under
this Agreement and executes and delivers to the Depositor and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor and
the Trustee, which contains an assumption by such Person of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Agreement; provided
further that each Rating Agency's rating of the Classes of Certificates that
have been rated in effect immediately prior to such assignment and delegation
will not be qualified, reduced or withdrawn as a result of such assignment and
delegation (as evidenced by a letter to such effect from each Rating Agency).
In the case of any such assignment and delegation, the Master Servicer shall be
released from its obligations under this Agreement, except that the Master
Servicer shall remain liable for all liabilities and obligations incurred by it
as the Master Servicer hereunder prior to the satisfaction of the conditions to
such assignment and delegation set forth in the next preceding sentence.
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Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.
Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Depositor, the
Master Servicer and any director, officer, employee or agent of the Depositor
or the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Master Servicer and any director,
officer, employee or agent of the Depositor or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder.
Neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal or administrative
action, proceeding, hearing or examination that is not incidental to its
respective duties under this Agreement and which in its opinion may involve it
in any expense or liability; provided, however, that the Depositor or the
Master Servicer may in its discretion undertake any such action, proceeding,
hearing or examination that it may deem necessary or desirable with respect to
this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action, proceeding, hearing or examination and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor and the Master Servicer shall be entitled to be
reimbursed therefor out of amounts attributable to the Mortgage Loans on
deposit in the Custodial Account as provided by Section 3.10 and, on the
Distribution Date(s) following such reimbursement, the aggregate of such
expenses and costs shall be allocated in reduction of the Accrued Certificate
Interest on each Class entitled thereto in the same manner as if such expenses
and costs constituted a Net Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor
the Master Servicer shall resign from its respective obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Depositor or the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such
resignation
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by the Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein with respect to the Master
Servicer, means any one of the following events (whatever reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the Master Servicer shall fail to remit to
the Trustee any remittance required to be made under the terms of this
Agreement, other than any Advances required by Section 4.04, and such
failure shall continue unremedied for a period of 5 days after the
date upon which written notice of such failure, requiring such failure
to be remedied, shall have been given to the Master Servicer by the
Trustee or the Depositor or to the Master Servicer, the Depositor and
the Trustee by the Holders of Certificates of any Class affected
thereby evidencing Percentage Interests aggregating not less than 25%;
or
(ii) the Master Servicer shall fail to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement and such failure shall continue unremedied for a period of
30 days (except that such number of days shall be 15 in the case of a
failure to pay the premium for any Required Insurance Policy) after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and
the Trustee by the Holders of Certificates of any Class evidencing, in
the case of any such Class, Percentage Interests aggregating not less
than 25%; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or appointing a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iv) the Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling
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of assets and liabilities, or similar proceedings of, or relating to,
the Master Servicer or of, or relating to, all or substantially all of
the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) the Master Servicer shall notify the Trustee
pursuant to Section 4.04(b) that it is unable to remit to the Trustee
an amount equal to the Advance it must make or fails to make Advances,
regardless of notice.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee may,
and at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the Master Servicer
(and to the Depositor if given by the Trustee or to the Trustee if given by the
Depositor), terminate all of the rights and obligations of the Master Servicer
under this Agreement, other than its rights as a Certificateholder hereunder.
If an Event of Default described in clause (vi) hereof shall occur, the Trustee
shall, by notice to the Master Servicer and the Depositor, immediately
terminate all of the rights and obligations of the Master Servicer under this
Agreement, other than its rights as a Certificateholder hereunder as provided
in Section 4.04(b). On or after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Certificates (other than as a Holder
thereof) or the Mortgage Loans or otherwise, shall, subject to Section 7.02,
pass to and be vested in the Trustee or the Trustee's designee appointed
pursuant to Section 7.02; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its designee for administration by it of all cash
amounts which shall at the time be credited to the Custodial Account or
thereafter be received with respect to the Mortgage Loans, all at the Master
Servicer's cost. No such termination shall release the Master Servicer for any
liability that it would otherwise have hereunder for any act or omission prior
to the effective time of such termination.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section
6.04, the Trustee or, upon notice to the Depositor and with the Depositor's
consent (which shall not be unreasonably withheld), a designee (which meets the
standards set forth below) of the Trustee, shall be the successor in
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all respects to the Master Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer (except for the responsibilities, duties and
liabilities contained in Sections 2.02 and 2.03, excluding the duty to notify
related Subservicers or Sellers as set forth in such Sections, and its
obligations to deposit amounts in respect of losses incurred prior to such
termination or resignation on the investment of funds in the Custodial Account
or remit such amounts to the Trustee pursuant to Sections 3.07(c) and 4.01(b),
respectively, by the terms and provisions hereof); provided, however, that any
failure to perform such duties or responsibilities caused by the preceding
Master Servicer's failure to provide information required by Section 4.04 shall
not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account or the Certificate Account if the Master Servicer had
continued to act hereunder and, in addition, shall be entitled to the income
from any Permitted Investments made with amounts attributable to the Mortgage
Loans held in the Custodial Account or the Certificate Account. If the Trustee
has become the successor to the Master Servicer in accordance with Section 6.04
or Section 7.01, then notwithstanding the above, the Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, which is also a FNMA- or FHLMC- approved mortgage
servicing institution, having a net worth of not less than $10,000,000, as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer
hereunder. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee shall become successor to the Master Servicer and shall
act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the initial Master Servicer hereunder. The Depositor,
the Trustee, the Custodian, if any, and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Holders of Certificates notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights affected by
a default or Event of Default hereunder, may waive such default or Event of
Default; provided, however, that (a) a default or Event of Default under clause
(i) of Section 7.01 may be waived only by all of the
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Holders of Certificates affected by such default or Event of Default and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Certificates
in the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such
waiver of a default or Event of Default by the Holders representing the
requisite percentage of Voting Rights affected by such default or Event of
Default, such default or Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred (which has
not been cured or waived), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise as a reasonably prudent investor would exercise or use
under the circumstances in the conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall forward or cause to be forwarded in a timely fashion
the notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 4.03, 7.03 and 10.01. The Trustee shall furnish in a
timely fashion to the Master Servicer such information as the Master Servicer
may reasonably request from time to time for the Master Servicer to fulfill its
duties as set forth in this Agreement. The Trustee covenants and agrees that
it shall perform its obligations hereunder in a manner so as to maintain the
status of REMIC I, REMIC II and REMIC III as REMICs under the REMIC Provisions
and to prevent the imposition of any federal, state or local income, prohibited
transaction, contribution or other tax on either REMIC I, REMIC II or REMIC III
to the extent that maintaining such status and avoiding such taxes are
reasonably within the control of the Trustee and are reasonably within the
scope of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misfeasance; provided,
however, that:
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(i) Prior to the occurrence of an Event of
Default, and after the curing or waiver of all such Events of Default
which may have occurred, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee by
the Depositor or the Master Servicer and which on their face, do not
contradict the requirements of this Agreement;
(ii) The Trustee (in its individual capacity)
shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;
(iii) The Trustee (in its individual capacity)
shall not be personally liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with
the direction of Certificateholders of any Class holding Certificates
which evidence, as to such Class, Percentage Interests aggregating not
less than 25% as to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with
knowledge of any default (other than a default in payment to the
Trustee) specified in clauses (i) and (ii) of Section 7.01 or an Event
of Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the
Corporate Trust Office obtains actual knowledge of such failure or
event or the Trustee receives written notice of such failure or event
at its Corporate Trust Office from the Master Servicer, the Depositor
or any Certificateholder; and
(v) Except to the extent provided in Section
7.02, no provision in this Agreement shall require the Trustee to
expend or risk its own funds (including, without limitation, the
making of any Advance as successor Master Servicer) or otherwise incur
any personal financial liability in the performance of any of its
duties as Trustee hereunder, or in the exercise of any of its rights
or powers, if the Trustee shall have reasonable grounds for believing
that repayment of funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount
of any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable, (B) any tax on contributions to a REMIC
after the Closing Date imposed by Section 860G(d) of the Code and (C) any tax
on "net income from foreclosure property" as defined in Section 860G(c) of the
Code, but only if such
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taxes arise out of a breach by the Trustee of its obligations hereunder, which
breach constitutes gross negligence or willful misfeasance of the Trustee. If
any tax on "net income from foreclosure property" as defined in Section 860G(c)
of the Code does not arise out of a breach by the Trustee as set forth above,
such tax will be paid as provided in Section 10.01(g).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and
shall be protected in acting or refraining from acting upon any
resolution, Officers' Certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally liable
for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of
Default hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests, aggregating not
less than 50%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the
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Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Master Servicer, if an
Event of Default shall have occurred and is continuing, and otherwise
by the Certificateholder requesting the investigation;
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys; and
(vii) To the extent authorized under the Code and
the regulations promulgated thereunder, each Holder of a Residual
Certificate hereby irrevocably appoints and authorizes the Trustee to
be its attorney-in-fact for purposes of signing any Tax Returns
required to be filed on behalf of the Trust Fund. The Trustee shall
sign on behalf of the Trust Fund and deliver to REMIC Administrator in
a timely manner any Tax Returns prepared by or on behalf of REMIC
Administrator that the Trustee is required to sign as determined by
REMIC Administrator pursuant to applicable federal, state or local tax
laws, provided that REMIC Administrator shall indemnify the Trustee
for signing any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates, the Trustee shall
not accept any contribution of assets to the Trust Fund unless it shall have
obtained or been furnished with an Opinion of Counsel to the effect that such
contribution will not (i) cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding or (ii)
cause the Trust Fund to be subject to any federal tax as a result of such
contribution (including the imposition of any federal tax on "prohibited
transactions" imposed under Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicer as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicer of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Account by the Depositor
or the Master Servicer.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
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Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Trustee
and any co-trustee on a monthly basis, and the Trustee and any co-trustee shall
be entitled to, the Trustee Fee for all services rendered by each of them in
the execution of the trusts hereby created and in the exercise and performance
of any of the powers and duties hereunder of the Trustee and any co-trustee,
and the Master Servicer will pay or reimburse the Trustee and any co-trustee
upon request for all reasonable expenses, disbursements and advances incurred
or made by the Trustee or any co-trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ, and the expenses incurred by the Trustee or any co-trustee in
connection with the appointment of an office or agency pursuant to Section
8.12) except any such expense, disbursement or advance as may arise from its
gross negligence or bad faith. The Trustee Fee set forth herein shall be
withheld by the Trustee from funds remitted by the Master Servicer pursuant to
Section 4.01(a).
(b) The Master Servicer agrees to indemnify the Trustee and its
officers, directors, agents and employees for, and to hold it and them harmless
against, any loss, liability or expense incurred without negligence or willful
misconduct on its or their part, arising out of, or in connection with, the
acceptance and administration of the Trust Fund, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against any claim in connection with the exercise or performance of any of its
or their powers or duties under this Agreement, provided that:
(i) with respect to any such claim, the Trustee
shall have given the Master Servicer written notice thereof promptly
after the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own
defense, the Trustee shall cooperate and consult fully with the Master
Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to
the contrary, the Master Servicer shall not be liable for settlement
of any claim by the Trustee entered into without the prior consent of
the Master Servicer, which consent shall not be unreasonably withheld,
and, provided further, that in the event the Master Servicer withhold
its consent to any settlement of a claim proposed by the Trustee,
except as to liability for such settlement, the obligation to
indemnify set forth in this Section 8.05 shall continue in full force
and effect.
No termination of this Agreement or the resignation or removal of the Trustee
hereunder shall affect the obligations created by this Section 8.05(b) of the
Master Servicer to indemnify the Trustee under the conditions and to the extent
set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any
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actions taken by the Trustee at the direction of Certificateholders pursuant to
the terms of this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association having its principal office in a state and city
acceptable to the Depositor and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or national banking association publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee. In addition, in
the event that the Depositor determines that the Trustee has failed (i) to
distribute or cause to be distributed to Certificateholders any amount required
to be distributed hereunder, if such amount is held by the Trustee or its
Paying Agent for distribution or (ii) to otherwise observe or perform in any
material respect any of its covenants, agreements or obligations hereunder, and
such failure shall continue unremedied for a period of 5 days (in respect of
clause (i) above) or 30 days (in respect of clause (ii) above) after the date
on which written notice of such failure, requiring that the same be remedied,
shall have been given to the Trustee by the Depositor, then the Depositor may
remove the Trustee and appoint a successor trustee by written instrument
delivered as provided in the preceding sentence. In connection with the
appointment of a successor trustee pursuant to the preceding sentence, the
Depositor shall, on or before the date
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on which any such appointment becomes effective, obtain from each Rating Agency
written confirmation that the appointment of any such successor trustee will
not result in the reduction of the ratings on any class of Certificates below
the lesser of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor, the Master 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.
(b) No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee
may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall
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be a party, or any corporation or national banking association succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 8.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall mail notice of any
such merger or consolidation to the Certificateholders at their address as
shown in the Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be
located, the Master 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 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 8.10, such powers, duties, obligations, rights and
trusts as the Master Servicer and the Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Trustee alone
shall have the power to make such appointment, or in case an Event of Default
shall have occurred and be continuing, the Trustee shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
8.06 hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee, and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Master Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
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(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer and the
Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor, the Master Servicer or any Seller to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial
Agreement. Subject to Article VIII, the Trustee agrees to comply with the
terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders. Each
Custodian shall be a depository institution subject to supervision by federal
or state authority, shall have a combined capital and surplus of at least
$15,000,000 and shall be qualified to do business in the jurisdiction in which
it holds any Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 11.01. The Trustee shall notify the Certificateholders of
the appointment of any Custodian (other than the Custodian appointed as of the
Closing Date) pursuant to this Section 8.11.
Section 8.12. Appointment of Office or Agency.
The Trustee will maintain an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices located at 4 Albany Street, New
York, New York 10004 for the purpose of keeping the Certificate Register. The
Trustee will maintain an office at the address stated in Section 11.05(d)
hereof where notices and demands to or upon the Trustee in respect of this
Agreement may be served.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by the Master Servicer or
Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the Master Servicer may purchase all
of the Mortgage Loans and all property acquired in respect of any Mortgage Loan
remaining in REMIC I or REMIC II at a price equal to 100% of the Stated
Principal Balance of each Mortgage Loan owned by either such REMIC (other than
Mortgage Loans as to which a Cash Liquidation has occurred) or the fair market
value of the related underlying property of such Mortgage Loan with respect to
Mortgage Loans as to which an REO Acquisition has occurred if such fair market
value is less than such unpaid principal balance (net of any unreimbursed
Advances attributable to principal), in each case less any Realized Losses that
have not previously been allocated to
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the Certificates on the day of repurchase plus accrued interest thereon at the
Net Mortgage Rate to, but not including, the first day of the month in which
such repurchase price is distributed. The right of the Master Servicer to
purchase all the assets of either such REMIC on any such Distribution Date is
conditioned upon the Stated Principal Balances as of such Distribution Date
being less than ten percent of the Cut-off Date Principal Balance of the
Mortgage Loans owned by such REMIC. If such right is exercised by the Master
Servicer, the Master Servicer shall be deemed to have been reimbursed for the
full amount of any unreimbursed Advances theretofore made by it with respect to
the Mortgage Loans it purchases. In addition, the Master Servicer shall
provide to the Trustee the certification required by Section 3.15 and the
Trustee and any Custodian shall, promptly following payment of the purchase
price, release to the Master Servicer the Mortgage Files pertaining to the
Mortgage Loans being purchased.
(b) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to
Certificateholders and the obligation of the Depositor to send certain notices
as hereinafter set forth) shall terminate upon the last action required to be
taken by the Trustee on the Final Distribution Date pursuant to this Article IX
following the earlier of:
(i) the later of the final payment or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, or
(ii) the purchase by the Master Servicer of all Mortgage
Loans and all property acquired in respect of any Mortgage Loan
remaining in the Trust Fund pursuant to Section 9.01(c), provided,
however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof.
(c) Upon final distribution as a result of the exercise by the
Master Servicer of its right to purchase the assets of either REMIC I or REMIC
II, the Master Servicer shall give the Trustee not less than 60 days' prior
notice of the Distribution Date on which the Master Servicer anticipates that
the final distribution will be made to the Group I or Group II
Certificateholders as applicable. Notice of any termination, specifying the
anticipated Final Distribution Date (which shall be a date that would otherwise
be a Distribution Date) upon which the Certificateholders may surrender their
Certificates to the Trustee (if so required by the terms hereof) for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of such final
distribution specifying:
(i) the anticipated Final Distribution Date upon
which final payment of the Certificates is anticipated to be made upon
presentation and surrender of Certificates at the office or agency of
the Trustee therein designated,
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(ii) the amount of any such final payment, if
known, and
(iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable and that payment will be made
only upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified.
If the Trustee is obligated to give notice as aforesaid, it shall give such
notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given, the Master Servicer
shall remit to the Trustee for deposit in the Certificate Account before the
Final Distribution Date in immediately available funds an amount equal to the
purchase price for the assets of the Trust Fund computed as above provided.
(d) Upon presentation and surrender of the Certificates by the
Certificateholders thereof, the Trustee shall distribute to the
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with the Master Servicer's election to repurchase,
or (ii) if the Master Servicer elected to so repurchase, an amount determined
as follows: (A) with respect to each Certificate, the outstanding Certificate
Principal Balance thereof, plus one month's Accrued Certificate Interest and
any previously unpaid Accrued Certificate Interest, subject to the priority set
forth in Section 4.02(a), and (B) with respect to the Residual Certificates,
any excess of the amounts available for distribution (including the repurchase
price specified in clause (ii) of subsection (a) of this Section) over the
total amount distributed under the immediately preceding clause (A).
(e) In the event that any Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date (if so required by the terms hereof), the Trustee shall on
such date cause all funds in the Certificate Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the Master Servicer (if
it exercised its right to purchase the assets of the Trust Fund), or the
Trustee (in any other case) shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within six months after the
second notice, any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by the
Master Servicer to contact the remaining Certificateholders concerning
surrender of their Certificates. The costs and expenses of maintaining the
escrow account and of contacting Certificateholders shall be paid out of the
assets which remain in the escrow account. No interest shall accrue or be
payable to any Certificateholder on any amount held in the escrow account as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 9.01.
Section 9.02. Additional Termination Requirements.
