<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 24, 1998
-------------
BA Mortgage Securities, Inc. (as depositor under a
Pooling and Servicing Agreement dated as of July 1, 1998 providing for,
inter alia, the issuance of Mortgage Pass-Through Certificates, Series 1998-4)
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-53933 94-324470
----------------------------- ------------- ---------------------
(State or Other Jurisdiction (Commission) (I.R.S. Employer
of Incorporation) File Number) Identification No.)
345 Montgomery Street, Lower Level #2, Unit #8152, San Francisco, CA 94104
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (415) 622-3676
--------------
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(Former Name or Former Address, if Changed Since Last Report)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
(See attached Exhibit Index.)
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BA MORTGAGE SECURITIES, INC.
By: /s/ John Isbrandsten
----------------------------------
Name: John Isbrandtsen
Title: Vice President
Dated: July 24, 1998
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Numbers Description of Exhibit Pages
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<S> <C> <C>
4.1 Pooling and Servicing Agreement dated as of July 1, 1998 among BA
Mortgage Securities, Inc., Depositor, Bank of America, FSB,
Master Servicer and the Bank of New York, Trustee (providing for,
inter alia, the issuance of Mortgage Pass Through Certificates,
Series 1998-4)
</TABLE>
4
<PAGE> 1
Execution Copy
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BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FSB
Master Servicer,
and
THE BANK OF NEW YORK,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1998
Mortgage Pass-Through Certificates
Series 1998-4
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<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I DEFINITIONS...............................................................4
Section 1.01. Definitions........................................................4
Accrued Certificate Interest.................................................4
Adjusted Class IA-12 Percentage..............................................4
Administration Fee...........................................................4
Advance......................................................................5
Affiliate....................................................................5
Agreement....................................................................5
Amount Held for Future Distribution..........................................5
Appraised Value..............................................................5
Assignment...................................................................5
Available Distribution Amount................................................5
Bankruptcy Amount............................................................6
Bankruptcy Code..............................................................6
Bankruptcy Loss..............................................................6
Book-Entry Certificate.......................................................6
Business Day.................................................................6
Buydown Funds................................................................6
Buydown Mortgage Loan........................................................6
Cash Liquidation.............................................................6
Certificate..................................................................7
Certificate Account..........................................................7
Certificate Account Deposit Date.............................................7
Certificateholder or Holder..................................................7
Certificate Group............................................................7
Certificate Owner............................................................7
Certificate Principal Balance................................................7
Certificate Register and Certificate Registrar...............................8
Class........................................................................8
Class A Certificates.........................................................8
Class I-PO Certificates......................................................8
Class I-PO Fraction..........................................................8
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C> <C>
Class I-PO Mortgage Loan.....................................................8
Class I-PO Principal Distribution Amount.....................................8
Class I-X-1 Certificates.....................................................8
Class I-X-1 Notional Amount..................................................8
Class I-X-1 Planned Notional Amount..........................................8
Class I-X-2 Certificates.....................................................8
Class I-X-2 Notional Amount..................................................8
Class I-X-2 Planned Notional Amount..........................................9
Class I-X-3 Certificates.....................................................9
Class I-X-3 Notional Amount..................................................9
Class I-X-3 Planned Notional Amount..........................................9
Class I-X-4 Certificates.....................................................9
Class I-X-4 Notional Amount..................................................9
Class IA-1 Certificates......................................................9
Class IA-2 Certificates......................................................9
Class IA-3 Certificates......................................................9
Class IA-4 Certificates......................................................9
Class IA-5 Certificates......................................................9
Class IA-6 Certificates......................................................9
Class IA-6 Notional Amount...................................................9
Class IA-7 Certificates.....................................................10
Class IA-8 Certificates.....................................................10
Class IA-9 Certificates.....................................................10
Class IA-10 Accretion Termination Date......................................10
Class IA-10 Accrual Amount..................................................10
Class IA-10 Certificates....................................................10
Class IA-11 Accretion Amount................................................10
Class IA-11 Accrual Amount..................................................10
Class IA-11 Certificates....................................................10
Class IA-12 Certificates....................................................10
Class IA-12 Liquidation Amount..............................................10
Class IA-12 Percentage......................................................10
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C>
Class IA-12 Prepayment Percentage...........................................11
Class IA-12 Priority Amount.................................................11
Class II-PO Certificates....................................................11
Class II-PO Fraction........................................................11
Class II-PO Mortgage Loan...................................................11
Class II-PO Principal Distribution Amount...................................11
Class II-X Certificates.....................................................11
Class II-X Notional Amount..................................................11
Class IIA-1 Certificates....................................................11
Class IIA-2 Certificates....................................................11
Class IIA-3 Certificates....................................................12
Class IIA-4 Accretion Termination Date......................................12
Class IIA-4 Accrual Amount..................................................12
Class IIA-4 Certificates....................................................12
Class IIA-5 Accretion Termination Date......................................12
Class IIA-5 Accrual Amount..................................................12
Class IIA-5 Certificates....................................................12
Class IIA-6 Certificates....................................................12
Class IIA-6 Liquidation Amount..............................................12
Class IIA-6 Percentage......................................................12
Class IIA-6 Prepayment Percentage...........................................12