(a) REMIC I, REMIC II and REMIC III as the case may be, shall be
terminated in accordance with the following additional requirements, unless the
Trustee and the Master Servicer have received an Opinion of Counsel (which
Opinion of Counsel shall not be an expense of the Trustee) to the effect that
the failure of REMIC I, REMIC II or REMIC III, as
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the case may be, to comply with the requirements of this Section 9.02 will not
(i) result in the imposition on either REMIC of taxes on "prohibited
transactions," as described in Section 860F of the Code, or (ii) cause either
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that
any Certificate is outstanding:
(i) The REMIC Administrator shall establish a
90-day liquidation period for REMIC I, REMIC II and REMIC III, as the
case may be, and specify the first day of such period in a statement
attached to such REMIC's final Tax Return pursuant to Treasury
regulations Section 1.860F-1. The REMIC Administrator also shall
satisfy all of the requirements of a qualified liquidation for REMIC
I, REMIC II and REMIC III, as the case may be, under Section 860F of
the Code and regulations thereunder;
(ii) The REMIC Administrator shall notify the
Trustee at the commencement of such 90-day liquidation period and, at
or prior to the time of making of the final payment on the
Certificates, the Trustee shall sell or otherwise dispose of all of
the remaining assets of REMIC I, REMIC II or REMIC III, as the case
may be, in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its
right to purchase the assets of REMIC I or REMIC II, the Master
Servicer shall, during the 90-day liquidation period prior to the
Final Distribution Date, purchase all of the assets of such REMIC for
cash at the price set forth in Section 9.01 hereof; provided, however,
that in the event that a calendar quarter ends after the commencement
of the 90-day liquidation period but prior to the Final Distribution
Date, such Master Servicer shall not purchase any of the assets of
such REMIC prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby
irrevocably approves and appoints the REMIC Administrator as its attorney-
in-fact to adopt a plan of complete liquidation for the Trust Fund at the
expense of the Trust Fund in accordance with the terms and conditions of this
Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to
treat each of REMIC I, REMIC II and REMIC III as a REMIC under the Code and, if
necessary, under applicable state law. Each such election will be made on Form
1066 or other appropriate federal tax or information return (including Form
8811) or any appropriate state return for the taxable year ending on the last
day of the calendar year in which the Certificates are issued. For the
purposes of the REMIC I election in respect of the Trust Fund, the REMIC I
Regular Interests shall be designated as the "regular interests" and the Class
R-I Certificates shall be designated as the sole class of "residual interests"
in REMIC I. For the purposes of the REMIC II election
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in respect of the Trust Fund, the REMIC II Regular Interests shall be
designated as the "regular interests" and the Class R-II Certificates shall be
designated as the sole class of "residual interests" in REMIC II. For the
purposes of the REMIC III election in respect of the Trust Fund, the
Certificates (other than the Residual Certificates) shall be designated as the
"regular interests" and the Class R-III certificates shall be designated as the
sole class of "residual interests in REMIC III." The REMIC Administrator and
the Trustee shall not permit the creation of any "interests" (within the
meaning of Section 860G of the Code) in REMIC I, REMIC II or REMIC III other
than the REMIC I Regular Interests and the Class R-I Certificates, the REMIC II
Regular Interests and the Class R-II Certificates and the Certificates (other
than the Residual Certificates) and the Class R-III Certificates, respectively.
(b) The Closing Date is hereby designated as the
"start-up day" of the Trust Fund within the meaning of Section 860G(a)(9) of
the Code.
(c) The Master Servicer shall hold a Class R-I
Certificate representing a 0.01% Percentage Interest of the Class R-I
Certificates, a Class R-II Certificate representing a 0.01% Percentage Interest
of the Class R-II Certificates and a Class R-III Certificate representing a
0.01% Percentage Interest of the Class R-III Certificates and shall be
designated as "the tax matters person" with respect to REMIC I, REMIC II and
REMIC III in the manner provided under Treasury regulations section 1.860F-4(d)
and temporary Treasury regulations section 301.6231(a)(7)-1T. The Master
Servicer shall appoint the REMIC Administrator to serve as attorney-in-fact and
agent for the tax matters person, and as such the REMIC Administrator shall (i)
act on behalf of REMIC I, REMIC II and REMIC III in relation to any tax matter
or controversy involving the Trust Fund and (ii) represent the Trust Fund in
any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The legal expenses,
including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Account as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence.
(d) The REMIC Administrator shall prepare or cause to be
prepared all of the Tax Returns that it determines are required with respect to
either REMIC I, REMIC II and REMIC III created hereunder and deliver such Tax
Returns in a timely manner to the Trustee and the Trustee shall sign and file
such Tax Returns in a timely manner. The expenses of preparing such returns
shall be borne by the REMIC Administrator without any right of reimbursement
therefor. The Trustee and the Master Servicer shall promptly provide the REMIC
Administrator with such information as the REMIC Administrator may from time to
time request for the purpose of enabling the REMIC Administrator to prepare Tax
Returns.
(e) The REMIC Administrator shall provide (i) to any
Transferor of a Residual Certificate such information as is necessary for the
application of any tax relating to the transfer of a Class R-I, Class R-II or
Class R-III Certificate to any Person who is not a Permitted Transferee, (ii)
to the Trustee and the Trustee shall forward to the Certificateholders such
information or reports as are required by the Code or the REMIC Provisions
including reports
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relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of each of REMIC I, REMIC II and REMIC III.
(f) The Master Servicer and the REMIC Administrator shall
take such actions and shall cause each of REMIC I, REMIC II and REMIC III
created hereunder to take such actions as are reasonably within the Master
Servicer's or the REMIC Administrator's control and the scope of their duties
more specifically set forth herein as shall be necessary or desirable to
maintain the status thereof as REMICs under the REMIC Provisions (and the
Trustee shall assist the Master Servicer and the REMIC Administrator, to the
extent reasonably requested by the Master Servicer and the REMIC Administrator
to do so). The Master Servicer and the REMIC Administrator shall not knowingly
or intentionally take any action, cause REMIC I, REMIC II or REMIC III to take
any action or fail to take (or fail to cause to be taken) any action reasonably
within its control and the scope of duties more specifically set forth herein,
that, under the REMIC Provisions, if taken or not taken, as the case may be,
could (i) endanger the status of REMIC I, REMIC II or REMIC III as a REMIC or
(ii) result in the imposition of a tax upon REMIC I, REMIC II or REMIC III
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Master Servicer or the REMIC Administrator, as applicable,
have received an Opinion of Counsel (at the expense of the party seeking to
take such action or, if such party fails to pay such expense, and the Master
Servicers or the REMIC Administrator, as applicable, determine that taking such
action is in the best interest of the Trust Fund and the Certificateholders, at
the expense of the Trust Fund, but in no event at the expense of the Master
Servicer, the REMIC Administrator or the Trustee) to the effect that the
contemplated action will not, with respect to each of REMIC I, REMIC II or
REMIC III created hereunder, endanger such status. The Trustee shall not take
or fail to take any action (whether or not authorized hereunder) as to which
the Master Servicer or the REMIC Administrator, as applicable, have advised it
in writing that they have received an Opinion of Counsel to the effect that an
Adverse REMIC Event could occur with respect to such action. In addition,
prior to taking any action with respect to REMIC I, REMIC II or REMIC III or
their assets, or causing REMIC I, REMIC II or REMIC III to take any action,
which is not expressly permitted under the terms of this Agreement, the Trustee
will consult with the Master Servicer or the REMIC Administrator, as
applicable, or their designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to REMIC I, REMIC II
or REMIC III and the Trustee shall not take any such action or cause REMIC I,
REMIC II or REMIC III to take any such action as to which the Master Servicer
or the REMIC Administrator, as applicable, have advised it in writing that an
Adverse REMIC Event could occur. The Master Servicer or the REMIC
Administrator, as applicable, may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not expressly permitted by this Agreement, but in no event at the
expense of the Master Servicer or the REMIC Administrator. At all times as may
be required by the Code, the Master Servicer will to the extent within their
control and the scope of their duties more specifically set forth herein,
maintain substantially all of the assets of REMIC I, REMIC II or REMIC III as
"qualified
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mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I, REMIC II or REMIC III created hereunder as defined in
Section 860F(a)(2) of the Code, on "net income from foreclosure property" of
REMIC I, REMIC II or REMIC III as defined in Section 860G(c) of the Code, on
any contributions to REMIC I, REMIC II and REMIC III after the Start-up Day
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed
by the Code or any applicable provisions of state or local tax laws, such tax
shall be charged (i) to the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
this Agreement, (ii) to the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Article X or (iii)
to the REMIC Administrator if such tax results from a breach by the REMIC
Administrator of its obligations under this Article X, or (iv) otherwise
against amounts on deposit in the Custodial Account as provided by Section 3.10
and on the Distribution Date(s) following such reimbursement the aggregate of
such taxes shall be allocated in reduction of the Accrued Certificate Interest
on each Class entitled thereto in the same manner as if such taxes constituted
a Net Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for
federal income tax purposes, maintain books and records with respect to REMIC
I, REMIC II and REMIC III on a calendar year and on an accrual basis or as
otherwise may be required by the REMIC Provisions.
(i) Following the Start-up Day, neither the Master
Servicer nor the Trustee shall accept any contributions of assets to REMIC I,
REMIC II or REMIC III unless the Master Servicer and the Trustee shall have
received an Opinion of Counsel (at the expense of the party seeking to make
such contribution) to the effect that the inclusion of such assets in REMIC I,
REMIC II or REMIC III will not cause either REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject REMIC I, REMIC II or REMIC III to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.
(j) Neither the Master Servicer nor the Trustee shall
enter into any arrangement by which REMIC I, REMIC II or REMIC III will receive
a fee or other compensation for services nor permit any such REMIC to receive
any income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.
(k) Solely for the purposes of Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" by which Certificate Principal Balance of each Regular Certificate and
the principal balance of each REMIC I Regular Interest Regular Interest would
be reduced to zero is June 26, 2028, which is the Distribution Date immediately
following the latest scheduled maturity of any Mortgage Loan.
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(l) Within 30 days after the Closing Date, the REMIC
Administrator shall prepare and file with the Internal Revenue Service Form
8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt Obligations" for REMIC I, REMIC II and REMIC
III.
(m) Neither the Trustee nor the Master Servicer shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the default, imminent default or foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, REMIC II or REMIC III, (iii) the termination of REMIC I, REMIC II or REMIC
III pursuant to Article IX of this Agreement or (iv) a purchase of Mortgage
Loans pursuant to Article II or III of this Agreement) nor acquire any assets
for REMIC I, REMIC II or REMIC III, nor sell or dispose of any investments in
the Custodial Account or the Certificate Account for gain nor accept any
contributions to REMIC I, REMIC II or REMIC III after the Closing Date unless
it has received an Opinion of Counsel that such sale, disposition, substitution
or acquisition will not (a) affect adversely the status of REMIC I, REMIC II or
REMIC III as REMICs or (b) cause REMIC I, REMIC II or REMIC III to be subject
to a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
Section 10.02. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Master Servicer for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on
or incurred by the Trust Fund, the Depositor or the Master Servicer, as a
result of a breach of the Trustee's covenants set forth in Article VIII or this
Article X.
(b) The REMIC Administrator agrees to indemnify the Trust
Fund, the Depositor and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the REMIC
Administrator's covenants set forth in this Article X with respect to
compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
REMIC Administrator that contain errors or omissions; provided, however, that
such liability will not be imposed to the extent such breach is a result of an
error or omission in information provided to the REMIC Administrator by the
Master Servicer in which case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust
Fund, the Depositor, the REMIC Administrator and the Trustee for any taxes and
costs (including, without limitation, any reasonable attorneys' fees) imposed
on or incurred by the Trust Fund, the Depositor or the Trustee, as a result of
a breach of the Master Servicer's covenants set forth in this Article X or in
Article III with respect to compliance with the REMIC Provisions, including,
without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by the Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee, without the consent of any of
the Certificateholders:
(i) to cure any ambiguity, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then- current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(ii) to correct or supplement any provisions
herein or therein, which may be inconsistent with any other provisions
herein or therein or to correct any error, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then-current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(iii) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or desirable to
maintain the qualification of the Trust Fund as a REMIC at all times
that any Certificate is outstanding or to avoid or minimize the risk
of the imposition of any tax on the Trust Fund pursuant to the Code
that would be a claim against the Trust Fund, provided that the
Trustee has received an Opinion of Counsel to the effect that (A) such
action is necessary or desirable to maintain such qualification or to
avoid or minimize the risk of the imposition of any such tax and (B)
such action will not adversely affect in any material respect the
interests of any Certificateholder;
(iv) to change the timing and/or nature of
deposits into the Custodial Account or the Certificate Account or to
change the name in which the Custodial Account are maintained,
provided that (A) the Certificate Account Deposit Date shall in no
event be later than the related Distribution Date, (B) such change
shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder and (C)
such change shall not result in a reduction of the rating assigned to
any Class of Certificates below the lower of the then-current rating
or the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect;
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(v) to modify, eliminate or add to the provisions
of Section 5.02(f) or any other provision hereof restricting transfer
of the Residual Certificates by virtue of their being the "residual
interests" in the Trust Fund, provided that (A) such change shall not
result in reduction of the rating assigned to any such Class of
Certificates below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by
a letter from each Rating Agency to such effect, and (B) such change
shall not, as evidenced by an Opinion of Counsel (at the expense of
the party seeking so to modify, eliminate or add such provisions),
cause either the Trust Fund or any of the Certificateholders (other
than the transferor) to be subject to a federal tax caused by a
transfer to a Person that is not a Permitted Transferee; or
(vi) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
materially inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any or of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay
the timing of, payments which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate;
(ii) reduce the aforesaid percentage of
Certificates of any Class the Holders of which are required to consent
to any such amendment, in any such case without the consent of the
Holders of all Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment, except if the Trustee requests such amendment, in which case it
shall be at the expense of the Trust Fund) to the effect that such amendment or
the exercise of any power granted to the Master Servicer, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of
a federal tax on the Trust Fund or cause REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificate is outstanding. The
placement of an "original issue discount" legend on, or any change required to
correct any such legend previously placed on, a Certificate shall not be deemed
an amendment of the Agreement.
(d) Promptly after the execution of any such amendments, the
Trustee shall furnish written notification of the substance of such amendment
to each Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the
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particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Depositor and at its expense on direction by the Trustee
(pursuant to the request of Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates of any Class evidencing in the aggregate not less than
25% of the related Percentage Interests of such Class, shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of
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such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of California and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of
the Depositor, 345 Montgomery Street, Lower Level #2, Unit #8152, San
Francisco, California 94104, Attention: David Grout, or such other address as
may hereafter be furnished to the Master Servicer and the Trustee in writing by
the Depositor, (b) in the case of the Master Servicer, 2810 North Parham Road,
Richmond, Virginia 23294, Attention: Sean Clevenger or such other address as
may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing, (c) in the case of the Trustee, 3 Park Plaza, 16th Floor,
Irvine, California 92614, Attention: BA Mortgage Securities, Inc., Series
1998-2 or such other address as may hereafter be furnished to the Depositor and
the Master Servicer in writing by the Trustee, (d) in the case of S&P, Standard
& Poor's, 26 Broad Street, 15th Floor, New York, New York 10004, Attention:
Frank Raiter, or such other address as may hereafter be furnished to the
Depositor, the Trustee and the Master Servicer in writing by S&P, (e) in the
case of Fitch, One State Street, 32nd Floor, New York, New York 10004,
Attention: BA Mortgage Securities, Inc., Series 1998-2, or such other address
as may be hereafter furnished to the Depositor, the Trustee and the Master
Servicer by Fitch and (f) in the case of the Underwriter, DLJ Mortgage Capital,
Inc., 277 Park Avenue, 9th Floor, New York, New York 10172, Attention: Paul
Najarian, or such other address as may hereafter be furnished to the Depositor,
the Trustee and the Master Servicer in writing by the Underwriter. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
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Section 11.06. Notices to Rating Agency.
The Depositor, the Master Servicer or the Trustee, as applicable,
shall notify each Rating Agency and any Subservicers at such time as it is
otherwise required pursuant to this Agreement to give notice of the occurrence
of, any of the events described in clause (a), (b), (c), (d), (g), (h), (i) or
(j) below or provide a copy to each Rating Agency at such time as otherwise
required to be delivered pursuant to this Agreement of any of the statements
described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master
Servicer or Trustee or a change in the majority ownership of the
Trustee,
(d) the filing of any claim under the Master Servicer's
blanket fidelity bond and the errors and omissions insurance policy
required by Section 3.12 or the cancellation or modification of
coverage under any such instrument,
(e) the statement required to be delivered to the Holders
of each Class of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to
Section 3.18,
(g) a change in the location of the Custodial Account or
the Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to
the Holders of any Class of Certificates resulting from the failure by
the Master Servicer to make an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage
Loan,
provided, however, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the Master Servicer shall provide
prompt written notice to each Rating Agency and any Subservicers of any such
event known to the Master Servicer.
Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms
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of this Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
BA MORTGAGE SECURITIES, INC. as Depositor
By:______________________________________
Name:
Title:
BANK OF AMERICA, FSB, as Master Servicer
By:______________________________________
Name:
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:______________________________________
Name:
Title:
<PAGE> 138
STATE OF ___________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
______________ of BA Mortgage Securities, Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
<PAGE> 139
STATE OF ___________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary
public in and for said State, personally appeared _______________, known to me
to be a __________ of Bank of America, FSB, the federal savings bank that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
<PAGE> 140
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of __________, 19__ before me, a notary public
in and for said State personally appeared ________________, known to me to be a
______________ of Bankers Trust Company of California, N.A., the national
banking association that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, and
acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
<PAGE> 141
EXHIBIT A
FORM OF CLASS A, CLASS X AND CLASS PO CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), [AND ASSUMING A
CONSTANT PASS-THROUGH RATE EQUAL TO THE INITIAL PASS-THROUGH RATE,] THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_____ OF OID PER $1,000 OF
[INITIAL CERTIFICATE PRINCIPAL BALANCE][NOTIONAL AMOUNT], THE YIELD TO MATURITY
IS ___% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO
MORE THAN $_______ PER $1,000 OF INITIAL [CERTIFICATE PRINCIPAL
BALANCE][NOTIONAL AMOUNT], COMPUTED USING THE APPROXIMATE METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE OR AS TO THE CONSTANCY
OF THE PASS-THROUGH RATE.]
<PAGE> 142
<TABLE>
<S> <C>
Certificate No. ____ [___%] [Adjustable] Pass-Through Rate
Class [ ] Senior [based on a Notional Amount]
Date of Pooling and Servicing
Agreement and Cut-off Date:
May 1, 1998 Aggregate Initial [Certificate Principal Balance]
[Notional Amount] of the Class [ ] Certificates:
First Distribution Date:
June 25, 1998
Master Servicer: Initial [Certificate Principal Balance
Bank of America, FSB [Notional Amount] of this Certificate: $___________
Last Scheduled
Distribution Date:
June 2[5][6], 20__ CUSIP: ____________
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-2
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Certificate Principal Balance of this Certificate by the aggregate Certificate
Principal Balance of all Class [ ] Certificates, both as specified above) in
certain distributions with respect to a Trust Fund consisting primarily of an
interest in a pool of conventional one- to four-family fixed interest rate
first mortgage loans (the
A-2
<PAGE> 143
"Mortgage Loans"), formed and sold by BA Mortgage Securities, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement referred to below). The Trust Fund was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), from the Available Distribution Amount in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Class [ ] Certificates on such
Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate [Certificate
Principal Balance][Notional Amount] of at least five million dollars for the
account of the Person entitled thereto if such Person shall have so notified
the Trustee or such Paying Agent at least five Business Days prior to the
related Record Date, or by check mailed to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial [Certificate Principal Balance][Notional Amount] of this
Certificate is set forth above. The [Certificate Principal Balance][Notional
Amount] hereof will be reduced to the extent of distributions allocable to
principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicer or the Subservicer, to the extent
provided in the Agreement, from related recoveries on such Mortgage Loan or
from other cash that would have been distributable to Certificateholders.
A-3
<PAGE> 144
As provided in the Agreement, withdrawals from the Custodial Account
created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicer, the Trustee nor any such agent shall be affected by notice
to the contrary.
A-4
<PAGE> 145
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Master Servicer
to purchase at a price determined as provided in the Agreement all remaining
Mortgage Loans in REMIC I or REMIC II and all property acquired in respect of
any such Mortgage Loans; provided, that such option may only be exercised with
respect to either REMIC I or REMIC II if the aggregate Stated Principal Balance
of the Mortgage Loans owned by such REMIC as of the Distribution Date upon
which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Principal Balance of the Mortgage Loans owned by
such REMIC.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-5
<PAGE> 146
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [ ] Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
A-6
<PAGE> 147
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________ (Please
print or typewrite name and address including postal zip code of assignee) a
Percentage Interest evidenced by the within Mortgage Pass-Through Certificate
and hereby authorizes the transfer of registration of such interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________
________________________________________________________________________________
Dated:
______________________________________________
Signature by or on behalf of assignor
______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________ for
the account of _____________________________________________ account number
________________, or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to _______________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
A-7
<PAGE> 148
EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICER, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED
ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
<PAGE> 149
Certificate No. __ Variable Pass-Through Rate
Date of Pooling and Servicing Aggregate Certificate
Agreement and Cut-off Date: Principal Balance
May 1, 1998 of the Class [I-M][II-M]
Certificates as of
the Cut-off Date:
First Distribution Date: $_______________
June 25, 1998
Initial Certificate Principal
Balance of this Certificate:
Master Servicer: $_______________
Bank of America, FSB
Last Scheduled Distribution Date: CUSIP ______________
June 2[5][6], 20__
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-2
evidencing a percentage interest in any distributions allocable to the
Class [I-M] [II-M] Certificates with respect to the Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate first mortgage loans formed and sold by BA MORTGAGE
SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ______________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the Certificate Principal Balance of this Certificate by the aggregate
Certificate Principal Balance of all Class [I-M] [II-M] Certificates, both as
specified above) in certain distributions with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first
B-2
<PAGE> 150
mortgage loans (the "Mortgage Loans"), formed and sold by BA Mortgage
Securities, Inc. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicer and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class M Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
No transfer of this Class [I-M] [II-M] Certificate will be made unless
the Trustee has received either (i) an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the Master
Servicer with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of a Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form
prescribed by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly,
B-3
<PAGE> 151
on behalf of or purchasing any Certificate with "plan assets" of any Plan, or
stating that the transferee is an insurance company, the source of funds to be
used by it to purchase the Certificate is an "insurance company general
account" (within the meaning of Department of Labor Prohibited Transaction
Class Exemption ("PTCE") 95-60), and the purchase is being made in reliance
upon the availability of the exemptive relief afforded under Sections I and III
of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicer or the Subservicer, to the extent
provided in the Agreement, from related recoveries on such Mortgage Loan or
from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicer of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
B-4
<PAGE> 152
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicer, the Trustee nor any such agent shall be affected by notice
to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans in REMIC I or REMIC II and all property acquired in
respect of any such Mortgage Loans; provided, that such option may only be
exercised with respect to either REMIC I or REMIC II if the aggregate Stated
Principal Balance of the Mortgage Loans owned by such REMIC as of the
Distribution Date upon which the proceeds of any such purchase are distributed
is less than ten percent of the Cut-off Date Principal Balance of the Mortgage
Loans owned by such REMIC.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
B-5
<PAGE> 153
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [I-M] [II-M] Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
B-6
<PAGE> 154
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________
________________________________________________________________________________
Dated:
_________________________________________
Signature by or on behalf of assignor
_________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________ for
the account of _____________________________________________ account number
________________, or, if mailed by check, to________________________ Applicable
statements should be mailed to _______________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
B-7
<PAGE> 155
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE [GROUP I] [GROUP
II] SENIOR CERTIFICATES AND CLASS [I-M] [II-M] CERTIFICATES AS DESCRIBED IN THE
AGREEMENT (AS DEFINED HEREIN).
[FOR JUNIOR SUBORDINATE CERTIFICATES: THIS CERTIFICATE HAS NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT.]
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICER, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED
ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
<PAGE> 156
Certificate No. ____ [___%] Pass-Through Rate
Class [ ] Subordinate Aggregate Certificate
Principal Balance
of the Class [ ]
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $__________
May 1, 1998
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $__________
June 25, 1998
Master Servicer: CUSIP: __________
Bank of America, FSB
Last Scheduled Distribution Date:
June 2[5][6], 20__
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-2
evidencing a percentage interest in any distributions allocable to the
Class [ ] Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the Certificate Principal Balance of this Certificate by the aggregate
Certificate Principal Balance of all Class [ ]
<PAGE> 157
Certificates, both as specified above) in certain distributions with respect to
a Trust Fund consisting primarily of a pool of conventional one- to four-family
fixed interest rate first mortgage loans (the "Mortgage Loans"), formed and
sold by BA Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement referred to
below). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Depositor, the
Master Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class [ ] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
[For Junior Subordinate Certificates: No transfer of this Certificate
will be made unless such transfer is exempt from the registration requirements
of the Securities Act of 1933, as amended, or is made in accordance with said
Act. In the event that such a transfer is to be made, (A)(i) the Trustee shall
require an opinion of counsel acceptable to and in form and substance
satisfactory to the Trustee and the Depositor that such transfer is exempt
(describing the applicable exemption and the basis therefor) from or is being
made pursuant to the registration requirements of the Securities Act of 1933,
as amended, or (ii) the transferee and the transferor shall execute investment
letters in the forms prescribed by the Agreement, or (B) the prospective
transferee of the Certificate shall provide to the Trustee, the Depositor and
the
<PAGE> 158
Master Servicer with an investment letter in the form prescribed by the
Agreement, as required under Section 5.02(d) of the Agreement. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Master Servicer and the Certificate
Registrar acting on behalf of the Trustee against any liability that may result
if the transfer is not so exempt or is not made in accordance with the
Securities Act of 1933, as amended, or any similar state laws.]
No transfer of this Certificate will be made unless the Trustee has
received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of a Class [ ] Certificate will not constitute
or result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form
prescribed by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an insurance company,
the source of funds to be used by it to purchase the Certificate is an
"insurance company general account" (within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60), and the purchase is
being made in reliance upon the availability of the exemptive relief afforded
under Sections I and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicer or the Subservicer, to the extent
provided in the Agreement, from related recoveries on such Mortgage Loan or
from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicer of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each
<PAGE> 159
Class of Certificates affected thereby. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon the Certificate. The Agreement also permits the amendment
thereof in certain circumstances without the consent of the Holders of any of
the Certificates and, in certain additional circumstances, without the consent
of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicer, the Trustee nor any such agent shall be affected by notice
to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Master Servicer
to purchase at a price determined as provided in the Agreement all remaining
<PAGE> 160
Mortgage Loans in REMIC I or REMIC II and all property acquired in respect of
such Mortgage Loans; provided, that such option may only be exercised with
respect to either REMIC I or REMIC II if the aggregate Stated Principal Balance
of the Mortgage Loans owned by such REMIC as of the Distribution Date upon
which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Principal Balance of the Mortgage Loans owned by
such REMIC.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 161
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [ ] Certificates referred to in the
within-mentioned Agreement.
___________________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
<PAGE> 162
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of assignor
__________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________ for
the account of _____________________________________________ account
number ________________, or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to ________________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
<PAGE> 163
EXHIBIT D
FORM OF RESIDUAL CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE
DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY
STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (D)
ANY "ELECTING LARGE PARTNERSHIP" DESCRIBED IN SECTION 775 OF THE CODE (ANY SUCH
PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C) OR (D) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (E) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
<PAGE> 164
ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR
ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
D-2
<PAGE> 165
<TABLE>
<S> <C>
Certificate No. ___ ____% Pass-Through Rate
Class [R-I] [R-II] [R-III] Senior Aggregate Initial Certificate
Principal Balance of the
Class [R-I] [R-II] [R-III] Certificates
as of the Cut-off Date:
$________________
Date of Pooling and Servicing Certificates: $50.00
Agreement and Cut-off Date:
May 1, 1998
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
June 25, 1998
Master Servicer:
Bank of America, FSB Percentage Interest:
_______%
CUSIP ____________
Last Scheduled Distribution Date:
June 2[5][6], 20__
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-2
evidencing a percentage interest in any distributions allocable to the
Class [R-I][R-II][R-III] Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate first mortgage loans formed and sold by BA MORTGAGE
SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (as specified above)
in certain distributions with respect to the Trust Fund consisting primarily of
a pool of conventional one- to four-family fixed interest rate first mortgage
loans (the "Mortgage Loans"), formed and sold by BA Mortgage Securities, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the
D-3
<PAGE> 166
Agreement referred to below). The Trust Fund was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), from the Available Distribution Amount in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Class [R-I][R-II][R-III] Certificates
on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of distributions allocable to principal and any Realized Losses allocable
hereto. Notwithstanding the reduction of the Certificate Principal Balance
hereof to zero, this Certificate will remain outstanding under the Agreement
and the Holder hereof may have additional obligations with respect to this
Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate
must be a 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,
(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, and (iv) if any person
other than a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions, then the Master Servicer will
have the right, in its sole
D-4
<PAGE> 167
discretion and without notice to the Holder of this Certificate, to sell this
Certificate to a purchaser selected by the Master Servicer, which purchaser may
be the Master Servicer, or any affiliate of the Master Servicer, on such terms
and conditions as the Master Servicer may choose.
No transfer of this Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended, or is made in accordance with said Act. In the event that such a
transfer is to be made, (A)(i) the Trustee shall require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, or (ii) the transferee
and the transferor shall execute investment letters in the forms prescribed by
the Agreement, or (B) the prospective transferee of the Certificate shall
provide to the Trustee, the Depositor and the Master Servicer with an
investment letter in the form prescribed by the Agreement, as required under
Section 5.02(d) of the Agreement. The Holder hereof desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Master Servicer and the Certificate Registrar acting on behalf of the
Trustee against any liability that may result if the transfer is not so exempt
or is not made in accordance with the Securities Act of 1933, as amended, or
any similar state laws.
No transfer of this Certificate will be made unless the Trustee has
received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of a Class [R-I][R-II][R-III] Certificate will not
constitute or result in a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code or (ii) a representation letter, in the
form as prescribed by the Agreement, stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicer or the Subservicer, to the extent
provided in the Agreement, from related recoveries on such Mortgage Loan or
from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes
D-5
<PAGE> 168
other than distributions to Certificateholders, such purposes including without
limitation reimbursement to the Depositor, the Subservicers and the Master
Servicer of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicer, the Trustee nor any such agent shall be affected by notice
to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
D-6
<PAGE> 169
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, the Master Servicer
to purchase at a price determined as provided in the Agreement all remaining
Mortgage Loans in REMIC I or REMIC II and all property acquired in respect of
any such Mortgage Loans; provided, that such option may only be exercised with
respect to either REMIC I or REMIC II if the aggregate Stated Principal Balance
of the Mortgage Loans owned by such REMIC as of the Distribution Date upon
which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Principal Balance of the Mortgage Loans owned by
such REMIC.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purpose
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-7
<PAGE> 170
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I][R-II][R-III] Certificates referred to in
the within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
D-8
<PAGE> 171
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
__________ (Please print or typewrite name and address including postal zip
code of assignee) a Percentage Interest evidenced by the within Mortgage
Pass-Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________
________________________________________________________________________________
Dated:
___________________________________________
Signature by or on behalf of assignor
__________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________ for
the account of _____________________________________________ account number
________________, or, if mailed by check, to________________________ Applicable
statements should be mailed to ________________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
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EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
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EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FSB
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EXHIBIT F
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
________________________________________________________________________________
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FSB]
MORTGAGE LOAN PURCHASE AGREEMENT
DATED MAY ___, 1998
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
________________________________________________________________________________
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MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated May ___, 1998,
between BA Mortgage Securities, Inc., a Delaware corporation (the "Depositor"),
and [Bank of America National Trust and Savings Association] [Bank of America,
FSB] a [national banking association] [federal savings bank] ([in such
capacity,] the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell certain Mortgage Loans (as defined below) to
the Depositor as provided herein. The Depositor intends to deposit such
mortgage loans, together with certain other mortgage loans, into a trust fund
(the "Trust Fund") evidenced by mortgage pass- through certificates (the
"Certificates"). The Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling Agreement") among the Depositor, Bank of
America, FSB, as master servicer ([in such capacity,] the "Master Servicer"),
and Bankers Trust Company of California, N.A., as Trustee (the "Trustee") dated
as of May 1, 1998 (the "Cut-off Date"). The Certificates are described more
fully in the related Prospectus Supplement (the "Prospectus Supplement") dated
May ___, 1998. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned in the Pooling Agreement.
In consideration of the mutual agreements herein contained, the
Depositor and the Seller hereby agree as follows:
SECTION 1. Agreement to Purchase. The Seller agrees to sell, and the
Depositor agrees to purchase, the mortgage loans (the "Mortgage Loans"),
identified on the schedules annexed hereto as Exhibit 1 (the "15 Year Loan
Schedule") and Exhibit 2 (the "30 Year Loan Schedule," and together with the 15
Year Loan Schedule, the "Mortgage Loan Schedule"). The Mortgage Loans will be
conventional fixed rate one- to four-family residential mortgage loans with
original terms to maturity of not more than 15 years from the date of
origination, in the case of the Mortgage Loans identified on the 15 Year Loan
Schedule (the "15 Year Loans"), and 30 years from the date of origination, in
the case of the Mortgage Loans identified on the 30 Year Loan Schedule (the "30
Year Loans"). The 15 Year Loans and the 30 Year Loans will have an aggregate
outstanding principal balance as of the close of business on the Cut-off Date,
after giving effect to any payments due on or before such date whether or not
received, of approximately $__________ (plus or minus 2.5%) and $__________
(plus or minus 2.5%), respectively, or such other amounts acceptable to the
Depositor as evidenced by the actual aggregate outstanding principal balance of
the 15 Year Loans and 30 Year Loans accepted by the Depositor for deposit into
the Trust Fund. The sale of the Mortgage Loans shall take place on or prior to
May __, 1998 or such other date as shall be mutually acceptable to the parties
hereto (the "Closing Date"), subject to the deposit of the Mortgage Loans into
the Trust Fund, the issuance of the Certificates and the sale of the
Certificates by the Depositor pursuant to the Underwriting Agreement (the
"Underwriting Agreement") and Purchase Agreement (the "Purchase Agreement"),
each to be entered into among the Depositor, Bank of America, FSB and
Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter"). The
purchase price for the 15 Year Loans (the "15 Year Loan Purchase Price") shall
be equal to _____% of the aggregate outstanding principal balances thereof as
of the close of business on the Cut-off
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Date, together with interest accrued on such principal balance at a per annum
rate equal to ____% from the Cut-off Date to but not including the Closing
Date, and the purchase price for the 30 Year Loans (the "30 Year Loan Purchase
Price") shall be equal to _____% of the aggregate outstanding principal
balances thereof as of the close of business on the Cut-off Date, together with
interest accrued on such principal balance at a per annum rate equal to ____%
from the Cut-off Date to but not including the Closing Date. The "Purchase
Price" for the Mortgage Loans shall be equal to the sum of the 15 Year Loan
Purchase Price and the 30 Year Loan Purchase Price. The Purchase Price shall
be paid to the Seller by wire transfer in immediately available funds on the
Closing Date by the Depositor, or as otherwise agreed by the Depositor and the
Seller.
Pursuant to the terms of the Pooling Agreement, the Depositor shall
assign to the Trustee all of its right, title and interest in and to the
Mortgage Loans, and other rights and obligations under this Agreement (except
with respect to its rights to either indemnification or notice) and the Trustee
shall succeed to such right, title and interest and rights and obligations
hereunder of the Depositor.
SECTION 2. Conveyance of Mortgage Loans. The Seller hereby agrees to
transfer, assign, set over and otherwise convey to the Depositor, without
recourse but subject to the terms of this Agreement, on the Closing Date and as
of the Cut-off Date, all the right, title and interest of the Seller in and to
the Mortgage Loans identified on the Mortgage Loan Schedule as of the Closing
Date. The Mortgage Loan Schedule shall conform to the requirements of the
Depositor as set forth in this Agreement and the Pooling Agreement. The
Mortgage Loan Schedule, as amended on the Closing Date if necessary to reflect
the actual Mortgage Loans accepted by the Depositor on the Closing Date in
accordance with Section 3 hereof, shall be used as part of the Mortgage Loan
Schedule under the Pooling Agreement. In connection with such transfer and
assignment, the Seller shall deliver, or cause to be delivered, to the
Custodian, the documents or instruments specified in Section 2.01 of the
Pooling Agreement with respect to each Mortgage Loan (each such set of
documents, a "Mortgage File"). At least two days prior to the Closing Date,
each Mortgage File shall have been delivered by the Seller to the Custodian.