Class IIA-6 Priority Amount.................................................12
Class B Certificates........................................................13
Class IB-1 Certificates.....................................................13
Class IB-2 Certificates.....................................................13
Class IB-3 Certificates.....................................................13
Class IB-4 Certificates.....................................................13
Class IB-5 Certificates.....................................................13
Class IIB-1 Certificates....................................................13
Class IIB-2 Certificates....................................................13
Class IIB-3 Certificates....................................................13
Class IIB-4 Certificates....................................................13
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C>
Class IIB-5 Certificates....................................................13
Class M Certificates........................................................13
Class IM Certificates.......................................................13
Class IIM Certificates......................................................13
Class PO Certificates.......................................................13
Class R-I Certificates......................................................14
Class R-II Certificates.....................................................14
Class R-III Certificates....................................................14
Class X Certificates........................................................14
Closing Date................................................................14
Code........................................................................14
Compensating Interest.......................................................14
Corporate Trust Office......................................................14
Corresponding Class.........................................................14
Curtailment.................................................................15
Custodial Account...........................................................15
Custodial Agreement.........................................................15
Custodian...................................................................16
Cut-off Date................................................................16
Cut-off Date Principal Balance..............................................16
Debt Service Reduction......................................................16
Deficient Valuation.........................................................16
Definitive Certificate......................................................16
Deleted Mortgage Loan.......................................................16
Depository..................................................................16
Depository Participant......................................................16
Determination Date..........................................................16
Disqualified Organization...................................................16
Distribution Date...........................................................17
Due Date....................................................................17
Due Period..................................................................17
Eligible Account............................................................17
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C>
Event of Default............................................................17
Excess Bankruptcy Loss......................................................17
Excess Fraud Loss...........................................................18
Excess Special Hazard Loss..................................................18
Extraordinary Events........................................................18
Extraordinary Losses........................................................18
FDIC........................................................................18
FHLMC.......................................................................18
FNMA........................................................................19
Final Distribution Date.....................................................19
Fitch.......................................................................19
Foreclosure Profits.........................................................19
Fraud Loss Amount...........................................................19
Fraud Losses................................................................19
Group I Certificates........................................................19
Group I Credit Support Depletion Date.......................................19
Group I Junior Subordinate Certificates.....................................19
Group I Loans...............................................................20
Group I Original Subordinate Principal Balance..............................20
Group I Premium Rate Mortgage Loans.........................................20
Group I Senior Certificates.................................................20
Group I Senior Subordinate Certificates.....................................20
Group I Subordinate Certificates............................................20
Group I Subordinate Liquidation Amount......................................20
Group I Subordinate Percentage..............................................20
Group I Subordinate Prepayment Percentage...................................20
Group I Subordinate Principal Distribution Amount...........................20
Group I-X Certificates......................................................21
Group I-X Notional Amount...................................................21
Group I-X Notional Reduction Amount.........................................21
Group IA Certificates.......................................................22
Group IA Liquidation Amount.................................................22
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C> <C>
Group IA Percentage.........................................................22
Group IA Prepayment Percentage..............................................22
Group IA Principal Distribution Amount......................................23
Group II Certificates.......................................................23
Group II Credit Support Depletion Date......................................23
Group II Junior Subordinate Certificates....................................23
Group II Loan...............................................................23
Group II Original Subordinate Principal Balance.............................23
Group II Premium Rate Mortgage Loans........................................23
Group II Senior Certificates................................................23
Group II Senior Subordinate Certificates....................................24
Group II Subordinate Certificates...........................................24
Group II Subordinate Liquidation Amount.....................................24
Group II Subordinate Percentage.............................................24
Group II Subordinate Prepayment Percentage..................................24
Group II Subordinate Principal Distribution Amount..........................24
Group IIA Certificates......................................................24
Group IIA Liquidation Amount................................................25
Group IIA Percentage........................................................25
Group IIA Prepayment Percentage.............................................25
Group IIA Principal Distribution Amount.....................................26
Independent.................................................................26
Initial Certificate Principal Balance.......................................26
Initial Notional Amount.....................................................26
Insurance Proceeds..........................................................26
Insurer.....................................................................26
Last Scheduled Distribution Date............................................26
Late Collections............................................................26
LIBOR.......................................................................27
LIBOR Business Day..........................................................27
LIBOR Certificates..........................................................27
LIBOR Rate Adjustment Date..................................................27
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C> <C>
Liquidated Mortgage Loan....................................................27
Liquidation Principal.......................................................27