All Mortgage Files so delivered will be held by the Custodian, as bailee of the
Seller, in escrow at all times prior to the Closing Date.
In the event that any assignment is lost or returned unrecorded because
of a defect therein, the Seller shall prepare a substitute assignment or cure
such defect and record and deliver such assignment in accordance with this
Section 2. The Seller will also pay the fees of the Custodian incurred in
connection with the removal and replacement of each assignment of Mortgage
delivered for recording, as well as the fees of the Custodian incurred in
connection with the addition of any title insurance policy or recorded Mortgage
to the related Mortgage File.
Upon sale of the Mortgage Loans by the Seller to the Depositor
hereunder, the ownership of each Mortgage Note, the Mortgage and the contents
of the related Mortgage File is vested in the Depositor and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or that come into the possession of the Seller shall immediately vest in the
Depositor. The Seller's records shall accurately reflect the sale of each
Mortgage Loan to the Depositor. In the event that any original document held
by the Seller is required pursuant
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to the terms of this Section to be a part of a Mortgage File, such document
shall be delivered promptly to the Depositor or its designee.
SECTION 3. Examination of Mortgage Files and Due Diligence Review. On
or before the Closing Date, the Seller shall either, as specified by the
Depositor, deliver to the Depositor, or its designee, in escrow, or make
available, or cause to be made available, for examination during normal
business hours, all credit files, underwriting documentation and Mortgage Files
relating to the Mortgage Loans. The fact that the Depositor has conducted or
has failed to conduct any partial or complete examination of the credit files,
underwriting documentation or Mortgage Files relating to the Mortgage Loans
shall not affect the Depositor's, the Trustee's or any holder of the
Certificates' right to demand repurchase of or substitution for the Mortgage
Loans or other relief as provided under this Agreement or to be provided under
the Pooling Agreement.
In addition to the foregoing examination of the Mortgage Files and
related documents, the Seller agrees to allow the Depositor, or its designee,
any representative of a statistical Rating Agency, or the Underwriter, to
examine and audit all books, records and files pertaining to the Mortgage
Loans, the Seller's underwriting procedures and the Seller's ability to perform
or observe all of the terms, covenants and conditions of this Agreement. Such
examinations and audits shall take place at one or more offices of the Seller
during normal business hours and in the course of such examinations and audits,
the Seller will make available to the Depositor, or its designee, adequate
facilities, as well as the assistance of a sufficient number of knowledgeable
and responsible individuals who are familiar with the Mortgage Loans and the
terms of this Agreement and the Seller shall cooperate fully with any such
review in all respects. The Seller agrees to provide the Depositor, its
designee and any representative of a Rating Agency or the Underwriter with all
material information regarding the Seller (including its financial condition),
and to provide access to knowledgeable financial or accounting officers for the
purpose of answering questions with respect to the Seller's financial
condition, financial statements or other developments affecting the Seller.
The Depositor shall, upon reasonable prior notice, also have the right to
perform such examinations and audits or to obtain such material information
regarding the Seller's financial condition and access to the officers described
above following the Closing Date.
The Seller understands and agrees that any information, including but
not limited to financial information, the Seller's mortgage loan underwriting
standards, information regarding the status of the Seller with respect to any
regulatory body or entity and information as to the loss, foreclosure and
delinquency experience of loans originated or acquired by the Seller, obtained
in the examination and review described in the foregoing paragraph may be
disclosed in the Prospectus Supplement. In addition, the Seller will provide
at its own expense a letter from an independent nationally recognized
accounting firm verifying any financial information referred to in the previous
sentence as is reasonably required to be disclosed in such Prospectus
Supplement. The Depositor assumes no responsibility with respect to
information referred to in this paragraph.
SECTION 4. Representations, Warranties and Covenants of the Seller.
In order to induce the Depositor to enter into this Agreement, the Seller
hereby represents, warrants and
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covenants to the Depositor, and any assignee of the Depositor, that as of the
date hereof and as of the Closing Date (or such other date specifically
provided herein):
(i) The Seller is duly incorporated and validly existing
as a [national banking association] [federal savings bank] in good standing
under the laws of the United States with full power and authority to carry on
its business as presently conducted by it. The Seller had the full power and
authority and legal right to originate or acquire the Mortgage Loans. The
Seller has the full power and authority and legal right to own the Mortgage
Loans and to transfer and convey the Mortgage Loans to the Depositor and has
the full power and authority and legal right to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action has been
or will have been taken, and (assuming the due authorization, execution and
delivery hereof by the Depositor) constitutes or will constitute the valid,
legal and binding agreements of the Seller, enforceable in accordance with its
terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity or the rights of creditors of banking institutions the
accounts of which are insured by the Federal Deposit Insurance Corporation or
any other instrumentality of the federal government (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (iii) public
policy considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from liabilities under
applicable securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Seller with this Agreement or the
consummation by the Seller of any other transaction contemplated hereby or (b)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance of this Agreement by the
Seller, conflicts or will conflict with, or results or will result in a breach
of, or constitutes or will constitute a default under (a) any term or provision
of the documents governing the Seller's organization, or (b) any term or
provision of any material agreement, contract, instrument or indenture, to
which the Seller is a party or is bound, or (c) any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Seller, or results or will result in the
creation or imposition of any lien, charge or encumbrance which, in any of the
foregoing cases, would have a material adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loans.
(v) There are no actions or proceedings against, or
investigations of, the Seller pending or, to the Seller's knowledge, threatened
against the Seller before any court,
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administrative agency or other tribunal, which would reasonably be expected to
adversely affect the transfer of the Mortgage Loans, the issuance of the
Certificates, the execution, delivery or enforceability of this Agreement or
have a material adverse effect on the financial condition of the Seller.
(vi) The information set forth on the Mortgage Loan
Schedule with respect to each Mortgage Loan was true and correct as of the
Cut-off Date.
(vii) The Seller represents and warrants that each of the
representations and warranties contained in Exhibit 3 hereto is true and
correct and will be true and correct as of the Closing Date.
(viii) The Seller covenants to (a) provide in a timely
manner all of the information regarding itself and the Mortgage Loans as the
Depositor may reasonably request in connection with the preparation of the
Prospectus Supplement, (b) fully cooperate with, and supply all information
requested by the Rating Agencies to the extent practicable, and (c) dedicate
adequate personnel and resources as may be required to comply with all of the
terms and conditions of this Agreement.
(ix) The Seller may advertise its availability for
handling refinancings of mortgage loans in its servicing portfolio, as long as
it does not specifically target Mortgagors whose Mortgage Loans are owned by
the Depositor or its assigns. The Depositor and its assigns will not object to
the Seller promoting the terms they have available for refinancings by sending
letters or promotional material to the mortgagors for all of the mortgage loans
in its servicing portfolio (those they own as well as those serviced for
others) or to all the mortgagors who have specific types of mortgage loans,
such as adjustable-rate mortgage loans, or to those whose mortgage loans fall
within specific interest rate ranges. The Seller may not, however, target the
Mortgage Loans as a separate class of mortgage loans for purposes of
advertising the availability of refinancing terms. The Seller may provide
payoff information and otherwise cooperate with individual Mortgagors who
contact it about prepaying their Mortgage Loans by advising them of refinancing
terms and streamlined origination arrangements that are available.
SECTION 5. Cure, Repurchase and Indemnity Obligations of the Seller.
Each of the representations, warranties and covenants contained in or required
to be made pursuant to Section 4 of this Agreement shall survive the sale of
the Mortgage Loans and shall continue in full force and effect, notwithstanding
any restrictive or qualified endorsement on the mortgage notes and
notwithstanding subsequent termination of this Agreement or the Pooling
Agreement. The representations, warranties and covenants contained in or
required to be made pursuant to Section 4 of this Agreement shall not be
impaired by any review or examination of the Mortgage Files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Depositor to review or examine such documents and shall inure to the benefit of
any transferee of the Mortgage Loans from the Depositor including, without
limitation, the Trustee for the benefit of the Certificateholders.
If the Depositor or its assignee finds any document or documents
constituting a part of a Mortgage File not to have been executed or otherwise
defective as set forth in Section 2.02
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of the Pooling Agreement or received, or to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule, the Depositor or its assignee shall
promptly so notify the Seller. The Seller hereby covenants and agrees that, if
any such defect cannot be corrected or cured, the Seller shall either (i)
repurchase the related Mortgage Loan from the Depositor or its assignee at the
Purchase Price, or (ii) substitute for any Mortgage Loan to which such defect
relates a Qualified Substitute Mortgage Loan, in either case in accordance with
Section 2.04 of the Pooling Agreement.
It is understood and agreed that the representations and warranties
set forth in Exhibit 3 hereto shall survive delivery of the respective Mortgage
Files to the Depositor or its assignee and shall continue throughout the term
of this Agreement. The Seller hereby covenants and agrees that if there is a
breach of any such representation or warranty which materially and adversely
affects the interests of the Depositor or its assigns in the related Mortgage
Loans, the Seller shall either (i) repurchase the related Mortgage Loan from
the Depositor or its assignee at the Purchase Price, or (ii) substitute for any
Mortgage Loan to which such defect relates a Qualified Substitute Mortgage
Loan, in either case in accordance with Section 2.04 of the Pooling Agreement.
If the aggregate of the principal balances of the Qualified Substitute Mortgage
Loans substituted for a Mortgage Loan is less than the Stated Principal Balance
of such Mortgage Loan, the Seller shall pay the difference in cash to the
Depositor or its assignee, and such payment by the Seller shall be treated in
the same manner as proceeds of the repurchase by the Seller of a Mortgage Loan.
Furthermore, such Qualified Substitute Mortgage Loan shall otherwise have such
characteristics so that the representations and warranties of the Depositor set
forth in Exhibit 3 hereto would not have been incorrect had such Qualified
Substitute Mortgage Loan originally been a Mortgage Loan. A Qualified
Substitute Mortgage Loan may be substituted for a defective Mortgage Loan
whether or not such defective Mortgage Loan is itself a Qualified Substitute
Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be payable
to the Depositor or its assignee by wire transfer of immediately available
funds to the account specified by the Depositor or its assignee, as applicable,
and, upon receipt by the Depositor or its assignee of written notification of
such deposit signed by an authorized officer, the Depositor or its assignee
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Seller or its designee or
assignee title to any Mortgage Loan released pursuant hereto. The obligation of
the Seller to repurchase or substitute any Mortgage Loan as to which such a
defect in a constituent document exists or a breach of the Seller's
representations with respect to the Mortgage Loans which materially and
adversely affects the interests of the Depositor or the Certificateholders in
any Mortgage Loan shall constitute the sole remedy respecting such defects
available to the Depositor or its assignee on behalf of the Certificateholders;
provided that this limitation shall not in any way limit the Depositor's rights
or remedies upon breach of any representation or warranty herein.
With respect to any Mortgage Loan as to which the Seller delivers to
the Depositor or the Trustee an affidavit certifying that the original Mortgage
Note has been lost or destroyed, if such Mortgage Loan is subsequently in
default and the enforcement thereof or of the related Mortgage is materially
adversely affected by the absence of the original Mortgage Note, the
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Seller will be obligated to repurchase or substitute for such Mortgage Loan in
the manner set forth above.
SECTION 6. Representations and Warranties of the Depositor. In order
to induce the Seller to enter into this Agreement, the Depositor hereby
represents and warrants to the Seller that as of the date hereof:
(i) The Depositor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to carry on its business as presently conducted
by it. The Depositor has the full power and authority and legal right to
execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action has
been or will have been taken, and (assuming the due authorization, execution
and delivery hereof by the Seller) constitutes or will constitute the valid,
legal and binding agreement of the Depositor, enforceable in accordance with
its terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this Agreement
which purport to provide indemnification from liabilities under applicable
securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Depositor with this Agreement, or the
consummation by the Depositor of any other transaction contemplated hereby or
(b) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) The execution, delivery or performance of this
Agreement by the Depositor does not conflict or will not conflict with, or
result or will result in a breach of, or constitute or will constitute a
default under (a) any term or provision of the documents governing the
Depositor's organization, or (b) any term or provision of any material
agreement, contract, instrument or indenture, to which the Depositor is a party
or is bound, or (c) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Depositor.
(v) There are no actions or proceedings against, or
investigations of, the Depositor pending or, to the Depositor's knowledge,
threatened against the Depositor before any court, administrative agency or
other tribunal, which would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the execution, delivery or enforceability of
this Agreement or have a material adverse effect on the financial condition of
the Depositor.
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SECTION 7. Closing. The closing of the sale of the Mortgage Loans
shall be held at the office of Orrick, Herrington & Sutcliffe LLP at 7:00 a.m.,
San Francisco time, on the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the
Seller and the Depositor shall be true and correct in all material
respects as of the Closing Date;
(b) All Closing Documents specified in Section 8 of this
Agreement, in such forms as are agreed upon and acceptable to the
Depositor and the Seller, shall be duly executed and delivered by all
signatories as required pursuant to the respective terms thereof;
(c) The Seller shall have delivered and released to the
Depositor or its designee, all documents required to be delivered to
the Depositor pursuant to Section 2 of this Agreement;
(d) The result of the examination and audit performed by
the Depositor pursuant to Section 3 hereof shall be satisfactory to
the Depositor in its sole determination and the parties shall have
agreed to the form and content of the Seller's information (as defined
in Section 9 hereof) to be disclosed in the Prospectus Supplement;
(e) All other terms and conditions of this Agreement
required to be complied with on or before the Closing Date shall have
been complied with and the Seller and the Depositor shall have the
ability to comply with all terms and conditions and perform all duties
and obligations required to be complied with or performed after the
Closing Date; and
(f) All of the terms and conditions of the Underwriting
Agreement and the Purchase Agreement required to be complied with on
or before the Closing Date shall have been complied with.
SECTION 8. Closing Documents. The Closing Documents shall consist of
the following:
(a) The Underwriting Agreement duly executed by the
Depositor, Bank of America, FSB and the Underwriter, and all exhibits
thereto duly executed by all applicable signatories;
(b) The Purchase Agreement duly executed by the
Depositor, Bank of America, FSB and the Underwriter, and all exhibits
thereto duly executed by all applicable signatories;
(c) This Agreement duly executed by the Depositor and the
Seller;
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(d) A cross-receipt dated the Closing Date duly executed
by the Seller and the Depositor; and
(e) A duly executed Bill of Sale in the form attached
hereto as Exhibit 4.
SECTION 9. Costs. The Seller shall pay directly all of its own
expenses, including out-of-pocket expenses, the expenses of the preparation and
recording of assignments of Mortgage pursuant to Section 2 hereof and the
delivery of documents required pursuant to Section 2 hereof to the Trustee and
its attorney fees.
SECTION 10. Servicing. The Mortgage Loans are to be delivered free
and clear of any servicing agreements with third party servicers.
SECTION 11. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or mailed by registered mail, postage prepaid, return
receipt requested, to the following addresses: if to the Depositor, addressed to
the Depositor at 345 Montgomery Street, Lower Level #2, Unit #8152, San
Francisco, California 94104, Attention: David James or to such other address as
the Depositor may designate in writing to the Seller; or if to the Seller,
addressed to the Seller at 555 California Street, San Francisco, California
94104, Attention: David Grout, or to such other addresses as the Seller may
designate in writing to the Depositor.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 13. Further Assurances. The Seller and the Depositor each
agree to execute and deliver such instruments and take such actions as the other
may, from time to time, reasonably request in order to effectuate the purpose
and to carry out the terms of this Agreement.
SECTION 14. Survival. The Seller and the Depositor agree that the
representations, warranties and agreements made herein and in any certificate or
other instrument delivered pursuant hereto shall be deemed to be relied upon by
the other party, notwithstanding any investigation heretofore or hereafter made
by such party or on such party's behalf, and that the representations,
warranties and agreements made by the Seller and the Depositor herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans.
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SECTION 15. Miscellaneous. This Agreement is to be governed by,
and construed in accordance with, the laws of the State of California. The
rights and obligations of the Seller under this Agreement shall not be assigned
by the Seller without the prior written consent of the Depositor. The Depositor
has the right to assign its interest under this Agreement, in whole or in part,
to the Trustee as may be required to effect the purposes of the Pooling
Agreement, by written notice to the Seller, without the consent of Seller, and
the Trustee shall thereupon succeed to the rights and obligations hereunder of
the Depositor. Notwithstanding any such assignment of the Depositor's interest
under this Agreement, the Depositor shall be entitled to indemnification from
the Seller in the circumstances and to the extent described in Section 9. Notice
is hereby given to the Seller by the Depositor that the representations and
warranties made by the Seller and contained in Exhibit 3 of this Agreement are
or will be assigned by the Depositor to the Trustee for the benefit of the
Certificateholders, together with such additional representations and warranties
as the Depositor shall specify. The Seller, without any further action on its
part, hereby consents to such assignment. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Depositor as provided in this Agreement
be, and be construed as, a sale of the Mortgage Loans by Seller to the
Depositor. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by Seller to the Depositor
to secure a debt or other obligation of Seller. However, in the event,
notwithstanding the intent of the parties, the Mortgage Loans are held to be
property of Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then, (a) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles
8 and 9 of the Uniform Commercial Code in effect in the applicable state; (b)
the conveyance provided for in this Agreement shall be deemed to be a grant by
Seller to the Depositor of a security interest in and to all of the Seller's
right, title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to the Mortgage Loans,
including all Qualified Substitute Mortgage Loans and
including (i) the Mortgage and Mortgage Note, any insurance
policies and all other documents in the related Mortgage File,
(ii) all title, hazard and primary mortgage insurance policies
identified on the Mortgage Loan Schedule as defined herein,
and (iii) all distributions with respect thereto payable on
and after the Cut-off Date;
F-11
<PAGE> 185
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
The possession by the Depositor or its assignee of the Mortgage Notes, the
Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall
be deemed to be "possession by the secured party," or possession by a purchaser
or a person designated by him or her, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code (including, without
limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor or its assignee for the purpose of perfecting such security
interest under applicable law. In connection herewith, the Depositor (or its
assignee) shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
Any assignment of the interest of the Depositor pursuant to Section 1
hereof shall also be deemed to be an assignment of any security interest
created hereby. The Seller and the Depositor shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in or lien on the
Mortgage Loans, such security interest or lien would be deemed to be a
perfected security interest or lien of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.
SECTION 16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute but one legal instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
F-12
<PAGE> 186
IN WITNESS WHEREOF, the Seller and the Depositor have caused their
names to be signed by their respective officers thereunto duly authorized as of
the date first above written.
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION] [BANK OF AMERICA, FSB],
the Seller
By:_________________________________________
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:_________________________________________
Name:
Title:
F-13
<PAGE> 187
EXHIBIT 1
15 YEAR LOAN SCHEDULE
F-1-1
<PAGE> 188
EXHIBIT 2
30 YEAR LOAN SCHEDULE
F-2-1
<PAGE> 189
EXHIBIT 3
SELLER REPRESENTATIONS AND WARRANTIES
Seller's Representations to be Assigned by Depositor to Trustee
The Seller hereby represents and warrants to the Depositor, as to each
Mortgage Loan, that as of the Closing Date or as of such other date
specifically provided herein:
(i) The information set forth on the Mortgage Loan Schedule
with respect to each Mortgage Loan is true and correct as of the Closing Date;
(ii) As of the Closing Date, each Mortgage is a valid first
lien on an unencumbered estate in fee simple or leasehold estate in the related
Mortgaged Property subject only to (a) liens for current real property taxes
and special assessments; (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal obtained in connection with the origination of the Mortgage Loan; (c)
exceptions set forth in the title insurance policy relating to such Mortgage,
such exceptions being acceptable to mortgage lending institutions generally;
and (d) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by the Mortgage;
(iii) As of the Closing Date, the Seller had good title to, and
was the sole owner of, each Mortgage Loan free and clear of any encumbrance or
lien, and immediately upon the transfer and assignment herein contemplated, the
Depositor shall have good title to, and will be the sole legal owner of, each
Mortgage Loan, free and clear of any encumbrance or lien (other than any lien
under this Agreement);
(iv) As of the day prior to the Cut-off Date, all payments due
on each Mortgage Loan had been made and no Mortgage Loan had been delinquent
(i.e., was more than 30 days past due) more than once in the preceding 12
months and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the Mortgagor to
pay the unpaid principal or interest on such Mortgage Note except as may be
provided under the Soldiers and Sailors Civil Relief Act of 1940, as amended,
and except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, the Mortgaged Property securing
each Mortgage is undamaged by water, fire, earthquake, earth movement other
than earthquake, windstorm, flood, tornado or similar casualty (excluding
casualty from the presence of hazardous wastes or
F-3-1
<PAGE> 190
hazardous substances, as to which the Seller makes no representations), so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
(viii) Each Mortgage Loan at the time it was made complied with
all applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings
association, savings bank, credit union, insurance company, or similar
institution which is supervised and examined by a federal or state authority or
by a mortgagee approved by the FHA;
(x) As of the Closing Date, except for Mortgage Loans for
which the related Mortgaged Properties are located in areas where such policies
are generally not available, each Mortgage Loan is covered by an ALTA form or
CLTA form of mortgagee title insurance policy or other form of policy of
insurance which, as of the Closing Date, is acceptable to FNMA or FHLMC, and
has been issued by, and is the valid and binding obligation of, a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the state in which
the related Mortgaged Property is located. Such policy insures the originator
of the Mortgage Loan, its successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan subject
to the exceptions set forth in such policy. With respect to each Mortgage Loan
for which the related Mortgage Property is located in an area where such
policies are generally not available, an attorney's certificate of title was
obtained at origination. Such policy (or certificate of title) is in full
force and effect and will be in full force and effect and inure to the benefit
of the Certificateholders upon the consummation of the transactions
contemplated by this Agreement and no claims have been made under such policy
(or certificate of title), and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything which would impair
the coverage of such policy (or certificate of title);
(xi) As of the Closing Date, except as specified on the
mortgage Loan Schedule, each Mortgage Loan which had a Loan-to-Value Ratio at
the time of the origination of the Mortgage Loan in excess of 80% was covered
by a Primary Mortgage Insurance Policy or an FHA insurance policy or a VA
guaranty, and such policy or guaranty is valid and remains in full force and
effect, except for any Mortgage Loan for which the outstanding Stated Principal
Balance thereof at any time subsequent to origination was 80% or less of the
value of the related Mortgaged Property (as determined by the original
appraisal or an appraisal obtained subsequent to origination);
(xii) As of the Closing Date, each insurer issuing a Primary
Mortgage Insurance Policy will hold a rating acceptable to the Rating Agency;
(xiii) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other instruments
approved by the Seller;
F-3-2
<PAGE> 191
(xiv) The Mortgaged Property securing each Mortgage is improved
with a one- to four-family dwelling unit, including units in a duplex,
condominium project, townhouse, a planned unit development or a de minimis
planned unit development;
(xv) Each Mortgage and Mortgage Note is genuine and the legal,
valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
laws relating to bankruptcy, insolvency, reorganization, receivership or
moratorium, or laws relating to or affecting the enforcement of creditors'
rights generally;
(xvi) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of such units
met FNMA requirements, are located in a condominium or planned unit development
projects which have received FNMA approval, or are approvable by FNMA;
(xvii) No more than __ of the Mortgage Loans are Buydown Loans;
(xviii) As of the Cut-off Date, all but approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, based solely on representations of the Mortgagors obtained
at the origination of the related Mortgage Loans and approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which were second or vacation homes of the
Mortgagors, based solely on such representations, and approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by Mortgaged
Properties which were investor properties of the related Mortgagors, based
solely on such representations;
(xix) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to FNMA and
FHLMC;
(xx) The Mortgage Loans have been underwritten substantially in
accordance with the underwriting standards of the originator of the Mortgage
Loan as in effect on the date of origination;
(xxi) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not be
exercised at the time of a transfer if prohibited by federal law;
(xxii) The Seller used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding fixed-rate conventional
mortgage loans originated or purchased by it which were available for inclusion
in the Mortgage Pool and as to which the representations and warranties in this
Exhibit could be made; and
(xxiii) No material misrepresentation or fraud with respect to a
Mortgage Loan has taken place on the part of any person involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan.
F-3-3
<PAGE> 192
(xxiv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior to,
or equal with, the lien of such Mortgage, except those which are insured
against by the title insurance policy referred to in item (x) above;
(xxv) To the Seller's knowledge, no improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. To the Seller's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse effect
on the value of such Mortgaged Property, and the Mortgaged Property is lawfully
occupied under applicable law;
(xxvi) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder and any and
all requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording the
Mortgage Loans were paid;
(xxvii) The related Mortgage contains customary and enforceable,
subject to paragraph (xv) above, provisions which render the rights and
remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure;
(xxviii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(xxix) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(xxx) None of the Mortgage Loans provides for a prepayment
penalty;
(xxxi) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements of
the current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis, or (C)
the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended;
F-3-4
<PAGE> 193
(xxxii) There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring;
(xxxiii) There is no material monetary default existing under any
Mortgage or the related Mortgage Note that is likely to result in a lien on the
Mortgaged Property with a higher priority than that of the Mortgage or an
impairment of the value of the Mortgaged property and, to the best of the
Seller's knowledge, there is no material event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxiv) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan;
(xxxv) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written instrument
which has been recorded or submitted for recordation, if necessary, to protect
the interests of the Certificateholders and which has been delivered to the
Trustee); satisfied, cancelled or subordinated such Mortgage in whole or in
part; released the related Mortgaged property in whole or in part from the lien
of such mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto;
(xxxvi) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow deposits
or payments of other charges or payments due the Seller have been capitalized
under the mortgage or the related Mortgage Note.
(xxxvii) Other than any Buydown Fund with respect to a Buydown
Loan, there is no pledged account or other security other than real estate
securing the Mortgagor's obligations.
(xxxviii) Other than any such obligation relating to a Buydown Loan,
there is no obligation on the part of the Seller or any other party under the
terms of the Mortgage or related Mortgage Note to make payments in addition to
those made by the Mortgagor;
(xxxix) Except for (A) payments in the nature of escrow payments,
(B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of principal and
interest, including without limitation taxes and insurance payments, and (C)
any Buydown Fund with respect to a Buydown Loan, the Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage; and
(xxxx) The Mortgage Loans in the aggregate conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
F-3-5
<PAGE> 194
EXHIBIT 4
BILL OF SALE
1. PARTIES. The parties to this Bill of Sale are the following:
Seller: [Bank of America National Trust and Savings Association]
[Bank of America, FSB]
Depositor: BA Mortgage Securities, Inc.
2. SALE. For value received, the Seller hereby conveys to the Depositor,
without recourse, all right, title and interest in and to the Mortgage Loans
identified on Exhibit 1 and Exhibit 2 (collectively, the "Mortgage Loan
Schedule") to the Mortgage Loan Purchase Agreement, dated as of May [___], 1998
(the "Mortgage Loan Purchase Agreement"), between the Seller and the Depositor
and all of the following property:
(a) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and uncertificated securities consisting of, arising
from or relating to the Mortgage Loans, including all Qualified
Substitute Mortgage Loans and including (i) the Mortgage and
Mortgage Note, any insurance policies and all other documents
in the related Mortgage File, (ii) all title, hazard and
primary mortgage insurance policies identified in the Mortgage
Loan Schedule as defined herein and (iii) all distributions
with respect thereto payable on and after the Cut-off Date;
(b) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, uncertificated securities, and other rights arising
from or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or
claims against other persons with respect to, all or any part
of the collateral described in clause (a) above (including any
accrued discount realized on liquidation of any investment
purchased at a discount); and
(c) All cash and non-cash proceeds of the collateral
described in clauses (a) and (b) above.
3. PURCHASE PRICE. $[________].
4. DEFINITIONS. Terms used but not defined herein shall have the meanings
assigned to them in the Mortgage Loan Purchase Agreement.
F-4-1
<PAGE> 195
IN WITNESS WHEREOF, each of the parties hereto has caused this Bill of
Sale to be duly executed and delivered on this [ ] day of May, 1998.
SELLER: [BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FSB]
By:_________________________________________
Name:
Title:
DEPOSITOR: BA MORTGAGE SECURITIES, INC.
By:_________________________________________
Name:
Title:
F-4-2
<PAGE> 196
EXHIBIT G
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
in custody for the referenced pool, the undersigned requests the release of the
mortgage documents described below for the reasons indicated. All documents to
be released to the undersigned shall be held in trust by the undersigned for
the benefit of the applicable securities holders solely for the purpose
indicated below. The Master Servicer shall return the documents to the
custodian when the Master Servicer's need thereof no longer exists, except
where the mortgage is paid in full or otherwise disposed of in accordance with
the applicable pooling and servicing agreement.
BA Mortgage Securities, Inc., Mortgage Pass-through Certificates, Series 1998-2
Pooling and Servicing Agreement Dated: May 1, 1998
Pool/Series#: 1998-2
Loan #
FHA/VA/FHMA#
Investor Loan#
Borrower Name(s):
Reason for Documents Request: (circle one)
1. Mortgage Paid in Full
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
_________________________________________________________
[name of Master Servicer]
Authorized Signature
****************************************************************
TO TRUSTEE: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files
in accordance with the terms of the Pooling and Servicing Agreement.
<PAGE> 197
Enclosed Documents: [ ] Promissory Note
[ ] Primary Mortgage Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed
of Trust
Title Insurance Policy
[ ] Other: __________________
_________________________________________________________
Name
_________________________________________________________
Title
_________________________________________________________
Date
G-2
<PAGE> 198
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he/she is [Title of Officer] of [Name of Owner]
(record or beneficial owner of the Mortgage Pass-Through Certificates, Series
1998-2, Class [R-I][R-II][R-III] (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
__________________] [the United States], on behalf of which he/she makes this
affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class [R-I][R-II][R-III] Certificates,
and (iii) is acquiring the Class [R-I][R-II][R-III] Certificates for its own
account or for the account of another Owner from which it has received an
affidavit and agreement in substantially the same form as this affidavit and
agreement. (For this purpose, a "disqualified organization" means the United
States, any state or political subdivision thereof, any agency or
instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home
Loan Mortgage Corporation, a majority of whose board of directors is not
selected by any such governmental entity) or any foreign government,
international organization or any agency or instrumentality of such foreign
government or organization, any rural electric or telephone cooperative, or any
organization (other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is subject to the tax
on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class [R-I][R-II][R-III] Certificates to disqualified
organizations under the Code, that applies to all transfers of Class
[R-I][R-II][R-III] Certificates after March 31, 1988; (ii) that such tax would
be on the transferor, or, if such transfer is through an agent (which person
includes a broker, nominee or middleman) for a disqualified organization, on
the agent; (iii) that the person otherwise liable for the tax shall be relieved
of liability for the tax if the transferee furnishes to such person an
affidavit that the transferee is not a disqualified organization and, at the
time of transfer, such person does not have actual knowledge that the affidavit
is false; and (iv) that the Class [R-I][R-II][R-III] Certificates may be
"noneconomic residual interests" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
<PAGE> 199
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class [R-I][R-II][R-III] Certificates if at any
time during the taxable year of the pass-through entity a disqualified
organization is the record holder of an interest in such entity. (For this
purpose, a "pass through entity" includes a regulated investment company, a
real estate investment trust or common trust fund, a partnership, trust or
estate, and certain cooperatives.)
5. The Owner is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or an investment
manager, named fiduciary or a trustee of any such plan, or any other Person
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any such plan.
6. That the Owner is aware that the Trustee will not register
the transfer of any Class [R-I][R-II][R-III] Certificates unless the
transferee, or the transferee's agent, delivers to it an affidavit and
agreement, among other things, in substantially the same form as this affidavit
and agreement. The Owner expressly agrees that it will not consummate any such
transfer if it knows or believes that any of the representations contained in
such affidavit and agreement are false.
7. That the Owner has reviewed the restrictions set forth on
the face of the Class [R-I][R-II][R-III] Certificates and the provisions of
Section 5.02(f) of the Pooling and Servicing Agreement under which the Class
[R-I][R-II][R-III] Certificates were issued (in particular, clause (iii)(A) and
(iii)(B) of Section 5.02(f) which authorize the Trustee to deliver payments to
a person other than the Owner and negotiate a mandatory sale by the Trustee in
the event the Owner holds such Certificates in violation of Section 5.02(f)).
The Owner expressly agrees to be bound by and to comply with such restrictions
and provisions.
8. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class [R-I][R-II][R-III]
Certificates will only be owned, directly or indirectly, by an Owner that is
not a disqualified organization.
9. The Owner's Taxpayer Identification Number is
______________.
10. This affidavit and agreement relates only to the Class
[R-I][R-II][R-III] Certificates held by the Owner and not to any other holder
of the Class [R-I][R-II][R-III] Certificates. The Owner understands that the
liabilities described herein relate only to the Class [R-I][R-II][R-III]
Certificates.
11. That no purpose of the Owner relating to the transfer of
any of the Class [R-I][R-II][R-III] Certificates by the Owner is or will be to
impede the assessment or collection of any tax.
12. That the Owner has no present knowledge or
expectation that it will be unable to pay any United States taxes owed by it so
long as any of the Certificates remain
H-1-2
<PAGE> 200
outstanding. In this regard, the Owner hereby represents to and for the
benefit of the person from whom it acquired the Class [R-I][R-II][R- III] that
the Owner intends to pay taxes associated with holding such Class
[R-I][R-II][R-III] Certificate as they become due, fully understanding that it
may incur tax liabilities in excess of any cash flows generated by the Class
[R-I][R-II][R-III] Certificate.
13. That the Owner has no present knowledge or
expectation that it will become insolvent or subject to a bankruptcy proceeding
for so long as any of the Class [R-I][R-II][R-III] Certificates remain
outstanding.
14. The Owner is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
H-1-3
<PAGE> 201
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:____________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
____________________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the
foregoing instrument and to be the [Title of Officer] of the Owner, and
acknowledged to me that he/she executed the same as his/her free act and deed
and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of
________________, 199__.
____________________________________________
NOTARY PUBLIC
COUNTY OF___________________________________
STATE OF____________________________________
My Commission expires the ____ day of ______
_________, 19__.
H-1-4
<PAGE> 202
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1998-2
Re: Mortgage Pass-Through Certificates,
Series 1998-2, Class [R-I][R-II][R-III]
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________________ (the "Seller") to
_______________________________ (the "Purchaser") of $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1998-2 Class [R-I][R-II][R-III] (the "Certificates"), pursuant to Section 5.02
of the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as May 1, 1998 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America, FSB, as master servicer (the "Master Servicer"),
and Bankers Trust Company of California, N.A., as trustee (the "Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth
in the Pooling and Servicing Agreement. The Seller hereby certifies,
represents and warrants to, and covenants with, the Depositor and the Trustee
that:
1. No purpose of the Seller relating to the transfer of
the Certificate by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has
delivered to the Trustee and the Master Servicer a transfer affidavit and
agreement in the form attached to the Pooling and Servicing Agreement as
Exhibit H-1. The Seller does not know or believe that any representation
contained therein is false.
3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations
<PAGE> 203
Section 1.860E-1(c)(4)(i) and, as a result of that investigation, the Seller
has determined that the Purchaser has historically paid its debts as they
become due and has found no significant evidence to indicate that the Purchaser
will not continue to pay its debts as they become due in the future. The
Seller understands that the transfer of a Residual Certificate may not be
respected for United States income tax purposes (and the Seller may continue to
be liable for United States income taxes associated therewith) unless the
Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours,
______________________________________
(Seller)
By:___________________________________
Name:_________________________________
Title:________________________________
H-2-2
<PAGE> 204
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1998-2
RE: Mortgage Pass-Through Certificates,
Series 1998-2, Class [ ]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to
purchase from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1998-2, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of May 1,
1998 among BA Mortgage Securities, Inc., as depositor (the "Depositor"), Bank
of America, FSB, as master servicer (the "Master Servicer"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the
Certificates have not been and will not be registered or
qualified under the Securities Act of 1933, as amended (the
"Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to
the foregoing effect.
2. The Purchaser is acquiring the
Certificates for its own account for investment only and not
with a view to or for sale in connection with any
<PAGE> 205
distribution thereof in any manner that would violate the Act
or any applicable state securities laws.
3. The Purchaser is (a) a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters, and, in
particular, in such matters related to securities similar to
the Certificates, such that it is capable of evaluating the
merits and risks of investment in the Certificates, (b) able
to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and
has had an opportunity to review (a) a copy of the Private
Placement Memorandum, dated May 20, 1998, relating to the
Certificates, (b) a copy of the Pooling and Servicing
Agreement and (c) such other information concerning the
Certificates, the Mortgage Loans and the Depositor as has been
requested by the Purchaser from the Depositor or the Seller
and is relevant to the Purchaser's decision to purchase the
Certificates. The Purchaser has had any questions arising
from such review answered by the Depositor or the Seller to
the satisfaction of the Purchaser. If the Purchaser did not
purchase the Certificates from the Seller in connection with
the initial distribution of the Certificates and was provided
with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original
Sale") of the Certificates by the Depositor, the Purchaser
acknowledges that such Memorandum was provided to it by the
Seller, that the Memorandum was prepared by the Depositor
solely for use in connection with the Original Sale and the
Depositor did not participate in or facilitate in any way the
purchase of the Certificates by the Purchaser from the Seller,
and the Purchaser agrees that it will look solely to the
Seller and not to the Depositor with respect to any damage,
liability, claim or expense arising out of, resulting from or
in connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has
it authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate
or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any
general solicitation by means of general advertising or in any
other manner or (e) take any other action, that (as to any of
(a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition
of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser
I-2
<PAGE> 206
will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and
Servicing Agreement.
6. The Purchaser
(a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (a Plan"), or any other person
(including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf
of or purchasing any Certificate with "plan assets" of any
Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. Section 2510.3-101; or
(b) is an insurance company, the source
of funds to be used by it to purchase the Certificates is an
"insurance company general account" (within the meaning of DOL
Prohibited Transaction Class Exemption ("PTCE") 95-60), and
the purchase is being made in reliance upon the availability
of the exemptive relief afforded under Sections I and III of
PTCE 95-60.
7. The Purchaser is not a non-United States
person.
Very truly yours,
______________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
I-3
<PAGE> 207
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
_________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Bank of America, FSB
555 California Street
San Francisco, California 94104
Attention: BA Mortgage Securities, Inc., Series 1998-2
Re: Mortgage Pass-Through Certificates,
Series 1998-2, Class [ ]
Ladies and Gentlemen:
In connection with the sale by _____________(the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Mortgage Pass-Through Certificates, Series 1998-2, Class _
(the "Certificates"), issued pursuant to the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of May 1, 1998 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America,
FSB, as master servicer (the "Master Servicer"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"). The Seller hereby certifies,
represents and warrants to, and covenants with, the Depositor and the Trustee
that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
has otherwise approached or negotiated with respect to any Certificate, any
interest in any Certificate or any other similar
<PAGE> 208
security with any person in any manner, (d) has made any general solicitation
by means of general advertising or in any other manner, or (e) has taken any
other action, that (as to any of (a) through (e) above) would constitute a
distribution of the Certificates under the Securities Act of 1933 (the "Act"),
that would render the disposition of any Certificate a violation of Section 5
of the Act or any state securities law, or that would require registration or
qualification pursuant thereto. The Seller will not act, in any manner set
forth in the foregoing sentence with respect to any Certificate. The Seller
has not and will not sell or otherwise transfer any of the Certificates, except
in compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
_______________________________________
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
J-2
<PAGE> 209
EXHIBIT K
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with
the agreements pursuant to which the Rule 144A Securities were issued, the
Seller hereby certifies the following facts: Neither the Seller nor anyone
acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or that would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule 144A Securities
to any person other than the Buyer or another "qualified institutional buyer"
as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with,
the Depositor, the Trustee and the Master Servicer pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of May 1, 1998 among BA Mortgage
Securities, Inc., as Depositor, Bank of America, FSB, as Master Servicer and
Bankers Trust Company of California, N.A., as Trustee, as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Rule 144A
Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Trustee or the Master Servicer.
<PAGE> 210
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale to it is being
made in reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with,
the Seller, the Trustee, Master Servicer and the Depositor that either (1) the
Buyer is (A) not an employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
or a plan (within the meaning of Section 4975(e)(1) of the Internal Revenue
Code of 1986 ("Code")), which (in either case) is subject to ERISA or Section
4975 of the Code (both a "Plan"), and (B) is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with "plan assets" of a Plan, or (2) is
not directly or indirectly purchasing the Rule 144A Securities on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with "plan
assets" of a Plan, or (3) the Buyer is an insurance company, the source of
funds used to purchase any Rule 144A Securities is an "insurance company
general account" (as such term is defined in Prohibited Transaction Class
Exemption ("PTCE") 95-60) and the conditions set forth in Sections I and III of
PTCE 95-60 have been satisfied.
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.
K-2
<PAGE> 211
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
_______________________________ _______________________________
Print Name of Seller Print Name of Buyer
By:____________________________ By:____________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.____________________________ No.____________________________
Date:__________________________ Date:__________________________
K-3
<PAGE> 212
ANNEX 1 TO EXHIBIT K
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $______________________ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings association or similar institution), limited liability
company, Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings Association. The Buyer (a) is a savings association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or
the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the
K-1-1
<PAGE> 213
insurance commissioner or a similar official or agency of a State or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees, or (b) employee
benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a trust fund
that includes as participants individual retirement accounts or
H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is
a majority-owned, consolidated subsidiary of another enterprise and the Buyer
is not itself a reporting company under the Securities Exchange Act of 1934.
K-1-2
<PAGE> 214
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer
for the account of a third party (including any separate account) in reliance
on Rule 144A, the Buyer will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
______________________________________
Print Name of Buyer
By:___________________________________
Name:
Title:
Date:_________________________________
K-1-3
<PAGE> 215
ANNEX 2 TO EXHIBIT K
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is
attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used.
____ The Buyer owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
K-2-1
<PAGE> 216
5. The Buyer is familiar with Rule 144A and understands
that each of the parties to which this certification is made are relying and
will continue to rely on the statements made herein because one or more sales
to the Buyer will be in reliance on Rule 144A. In addition, the Buyer will
only purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the information and
conclusions herein. Until such notice, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
______________________________________
Print Name of Buyer
By:___________________________________
Name:______________________________
Title:_____________________________
IF AN ADVISER:
______________________________________
Print Name of Buyer
Date:_________________________________
K-2-2
<PAGE> 217
EXHIBIT L
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
Bank of America, FSB
555 California Street
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1998-2
Re: Mortgage Pass-Through Certificates, Series 1998-2
Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the
assignment by _________________ (the "Trustee") to _______________________ (the
"Lender") of _______________ (the "Mortgage Loan") pursuant to Section 3.13(d)
of the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of May 1, 1998 among BA Mortgage Securities, Inc., as depositor, Bank
of America, FSB, as master servicer (the "Master Servicer"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Lender hereby certifies, represents and warrants to,
and covenants with, the Master Servicer and the Trustee that:
(i) the Mortgage Loan is secured by Mortgaged Property located in
a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
(iii) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
<PAGE> 218
(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
______________________________________
(Lender)
By:___________________________________
Name:_________________________________
Title:________________________________
L-2
<PAGE> 219
EXHIBIT M
SCHEDULE OF MORTGAGE LOAN EXCEPTIONS
<PAGE> 220
EXHIBIT N
Information Available for Reports to Certificateholders
Deal Name
Remit Date
Loan Number
City
State
Zip Code
Property Type (SFR, CONDO, etc.)
Occupancy Status (Owner, Investor, etc.)
Loan Purpose (Purchase, Refi, etc.)
Loan Type
Balloon Flag
Loan Status (Current, Foreclosure, REO, Bankrupt)
Original Term of Loan
Amortization Term
First Payment of Loan
Maturity Date
Appraisal Value
Original LTV
Original Principal Balance
Initial Principal Balance
Previous Month's Balance
Current Balance
Prepay Date
Prepay Status (Loan has prepaid, liquidated or repurchased by the servicer)
Original Scheduled P&I
Initial Scheduled P&I
Scheduled P&I
Scheduled Interest Amount
Scheduled Principal Amount
Curtailment
Original Note Rate
Initial Note Rate
Current Note Rate
Next Note Rate
Current Servicing Rate
Next Servicing Rate
Current Pass-Through Rate
Next Pass-Through Rate
Paid to Date
Current Payment Date
Next Payment Date
Index Type
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Gross Margin
Original Index
Current Index Rate
Next Index Rate
First Rate Adjust
Current Interest Adjust Date
Next Interest Adjust Date
Adjust Frequency Rate
Cap Rate
Maximum Interest Rate
Minimum Interest Rate
First Payment Adjust Date
Current Payment Adjust Date
Next Payment Adjust Date
Adjust Frequency Payment
Cap Payment
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EXHIBIT O
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement"), dated [ ] with respect to the
obligations of the Owner and the Custodian, and as of the Closing Date under
the Pooling Agreement (defined below) with respect to the obligations of the
other parties hereto, by and among Bankers Trust Company of California, N.A.,
as Trustee (including its successors under the Pooling Agreement defined below,
the "Trustee"), BA MORTGAGE SECURITIES, INC. (together with any successor in
interest, the "Depositor"), Bank of America [National Trust and Savings
Association][, FSB] (together with any successor in interest, the "Owner") [,
and together with any successor in interest or successor under the Pooling
Agreement referred to below, the "Master Servicer"] [Bank of America, FSB
(together with any successor in interest or successor under the Pooling
Agreement referred to below, the "Master Servicer")], and ____________________
(together with any successor in interest or any successor appointed hereunder,
the "Custodian").
W I T N E S S E T H T H A T :
WHEREAS, the Owner owns certain Mortgage Loans and the related
Mortgage Files (each as defined below);
WHEREAS, the Owner intends to sell the Mortgage Loans to the
Depositor;
WHEREAS, the Depositor, the Master Servicer and the Trustee intend to
enter into a Pooling and Servicing Agreement dated as of May 1, 1998, relating
to the issuance of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1998-2 (as in effect on the Closing Date thereunder, the
"Original Pooling Agreement," and as amended and supplemented from time to
time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Owner, prior
to the Closing Date under the Pooling Agreement, and thereafter for the
Trustee, for the purposes of receiving and holding certain documents and other
instruments delivered by the Depositor and the Master Servicer under the
Pooling Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Owner, the Trustee,
the Depositor, the Master Servicer and the Custodian hereby agree as follows:
<PAGE> 223
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the following
meanings or, if not defined below, shall have the meanings assigned in the
Original Pooling Agreement, unless otherwise required by the context herein.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient when recorded
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the Mortgage Loan, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same county, if permitted by law.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or the State of
__________ are required or authorized by law or executive order to be closed.
Delivery Date: The date, prior to the Closing Date, upon which the
Owner delivers Mortgage Files to the Custodian pursuant to this Agreement.
Final Certification: A final certification in the form attached
hereto as Exhibit Two delivered by the Custodian to the Owner or the Trustee
pursuant to Section 2.2(b) or Section 2.02 of the Pooling Agreement,
respectively, with a Mortgage Loan Schedule attached thereto.
Initial Certification: An initial certification in the form attached
hereto as Exhibit One delivered by the Custodian to the Owner pursuant to
Section 2.2(a) with a Mortgage Loan Schedule attached thereto.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents pertaining to a particular
Mortgage Loan held by the Custodian pursuant to this Agreement, which shall
include:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
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(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such intervening
assignment or assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) the mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract of
title, which in each case may be a copy of the original thereof.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
The Mortgage Files shall also contain originals or certified copies of
powers of attorney for any party executing any instrument or document set forth
in items (i) through (v) above pursuant to delegated authority.
Mortgage Loan Schedule: The list of the Mortgage Loans on computer
readable tape, containing the information set forth on Exhibit Three attached
hereto (as amended from time to time to reflect the removal or the addition of
Mortgage Loans pursuant to Section 2.3), which list shall set forth at a
minimum the following information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Owner's Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property
including state and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate; and
(vi) the principal balance of the Mortgage Loan at
origination.
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Such schedule may consist of multiple reports that collectively set forth all
of the above information.
Mortgage Loans: The mortgage loans identified on the Mortgage Loan
Schedule (as amended from time to time to reflect the removal or the addition
of Mortgage Loans pursuant to Section 2.3).
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate at
origination borne by the related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Request for Release: A request for release of Mortgage Files and
receipt in the form attached hereto as Exhibit Four delivered prior to the
Closing Date by the Owner and on or after the Closing Date, by the Master
Servicer, to the Custodian pursuant to Section 2.3.
Servicing Officer: Any officer of the Owner involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Custodian by the Owner, as such list may from time to time be amended.
Capitalized terms used in this Agreement shall have the following
meanings or, if not defined below, shall have the meanings assigned in the
Original Pooling Agreement, unless otherwise required by the context herein.
ARTICLE II
Delivery and Custody of Mortgage Files
Section 2.1. Delivery of Mortgage Files; Custodian to Act as Agent;
Acceptance of Mortgage Files. The Owner, from time to time, will cause to be
delivered to the Custodian on each Delivery Date the Mortgage Files relating to
the Mortgage Loans identified on the Mortgage Loan Schedule for such Delivery
Date. The Custodian, as the duly appointed agent of the Owner for these
purposes, declares that it will hold such Mortgage Files as agent for the
Owner, in trust, for the use and benefit of the Owner and its assigns. The
Custodian
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acknowledges that the Owner intends to sell the Mortgage Loans to the
Depositor, and the Depositor intends assign the Mortgage Loans to the Trustee,
on the Closing Date, and the Custodian agrees that it will hold the Mortgage
Files as agent for the Trustee, in trust for the use and benefit of all present
and future Certificateholders, upon receipt of written notice from a Servicing
Officer of such sale and assignment.
Section 2.2. Review of Mortgage Files.
(a) Within two (2) Business Days following each Delivery Date, the
Custodian shall deliver to the Owner an Initial Certification evidencing
receipt of a Mortgage File for each Mortgage Loan listed on the Schedule
attached hereto (the "Mortgage Loan Schedule").
(b) Within 10 days following each Delivery Date, (and within 45 days
of the Closing Date) the Custodian agrees, for the benefit of the Owner and its
assigns and the Trustee, to review each Mortgage File to ascertain that (i) the
documents required to be delivered in the definition of Mortgage File are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct. If
the Custodian finds any document or documents constituting a part of a Mortgage
File to be missing or defective in any material respect, the Custodian shall
promptly so notify the Owner and its assigns, or the Trustee if after the
Closing Date. Upon completion of such review, the Custodian shall promptly
deliver to the Owner, or the Trustee if after the Closing Date, a Final
Certification with respect to the Mortgage Loans on the related Mortgage Loan
Schedule, with any exceptions listed on an attachment thereto. The Custodian
shall be under no duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in any Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
(c) The Mortgage File review set forth in Section 2.2 (b) shall
also constitute the Mortgage File review under Section 2.02 of the Pooling
Agreement. The Trustee shall deliver a certification in the form to be set
forth in the Pooling Agreement in sole reliance upon receipt from the Custodian
of the Section 2.2(b) Final Certification. Trustee shall not be entitled to
any compensation in addition to that set forth in the Pooling Agreement in
connection with the delivery of any such certification pursuant to the Pooling
Agreement unless the Trustee is requested to perform an additional review of
the Mortgage Files.
Section 2.3. Custodian to Cooperate; Release of Mortgage Files;
Completion of Endorsements and Assignments.
(a) Upon receipt by the Custodian of a Request for Release, which
Request for Release shall have attached thereto a revised Mortgage Loan
Schedule reflecting the deletion of the Mortgage Files requested by such
Request for Release (if such Request for Release related to less than all of
the Mortgage Files), the Custodian shall deliver the Mortgage Files requested
by the Owner to the Owner or the Person designated by the Owner in such Request
for Release
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within five Business Days of receipt of such Request for Release. Custodian
shall comply with any instructions regarding the completion of Assignments of
Mortgages and endorsement of Mortgage Notes set forth in any such Request for
Release prior to making such delivery.
(b) Upon the repurchase or substitution of any Mortgage Loan
pursuant to Article II of the Pooling Agreement or payment in full of any
Mortgage Loan, or the receipt by the Master Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, the
Master Servicer shall immediately notify the Custodian by a certification
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required
to be deposited in the Custodial Account pursuant to Section 3.07 of the
Pooling Agreement have been or will be so deposited) of a Servicing Officer and
shall request delivery to it of the Mortgage File. The Custodian agrees, upon
receipt of such certification and request, promptly to release to the Master
Servicer the related Mortgage File. The Master Servicer shall deliver to the
Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Qualified
Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or foreclosures
of any Mortgage Loan, including, for this purpose, collection under any Primary
Mortgage Insurance Policy or any Mortgage Pool Insurance Policy, the Master
Servicer shall deliver to the Custodian a certificate of a Servicing Officer
requesting that possession of the Mortgage File be released to the Master
Servicer and certifying as to the reason for such release and that such release
will not invalidate any insurance coverage provided in respect of the Mortgage
Loan under any of the Required Insurance Policies. With such certificate, the
Master Servicer shall deliver to the Custodian a trust receipt signed by a
Servicing Officer on behalf of the Master Servicer, and upon receipt of the
foregoing, the Custodian shall deliver the Mortgage File to the Master
Servicer. The Master Servicer shall cause each Mortgage File so released to be
returned to the Custodian when the need therefor by the Master Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or (ii) the Mortgage File has been delivered to an attorney,
or to a public trustee or other public official as required by law, for
purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Custodian a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File was delivered and the purpose or purposes of such delivery. In
the event of the liquidation of a Mortgage Loan, the Custodian shall deliver
the trust receipt with respect thereto to the Master Servicer upon deposit of
the related Liquidation Proceeds in the Custodial Account as provided in the
Pooling Agreement.
Section 2.5. Notification of Breaches of Representations and
Warranties. Upon discovery by the Custodian of a breach of any representation
or warranty made by the Master Servicer as set forth in the Pooling Agreement
or by a Seller in a Mortgage Loan Purchase Agreement with respect to a Mortgage
Loan relating to a Mortgage File, the Custodian shall give prompt written
notice to the Depositor, the Master Servicer and the Trustee.
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Section 2.6. Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect
to any Mortgage Loan subject to this Agreement in accordance with the terms and
provisions of the Pooling Agreement, the Master Servicer shall notify the
Custodian that such assumption or substitution agreement has been completed by
forwarding to the Custodian the original of such assumption or substitution
agreement, which shall be added to the related Mortgage File and, for all
purposes, shall be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Owner and its
Assigns. With respect to each Mortgage Note, Mortgage and other documents
constituting each Mortgage File which are delivered to the Custodian, the
Custodian is exclusively the bailee and agent of Owner, until the Custodian has
received the notice described in Section 2.1 hereof, and thereafter as the
exclusive bailee and agent of the Trustee as the Owner's assign, and has no
instructions to hold any Mortgage Note or Mortgage for the benefit of any
person other than the Owner and its assigns, holds such documents for the
benefit of the Owner and its assigns and undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. Except upon
compliance with the provisions of Section 2.3 of this Agreement, after receipt
of the notice described in Section 2.1 on the Closing Date, no Mortgage Note,
Mortgage or other document constituting a part of a Mortgage File shall be
delivered by the Custodian to the Depositor or the Master Servicer or otherwise
released from the possession of the Custodian.
Section 3.2. Indemnification. The Depositor hereby agrees to
indemnify and hold the Custodian harmless from and against all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any
other expenses, fees or charges of any character or nature, which the Custodian
may incur or with which the Custodian may be threatened by reason of its acting
as custodian under this Agreement, including indemnification of the Custodian
against any and all expenses, including reasonable attorney's fees if counsel
for the Custodian has been approved by the Depositor, and the cost of defending
any action, suit or proceedings or resisting any claim. Notwithstanding the
foregoing, it is specifically understood and agreed that in the event any such
claim, liability, loss, action, suit or proceeding or other expense, fee or
charge shall have been caused by reason of any negligent act, negligent failure
to act or willful misconduct on the part of the Custodian, or which shall
constitute a willful breach of its duties hereunder, the indemnification
provisions of this Agreement shall not apply.
Section 3.3. Indemnification by the Custodian. The Custodian agrees
to indemnify the Trustee for any and all liabilities, obligations, losses,
damages, payments, costs or expenses, including attorney's fees, of any kind
whatsoever which may be imposed on, incurred by or asserted against the Trustee
as the result of any act or omission in any way relating to the maintenance and
custody by the Custodian of Mortgage Files relating to the Mortgage Loans;
provided, however, that the Custodian shall not be liable for consequential
damages of any kind
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or any portion of such liabilities, obligations, losses, damages, payments or
costs due to the gross negligence or willful misconduct of the Trustee.
Section 3.4. Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.
Section 3.5. Custodian's Fees and Expenses. In consideration for
the services rendered by the Custodian hereunder, until the Closing Date the
Owner, and thereafter the Master Servicer, shall pay such fees and expenses of
the Custodian as are set forth in that certain letter agreement dated
_______________ between the Custodian and the Owner.
Section 3.6. Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans by giving 30 days written notice to the other parties to this Agreement.
Upon receiving such notice of resignation, the Owner, if such notice is
received prior to the Closing Date or the Trustee if such notice is received on
or after the Closing Date, shall either take custody of the Mortgage Files
itself and give prompt notice thereof to the Depositor, the Master Servicer and
the Custodian, or promptly appoint a successor Custodian (with the prior
approval of the Depositor and the Master Servicer in the case of the Trustee)
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Custodian and one copy to the successor Custodian.
If the Owner or the Trustee, as applicable, shall not have taken custody of the
Mortgage Files and no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.
The Owner and its assigns may remove the Custodian at any time. In
such event, the Owner or its assigns shall appoint, or petition a court of
competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian appointed by the Trustee shall be a depository institution
subject to supervision or examination by federal or state authority and shall
be able to satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Master Servicer, the Depositor or any Seller.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian.
The Trustee shall give prompt notice to the Depositor and the Master Servicer
of the appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Depositor and the
Master Servicer.
In the event that the Trustee becomes the successor Custodian, the
Trustee shall review the Mortgage Files and shall be entitled to such fees and
expenses as agreed upon between the Owner and the Trustee.
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If the Owner or the Trustee removes the Custodian, all costs of the
transfer of the Mortgage Files to the Owner, the Trustee, or the successor
Custodian, as applicable, shall be paid by the Owner, if prior to the Closing
Date, or otherwise by the Trust Fund. If the Custodian resigns, the Custodian
shall bear the costs of the transfer of the Mortgage Files to the Owner, the
Trustee or the successor Custodian, as applicable.
Section 3.7. Merger or Consolidation of Custodian. Any Person into
which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 3.8. Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $10,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV
Miscellaneous Provisions
Section 4.1. Notices. All notices, requests, consents and demands
and other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram,
telex or facsimile, or by registered or certified mail, postage prepaid, return
receipt requested, at the addresses specified on the signature page hereof
(unless changed by the particular party whose address is stated herein by
similar notice in writing), in which case the notice will be deemed delivered
when received.
Section 4.2. Amendments. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Depositor, the Master
Servicer nor the Trustee shall enter into any amendment hereof that is not
permitted by the Pooling Agreement. The Trustee shall give prompt notice to
the Custodian of any amendment or supplement to the Pooling Agreement and
furnish the Custodian with written copies thereof.
Section 4.3. Governing Law. This Agreement shall be deemed a
contract made under the laws of the State of California and shall be construed
and enforced in accordance with and governed by the laws of the State of
California.
Section 4.4. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere,
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such recordation to be effected by the Master Servicer and at its expense on
direction by the Trustee (pursuant to the request of holders of Certificates
evidencing undivided interests in the aggregate of not less than 25% of the
Trust Fund), but only upon direction accompanied by an Opinion of Counsel
reasonably satisfactory to the Master Servicer to the effect that the failure
to effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 4.6 No Conflict. In the event of any conflict between the
terms of this Agreement and the terms of the Pooling Agreement, the terms of
the Pooling Agreement shall prevail.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Address: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________________
Name:
Title:
Address: BA MORTGAGE SECURITIES, INC.,
as Depositor
By:_____________________________________________
Name:
Title:
Address: BANK OF AMERICA, FSB,
as [Owner and] Master Servicer
By:_____________________________________________
Name:
Title:
[Address:] [BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
as Owner
By:_____________________________________________
Name:
Title: ]
Address: ________________________________________________
as Custodian
By:_____________________________________________
Name:
Title:
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<PAGE> 233
[STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared _______________________, known to me to be
a ______________ of Bank of America National Trust and Savings Association, a
national banking association that executed the within instrument, and also
known to me to be the person who executed it on behalf of said association and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________________]
Notary Public
[SEAL]
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<PAGE> 234
[STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ___th day of __________, 19__, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a ____________________ of Bank of America, FSB, the federal savings bank that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
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<PAGE> 235
[STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ___th day of __________, 19__, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a ____________________ of Bankers Trust Company of California, N.A., the
national banking association that executed the within instrument, and also
known to me to be the person who executed it on behalf of said association, and
acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
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<PAGE> 236
[STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ___th day of __________, 19__, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a ____________________ of BA Mortgage Securities, Inc., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
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<PAGE> 237
[STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ___th day of __________, 19__, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a ____________________ of [NAME OF CUSTODIAN], the [national banking
association] that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
O-16
<PAGE> 238
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
_____________, 1998
[name and address
of Owner]
Re: Custodial Agreement dated as of __________, 1998, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., [Bank of America National Trust and Savings
Association,] Bank of America, FSB and [NAME OF CUSTODIAN],
Mortgage Pass-Through Certificates, Series 1998-2
Ladies and Gentlemen:
In accordance with Section 2.2(a) of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage
File with respect to each Mortgage Loan listed in the Mortgage Loan Schedule
attached hereto, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
_____________________________,
as Custodian
By:___________________________________
Name:_________________________________
Title:________________________________
O-1-1
<PAGE> 239
EXHIBIT TWO
FORM OF CUSTODIAN FINAL CERTIFICATION
________________, 1998
[name and address
of Owner or Trustee,
as applicable]
Re: Custodial Agreement dated as of __________, 1998, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., [Bank of America National Trust and Savings
Association,] Bank of America, FSB and [NAME OF CUSTODIAN],
Mortgage Pass-Through Certificates, Series 1998-2
Ladies and Gentlemen:
In accordance with Section 2.2(b) of the above-captioned Custodial
Agreement and Section 2.02 of the Pooling Agreement, the undersigned, as
Custodian, hereby certifies that it has received a Mortgage File with respect
to each Mortgage Loan listed in the Mortgage Loan Schedule attached hereto
containing with respect to each such Mortgage Loan, with any exceptions listed
on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such intervening
assignment or assignments have been recorded;
O-2-1
<PAGE> 240
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) the original mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract of
title, which in each case may be a copy of the original thereof.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
Custodian hereby further certifies that it has reviewed each Mortgage
File and the Mortgage Loan Schedule attached hereto and has determined that (i)
the documents required to be delivered in the definition of Mortgage File are
in its possession; (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
_________________________,
as Custodian
By:___________________________________
Name:_________________________________
Title:________________________________
O-2-2
<PAGE> 241
EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
O-3-1
<PAGE> 242
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
To: [Address]
Re: Custodial Agreement dated as of __________, 1998, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., [Bank of America National Trust and Savings
Association,] Bank of America, FSB and [NAME OF CUSTODIAN],
Mortgage Pass-Through Certificates, Series 1998-2
In connection with the administration of the Mortgage Loans
held by you as the Custodian on behalf of the [Owner][Trustee], we request the
release, and acknowledge receipt, of the Mortgage File/[specify documents] for
the Mortgage Loan described below. Send file/documents to:
______________________________
______________________________
______________________________
Attn: ________________________
Mortgagor's Name, Address & Zip Code:
_____________________________________
_____________________________________
_____________________________________
Mortgage Loan Number: _______________
O-4-1
<PAGE> 243
Upon our return of the above documents to you as the
Custodian, please acknowledge your receipt by signing in the space indicated
below, and returning this form.
[Name of Owner or Master Servicer, as applicable]
By:_______________________________________________
[Name of Servicing Officer]
Name:_____________________________________________
Title:____________________________________________
Date:_____________________________________________
Acknowledgement of Documents returned to the Custodian:
_________________________,
as Custodian
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Date:_____________________________________________
O-4-2
<PAGE> 244
EXHIBIT P
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[ ], 1998
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, CA 94104
Re: Pooling and Servicing Agreement dated May 1, 1998 by and among
BA Mortgage Securities, Inc., Bank of America, FSB, and
Bankers Trust Company of California, N.A., Mortgage
Pass-Through Certificates Series 1998-2
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that it
has received a mortgage file with respect to each Mortgage Loan listed in the
Mortgage Loan Schedules attached hereto containing with respect to each such
Mortgage Loan, with any exceptions listed on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such assignment or
intervening assignments have been recorded;
<PAGE> 245
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title, which in each case may be a copy of the original thereof.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
The Trustee further certifies [based solely on receipt by it of the
Final Certification under Section 2.2(b) of the Custodial Agreement] that
[it][the Custodian on its behalf] has reviewed each Mortgage File and the
Mortgage Loan Schedules attached hereto and has determined that (i) the
documents required to be delivered in the definition of Mortgage File are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as
Trustee
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
P-2
<PAGE> 246
EXHIBIT Q
PLANNED PRINCIPAL BALANCES AND
COMBINATION TARGETED PRINCIPAL BALANCES
[See Appendix A of the Prospectus Supplement]
<PAGE> 247
EXHIBIT R
FORM OF SPECIAL SERVICING AGREEMENT
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the
"Agreement") is made and entered into as of __________, between Bank of
America, FSB, as master servicer under the Pooling Agreement described below
(in such capacity, the "Master Servicer"), and ______________________ (the
"Loss Mitigation Advisor").
PRELIMINARY STATEMENT
____________________ is the holder of the entire interest in
BA Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1998-2,
Class ____ (the "Class B Certificates"). The Class B Certificates were issued
pursuant to a Pooling and Servicing Agreement dated as of May 1, 1998 (the
"Pooling Agreement") among BA Mortgage Securities, Inc., as Depositor (the
"Depositor"), the Master Servicer and Bankers Trust Company of California,
N.A., as Trustee.
____________________ intends to resell all of the Class B
Certificates directly to ___________________________ (the "Purchaser") on or
promptly after the date hereof.
In connection with such sale, the parties hereto have agreed
that the Master Servicer will engage in certain special servicing procedures
relating to foreclosures for the benefit of the Purchaser, and that the Loss
Mitigation Advisor will deposit funds in a collateral fund to cover any losses
attributable to such procedures as well as all advances and costs in connection
therewith, as set forth herein.
In consideration of the mutual agreements herein contained,
the receipt and sufficiency of which are hereby acknowledged, the Master
Servicer and the Loss Mitigation Advisor agree that the following provisions
shall become effective and shall be binding on and enforceable by the Master
Servicer and the Loss Mitigation Advisor:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
<PAGE> 248
Collateral Fund: The fund established and maintained pursuant
to Section 3.01 hereof.
Commencement of Foreclosure: The first official action
required under local law in order to commence foreclosure proceedings or to
schedule a trustee's sale under a deed of trust, including (i) in the case of a
mortgage, any filing or service of process necessary to commence an action to
foreclose, or (ii) in the case of a deed of trust, posting, the publishing,
filing or delivery of a notice of sale, including in either case (x) any notice
of default, notice of intent to foreclose or sell or any other action
prerequisite to the actions specified in (i) or (ii) above, (y) the acceptance
of a deed-in-lieu of foreclosure (whether in connection with a sale of the
related property or otherwise) or (z) initiation and completion of a short
pay-off.
Current Appraisal: With respect to any Mortgage Loan as to
which the Loss Mitigation Advisor has made an Election to Delay Foreclosure, an
appraisal of the related Mortgaged Property obtained by the Loss Mitigation
Advisor at its own expense from an independent appraiser (which shall not be an
affiliate of the Loss Mitigation Advisor) acceptable to the Master Servicer as
nearly contemporaneously as practicable to the time of the Loss Mitigation
Advisor's election, prepared based on the Master Servicer's customary
requirements for such appraisals.
Election to Delay Foreclosure: Any election by the Loss
Mitigation Advisor to delay the Commencement of Foreclosure, made in accordance
with Section 2.02(b).
Election to Foreclose: Any election by the Loss Mitigation
Advisor to proceed with the Commencement of Foreclosure, made in accordance
with Section 2.03(a).
Monthly Advances: Advances and Servicing Advances including
costs and expenses of foreclosure.
Required Collateral Fund Balance: As of any date of
determination, an amount equal to the aggregate of all amounts previously
required to be deposited in the Collateral Fund pursuant to Section 2.02(d)
(after adjustment for all withdrawals and deposits pursuant to Section 2.02(e))
and Section 3.02 to be reduced by all withdrawals therefrom pursuant to Section
2.02(g) and Section 2.03(d).
Section 1.02 Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement
shall have the meanings assigned in the Pooling Agreement.
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<PAGE> 249
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01 Reports and Notices.
(a) In connection with the performance of its duties
under the Pooling Agreement relating to the realization upon defaulted Mortgage
Loans serviced by it, the Master Servicer shall provide to the Loss Mitigation
Advisor the following notices and reports:
(i) Upon request by the Loss Mitigation Advisor,
the Trustee shall provide such information as is available to any
Eligible Certificateholder pursuant to Section 4.03(f) of the Pooling
Agreement, at the expense of the Loss Mitigation Advisor.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan serviced by it, the Master Servicer
shall provide the Loss Mitigation Advisor with a notice (sent by
telecopier) of such proposed and imminent foreclosure, stating the
loan number and the aggregate amount owing under the Mortgage Loan.
Such notice may be provided to the Loss Mitigation Advisor in the form
of a copy of a referral letter from the Master Servicer or a
Subservicer to an attorney requesting the institution of foreclosure.
(b) If requested by the Loss Mitigation Advisor, the
Master Servicer shall make its servicing personnel available (during their
normal business hours) to respond to reasonable inquiries, by phone or in
writing by facsimile, electronic, or overnight mail transmission, by the Loss
Mitigation Advisor in connection with any Mortgage Loan identified in a report
under subsection (a)(i)(B), (a)(i)(C), (a)(i)(D), or (a)(ii) which has been
given to the Loss Mitigation Advisor; provided, that (1) the Master Servicer
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and (2) the Master Servicer shall
respond within five Business Days orally or in writing by facsimile
transmission.
(c) In addition to the foregoing, the Master Servicer
shall provide to the Loss Mitigation Advisor such information as the Loss
Mitigation Advisor may reasonably request provided, however, that such
information is consistent with the Master Servicer's normal reporting
practices, concerning each Mortgage Loan that is at least ninety days
delinquent and each Mortgage Loan which has become real estate owned, through
the final liquidation thereof; provided, that the Master Servicer shall only be
required to provide information that is readily accessible to its servicing
personnel and is non-confidential and provided, further, that the Loss
Mitigation Advisor will reimburse the Master Servicer for any out of pocket
expenses.
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<PAGE> 250
Section 2.02 Loss Mitigation Advisor's Election to Delay
Foreclosure Proceedings.
(a) In the event that the Master Servicer does not
receive written notice of the Loss Mitigation Advisor's election pursuant to
subsection (b) below by overnight courier (with tracking service) within 24
hours (exclusive of any intervening non-Business Days) of transmission of the
notice provided by the Master Servicer under Section 2.01(a)(ii) subject to
extension as set forth in Section 2.02(b), the Loss Mitigation Advisor shall be
deemed to direct Master Servicer to proceed with the Commencement of
Foreclosure in respect of such Mortgage Loan in accordance with its normal
foreclosure policies without further notice to the Loss Mitigation Advisor.
Any foreclosure that has been initiated may be discontinued without notice to
the Loss Mitigation Advisor if (i) the Mortgage Loan has been brought current
or if a refinancing or prepayment occurs with respect to the Mortgage Loan
(including by means of a short payoff approved by the Master Servicer or
related Subservicer) or (ii) the Master Servicer or related Subservicer has
reached the terms of a forbearance agreement with the Borrower.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Loss Mitigation
Advisor, the Loss Mitigation Advisor may elect to instruct the Master Servicer
to delay the Commencement of Foreclosure until such time as the Loss Mitigation
Advisor determines that the Master Servicer may proceed with the Commencement
of Foreclosure. Such election must be evidenced by written notice received
within 24 hours (exclusive of any intervening non-Business Days) of
transmission of the notice provided by the Master Servicer under Section
2.01(a)(ii). Such 24 hour period shall be extended for no longer than an
additional four Business Days after the receipt of the information if the Loss
Mitigation Advisor requests additional information related to such foreclosure;
provided, however, that the Loss Mitigation Advisor will have at least one
Business Day to respond to any requested additional information. Any such
additional information shall (i) be provided only to the extent it is not
confidential in nature and (ii) be obtainable by the Master Servicer from
existing reports, certificates or statements or otherwise be readily accessible
to its servicing personnel. The Loss Mitigation Advisor agrees that it has no
right to deal with the Mortgagor during such period. However, if such
servicing activities include acceptance of a deed-in-lieu of foreclosure or
short payoff, the Loss Mitigation Advisor will be notified and given two
Business Days to approve or disapprove, in writing, of such action. If the
Master Servicer does not receive a written approval or disapproval of the
proposed short payoff or deed-in-lieu of foreclosure from the Loss Mitigation
Advisor within two Business Days after sending the notice of such action the
terms of this Agreement will no longer apply to the Servicing of such Mortgage
Loan.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Loss
Mitigation Advisor shall obtain a Current Appraisal as soon as practicable, but
in no event more than seven business days thereafter, and shall provide the
Master Servicer with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to
Delay Foreclosure, the Loss Mitigation Advisor shall remit by wire transfer to
the Master Servicer,
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for deposit in the Collateral Fund, an amount, as calculated by the Master
Servicer, equal to the sum of (i) 125% of the greater of the unpaid principal
balance of the Mortgage Loan and the value shown in the Current Appraisal
referred to in subsection (c) above, and (ii) three months' interest on the
Mortgage Loan at the applicable Mortgage Rate. If any Election to Delay
Foreclosure extends for a period in excess of three months (such excess period
being referred to herein as the "Excess Period"), within two Business Days the
Loss Mitigation Advisor shall remit by wire transfer in advance to the Master
Servicer for deposit in the Collateral Fund the amount of each additional
month's interest, as calculated by the Master Servicer, equal to interest on
the Mortgage Loan at the applicable Mortgage Rate for the Excess Period. The
terms of this Agreement will no longer apply to the servicing of any Mortgage
Loan upon the failure of the Loss Mitigation Advisor to deposit any of the
above amounts relating to the Mortgage Loan within two Business Days of the
Election to Delay Foreclosure or within two Business Days of the commencement
of the Excess Period subject to Section 3.01.
(e) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Master
Servicer may withdraw from the Collateral Fund from time to time amounts
necessary to reimburse itself or the related Subservicer for all related
Advances, Servicing Advances and Subservicer Servicing Advances thereafter made
by the Master Servicer or a related Subservicer in accordance with the Pooling
Agreement and any related Subservicing Agreement. To the extent that the
amount of any liquidation expenses with respect to any Mortgage Loan is
determined by the Master Servicer based on estimated costs, and the actual
costs are subsequently determined to be higher, the Master Servicer may
withdraw the additional amount from the Collateral Fund. In the event that the
Mortgage Loan is brought current by the Mortgagor and the foreclosure action is
discontinued, the amounts so withdrawn from the Collateral Fund shall be
redeposited therein and to the extent that reimbursement therefor from amounts
paid by the mortgagor is not prohibited pursuant to the Pooling Agreement,
applicable law or the related Mortgage Note. Except as provided in the
preceding sentence, amounts withdrawn from the Collateral Fund to cover
Advances, Servicing Advances and Subservicer Servicing Advances shall not be
redeposited therein or otherwise reimbursed to the Loss Mitigation Advisor. If
and when any such Mortgage Loan is brought current by the Mortgagor, all
amounts remaining in the Collateral Fund in respect of such Mortgage Loan
(after adjustment for all permitted withdrawals and deposits pursuant to this
subsection) shall be released to the Loss Mitigation Advisor.
(f) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Master
Servicer shall continue to service the Mortgage Loan in accordance with its
customary procedures (other than the delay in Commencement of Foreclosure as
provided herein). If and when the Loss Mitigation Advisor shall notify the
Master Servicer that it believes that it is appropriate to do so, the Master
Servicer may proceed with the Commencement of Foreclosure. In any event, if
the Mortgage Loan is not brought current by the Mortgagor by the time the loan
becomes 6 months delinquent, the Loss Mitigation Advisor's election shall no
longer be effective and at the Loss Mitigation Advisor's option, either (i) the
Loss Mitigation Advisor shall purchase the Mortgage Loan from the Trust Fund at
a purchase price equal to the fair market value as
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shown on the Current Appraisal, to be paid by (x) applying any balance in the
Collateral Fund to such purchase price, and (y) to the extent of any
deficiency, by wire transfer if immediately available funds from the Loss
Mitigation Advisor to the Master Servicer for deposit in the related Custodial
Account; or (ii) the Master Servicer may proceed with the Commencement of
Foreclosure.
(g) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Delay Foreclosure and as to which the Master Servicer proceeded with the
Commencement of Foreclosure in accordance with subsection (f) above, the Master
Servicer shall calculate the amount, if any, by which the value shown on the
Current Appraisal obtained under subsection (c) exceeds the actual sales price
obtained for the related Mortgaged Property (net of liquidation expenses and
accrued interest related to the extended foreclosure period), and the Master
Servicer shall withdraw the amount of such excess from the Collateral Fund,
shall remit the same to the Trust Fund and shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund in respect
of such Mortgage Loan (after adjustment for all permitted withdrawals and
deposits pursuant to this Agreement) shall be released to the Loss Mitigation
Advisor.
Section 2.03 Loss Mitigation Advisor's Election to Commence
Foreclosure Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Loss Mitigation Advisor may elect to
instruct the Master Servicer to proceed with the Commencement of Foreclosure as
soon as practicable. Such election must be evidenced by written notice
received by the Master Servicer by 2:00 p.m., Los Angeles time, on the third
Business Day following the delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Loss Mitigation Advisor shall remit to the Master Servicer, for
deposit in the Collateral Fund, an amount, as calculated by the Master
Servicer, equal to 125% of the current unpaid principal balance of the Mortgage
Loan and three months interest on the Mortgage Loan at the applicable Mortgage
Rate. If and when any such Mortgage Loan is brought current by the Mortgagor,
all amounts in the Collateral Fund in respect of such Mortgage Loan (after
adjustment for all permitted withdrawals and deposits pursuant to this
Agreement) shall be released to the Loss Mitigation Advisor and to the extent
that reimbursement therefor from amounts paid by the Mortgagor is not
prohibited pursuant to the Pooling Agreement, applicable law or the related
Mortgage Note. The terms of this Agreement will no longer apply to the
servicing of any Mortgage Loan upon the failure of the Loss Mitigation Advisor
to deposit the above amounts relating to the Mortgage Loan within two Business
Days of the Election to Foreclose subject to Section 3.01.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Foreclose, the Master Servicer
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than Commencement of
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Foreclose as provided herein). In connection therewith, the Master Servicer
shall have the same rights to make withdrawals for Advances, Servicing Advances
and Subservicer Servicing Advances from the Collateral Fund as are provided
under Section 2.02(e), and the Master Servicer shall make reimbursements
thereto to the limited extent provided under such subsection in accordance with
its customary procedures. The Master Servicer shall not proceed with the
Commencement of Foreclosure if (i) the same is stayed as a result of the
mortgagor's bankruptcy or is otherwise barred by applicable law, or to the
extent that all legal conditions precedent thereto have not yet been complied
with, or (ii) the Master Servicer believes there is a breach of representations
or warranties by a Seller, which may result in a repurchase or substitution of
such Mortgage Loan, or (iii) the Master Servicer or related Subservicer
reasonably believes the Mortgaged Property may be contaminated with or affected
by hazardous wastes or hazardous substances (and, without limiting the Master
Servicer's or related Subservicer's right not to proceed with the Commencement
of Foreclosure, the Master Servicer supplies the Loss Mitigation Advisor with
information supporting such belief). Notwithstanding anything contained in the
foregoing sentence, the Master Servicer shall not be required to make any
investigation in addition to its customary service procedures. Any foreclosure
that has been initiated may be discontinued without notice to the Loss
Mitigation Advisor if the Mortgage Loan has been brought current or if a
refinancing or prepayment occurs with respect to the Mortgage Loan, including
by means of a short payoff approved by the Loss Mitigation Advisor in
accordance with the procedures for notice by the Master Servicer and response
by the Loss Mitigation Advisor set forth in paragraph 2.02(b) above.
(d) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Foreclose and as to which the Master Servicer or related Subservicer proceeded
with the Commencement to Foreclosure in accordance with subsection (c) above,
the Master Servicer shall calculate the amount, if any, by which the unpaid
principal balance of the Mortgage Loan at the time of liquidation (plus all
unreimbursed interest, Servicing Advances and Subservicer Servicing Advances in
connection therewith other than those paid from the Collateral Fund) exceeds
the actual sales price obtained for the related Mortgaged Property, and the
Master Servicer shall withdraw the amount of such excess from the Collateral
Fund, shall remit the same to the Trust Fund and shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) in
respect of such Mortgage Loan shall be released to the Loss Mitigation Advisor.
Section 2.04. Termination.
(a) The Loss Mitigation Advisor's right to make any
Election to Delay Foreclosure or any Election to Foreclose and the Master
Servicer's obligations under Section 2.01 shall terminate (i) at such time as
the Stated Principal Balance of the Class B Certificates has been reduced to
zero, (ii) upon any transfer by the Loss Mitigation Advisor of any interest
(other than the minority interest therein, but only if the transferee provides
written acknowledgment to the Master Servicer of the Loss Mitigation Advisor's
right hereunder and that such transferee will have no rights hereunder) in the
Class B Certificates
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(whether or not such transfer is registered under the Pooling Agreement),
including any such transfer in connection with a termination of the Trust Fund
or (iii) any breach of the terms of this Agreement by the Loss Mitigation
Advisor.
(b) Except as set forth in 2.04(a), this Agreement and
the respective rights, obligations and responsibilities of the Loss Mitigation
Advisor and the Master Servicer hereunder shall terminate upon the final
liquidation of the last Mortgage Loan as to which the Loss Mitigation Advisor
made any Election to Delay Foreclosure or any Election to Foreclose and the
withdrawal of all remaining amounts in the Collateral Fund as provided herein.
The Loss Mitigation Advisor's right to make an election pursuant to Section
2.02 or Section 2.03 hereof with respect to a particular Mortgage Loan shall
terminate if the Loss Mitigation Advisor fails to make any deposit required
pursuant to Section 2.02(d) or 2.03(b) or if the Loss Mitigation Advisor fails
to make any other deposit to the Collateral Fund pursuant to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon receipt from the Loss Mitigation Advisor of the initial
amount required to be deposited in the Collateral Fund pursuant to Article II,
the Master Servicer shall establish and maintain with the Master Servicer as a
segregated account on its books and records an Eligible Account (the
"Collateral Fund"), entitled "Bank of America, FSB, as Master Servicer, for the
benefit of registered holders of BA Mortgage Securities, Inc. Mortgage
Pass-Through Certificates, Series 1998-2." Amounts held in the Collateral Fund
shall continue to be the property of the Loss Mitigation Advisor, subject to
the first priority security interest granted hereunder for the benefit of the
Certificateholders, until withdrawn from the Collateral Fund pursuant to
Section 2.02 or 2.03 hereof. The Collateral Fund shall be an "outside reserve
fund" within the meaning of the REMIC Provisions, beneficially owned by the
Loss Mitigation Advisor for federal income tax purposes. All income, gain,
deduction or loss with respect to the Collateral Fund shall be that of the Loss
Mitigation Advisor. All distributions from the Trust Fund to the Collateral
Fund shall be treated as distributed to the Loss Mitigation Advisor as the
beneficial owner thereof.
Upon the termination of this Agreement and the liquidation of
all Mortgage Loans as to which the Loss Mitigation Advisor has made any
Election to Delay Foreclosure or any Election to Foreclose pursuant to Section
2.04 hereof, the Master Servicer shall distribute to the Loss Mitigation
Advisor all amounts remaining in the Collateral Fund (after adjustment for all
deposits and permitted withdrawals pursuant to this Agreement) together with
any investment earnings thereon. In the event the Loss Mitigation Advisor has
made any Election to Delay Foreclosure or any Election to Foreclose, prior to
any distribution to the Loss Mitigation Advisor of all amounts remaining in the
Collateral Fund, funds in the Collateral Fund shall be applied consistent with
the terms of this Agreement.
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Section 3.02. Permitted Investments.
The Master Servicer shall, at the written direction of the
Loss Mitigation Advisor, invest the funds in the Collateral Fund in Permitted
Investments. Such direction shall not be changed more frequently than
quarterly. In the absence of any direction, the Master Servicer shall select
such investments in accordance with the definition of Permitted Investments in
its discretion.
All income and gain realized from any investment as well as
any interest earned on deposits in the Collateral Fund (net of any losses on
such investments) and any payments of principal made in respect of any
Permitted Investment shall be deposited in the Collateral Fund upon receipt.
All costs and realized losses associated with the purchase and sale of
Permitted Investments shall be borne by the Loss Mitigation Advisor and the
amount of net realized losses shall be deposited by the Loss Mitigation Advisor
in the Collateral Fund promptly upon realization. The Master Servicer shall
periodically (but not more frequently than monthly) distribute to the Loss
Mitigation Advisor upon request an amount of cash, to the extent cash is
available therefor in the Collateral Fund, equal to the amount by which the
balance of the Collateral Fund, after giving effect to all other distributions
to be made from the Collateral Fund on such date, exceeds the Required
Collateral Fund Balance. Any amounts so distributed shall be released from the
lien and security interest of this Agreement.
Section 3.03. Grant of Security Interest.
The Loss Mitigation Advisor hereby grants to the Master
Servicer for the benefit of the Certificateholders under the Pooling Agreement
a security interest in and lien on all of the Loss Mitigation Advisor's right,
title and interest, whether now owned or hereafter acquired, in and to: (1)
the Collateral Fund, (2) all amounts deposited in the Collateral Fund and
Permitted Investments in which such amounts are invested (and the distributions
and proceeds of such investments) and (3) all cash and non-cash proceeds of any
of the foregoing, including proceeds of the voluntary conversion thereof (all
of the foregoing collectively, the "Collateral").
The Loss Mitigation Advisor acknowledges the lien on the
security interest in the Collateral for the benefit of the Certificateholders.
The Loss Mitigation Advisor shall take all actions requested by the Master
Servicer as may be reasonably necessary to perfect the security interest
created under this Agreement in the Collateral and cause it to be prior to all
other security interests and liens, including the execution and delivery to the
Master Servicer for filing of appropriate financing statements in accordance
with applicable law. The Master Servicer shall file appropriate continuation
statements, or appoint an agent on its behalf to file such statements, in
accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at
any time are insufficient to cover any withdrawals therefrom that the Master
Servicer is then entitled to
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make hereunder, the Loss Mitigation Advisor shall be obligated to pay such
amounts to the Master Servicer immediately upon demand. Such obligation shall
constitute a general corporate obligation of the Loss Mitigation Advisor. The
failure to pay such amounts within two Business Days of such demand (except for
amounts to cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and
2.03(b)), shall cause an immediate termination of the Loss Mitigation Advisor's
right to make any Election to Delay Foreclosure or Election to Foreclose and
the Master Servicer's obligations under this Agreement with respect to all
Mortgage Loans to which such insufficiencies relate, without the necessity of
any further notice or demand on the part of the Master Servicer.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Master
Servicer and the Loss Mitigation Advisor by written agreement signed by the
Master Servicer and the Loss Mitigation Advisor.
Section 4.02. 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 4.03. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of California and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in
writing or by telecopy and shall be deemed effective upon receipt to:
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(a) in the case of the Master Servicer,
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Attention: _____________________________________
Phone: _____________________________________
Fax: _____________________________________
(b) in the case of the Loss Mitigation Advisor,
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Attention: _____________________________________
Phone: _____________________________________
Fax: _____________________________________
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever, including
regulatory, held invalid, then such covenants, agreements, provisions or terms
of this Agreement shall in no way affect the validity or enforceability of the
other provisions of this Agreement.
Section 4.06. Successors and Assigns.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the
Certificateholders; provided, however, that the rights under this Agreement
cannot be assigned by the Loss Mitigation Advisor without the consent of the
Master Servicer.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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Section 4.08. Confidentiality.
The Loss Mitigation Advisor agrees that all information
supplied by or on behalf of the Master Servicer pursuant to Sections 2.01 or
2.02, including individual account information, is the property of the Master
Servicer and the Loss Mitigation Advisor agrees to hold such information
confidential and not to disclose such information.
Each party hereto agrees that neither it, nor any officer,
director, employee, affiliate or independent contractor acting at such party's
direction will disclose the terms of Section 4.09 of this Agreement to any
person or entity other than such party's legal counsel except pursuant to a
final, non-appealable order of court, the pendency of such order the other
party will have received notice of at least five business days prior to the
date thereof, or pursuant to the other party's prior express written consent.
Section 4.09. Indemnification.
The Loss Mitigation Advisor agrees to indemnify and hold
harmless the Master Servicer, the Depositor, and each applicable Subservicer
and each person who controls the Master Servicer, the Depositor, or any
applicable Subservicer and each of their respective officers, directors,
affiliates and agents acting at the Master Servicer's, the Depositor's, or any
applicable Subservicer's direction (the "Indemnified Parties") against any and
all losses, claims, damages or liabilities to which they may be subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, actions taken by, or actions not
taken by, the Master Servicer, the Depositor, or any applicable Subservicer, or
on their behalf, in accordance with the provisions of this Agreement and (i)
which actions conflict with the Master Servicer's, the Depositor's, or any
applicable Subservicer's obligations under the Pooling Agreement or the related
Subservicing Agreement, or (ii) give rise to securities law liability under
federal or state securities laws with respect to the Certificates. The Loss
Mitigation Advisor hereby agrees to reimburse the Indemnified Parties for the
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
The indemnification obligations of the Loss Mitigation Advisor hereunder shall
survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the Master Servicer and the Loss
Mitigation Advisor 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.
BANK OF AMERICA, FSB,
as Master Servicer
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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LOSS MITIGATION ADVISOR
________________________________________________
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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