Liquidation Proceeds........................................................28
Loan Group..................................................................28
Loan Group I................................................................28
Loan Group II...............................................................28
Loan-to-Value Ratio.........................................................28
Master Servicer Remittance Amount...........................................28
Master Servicing Fee........................................................28
Maturity Date...............................................................28
Monthly Payment.............................................................28
Mortgage....................................................................29
Mortgage File...............................................................29
Mortgage Loan Purchase Agreement............................................29
Mortgage Loan Schedule......................................................29
Mortgage Loans..............................................................30
Mortgage Note...............................................................30
Mortgage Rate...............................................................30
Mortgaged Property..........................................................30
Mortgagor...................................................................30
Net Mortgage Rate...........................................................30
Net Prepayment Interest Shortfall...........................................30
Non-Primary Residence Loans.................................................30
Non-United States Person....................................................30
Nonrecoverable Advance......................................................30
Nonrecoverable Subservicer Advance..........................................30
Nonsubserviced Mortgage Loan................................................31
Notional Amount.............................................................31
Officers' Certificate.......................................................31
Opinion of Counsel..........................................................31
Outstanding Mortgage Loan...................................................31
Ownership Interest..........................................................31
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C> <C>
Pass-Through Rate...........................................................31
Paying Agent................................................................31
Percentage Interest.........................................................31
Permitted Investments.......................................................32
Permitted Transferee........................................................33
Person......................................................................33
Planned Principal Balance...................................................33
Pool Stated Principal Balance...............................................33
Prepayment Assumption.......................................................33
Prepayment Interest Shortfall...............................................33
Primary Mortgage Insurance Policy...........................................33
Primary Servicing Fee.......................................................33
Principal Payment Amount....................................................34
Principal Prepayment........................................................34
Principal Prepayment Amount.................................................34
Principal Prepayment in Full................................................34
Prior Period................................................................34
Purchase Price..............................................................34
Qualified Substitute Mortgage Loan..........................................34
Rating Agency...............................................................35
Realized Loss...............................................................35
Record Date.................................................................35
Regular Certificate.........................................................35
REMIC.......................................................................35
REMIC I.....................................................................35
REMIC I Regular Interest IA-1-L.............................................35
REMIC I Regular Interest IA-2-L.............................................35
REMIC I Regular Interest IA-3-L.............................................36
REMIC I Regular Interest IA-4-L.............................................36
REMIC I Regular Interest IA-5-L.............................................36
REMIC I Regular Interest IA-7-L.............................................36
REMIC I Regular Interest IB-L...............................................36
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<TABLE>
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(CONTINUED)
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<S> <C> <C>
REMIC I Regular Interest I-PO1-L............................................36
REMIC I Regular Interest I-PO2-L............................................36
REMIC I Regular Interest I-X-1-L............................................37
REMIC I Regular Interest I-X-2-L............................................37
REMIC I Regular Interest I-X-3-L............................................37
REMIC I Regular Interest I-X-4-L............................................37
REMIC I Regular Interests...................................................37
REMIC II....................................................................37
REMIC II Regular Interest IIA-1-L...........................................37
REMIC II Regular Interest IIB-L.............................................37
REMIC II Regular Interest II-X-L............................................38
REMIC II Regular Interest II-PO-L...........................................38
REMIC II Regular Interests..................................................38
REMIC III...................................................................38
REMIC Administrator.........................................................38
REMIC Provisions............................................................38
REO Acquisition.............................................................38
REO Disposition.............................................................38
REO Imputed Interest........................................................38
REO Proceeds................................................................38
REO Property................................................................39
Request for Release.........................................................39
Required Insurance Policy...................................................39
Residual Certificates.......................................................39
Responsible Officer.........................................................39
S&P.........................................................................39
Schedule 1 Targeted Principal Balance.......................................39
Schedule 2 Targeted Principal Balance.......................................39
Seller......................................................................39
Senior Certificates.........................................................39
Servicing Accounts..........................................................39
Servicing Advances..........................................................39
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C>
Servicing Officer...........................................................40
Special Hazard Amount.......................................................40
Special Hazard Loss.........................................................40
Stated Principal Balance....................................................40
Step Down Percentage........................................................40
Stripped Interest Rate......................................................41
Subordinate Certificate Pass-Through Rate...................................41
Subordinate Certificates....................................................41
Subordination Level.........................................................41
Subserviced Mortgage Loan...................................................41
Subservicer.................................................................41
Subservicer Servicing Advances..............................................41
Subservicing Account........................................................41
Subservicing Agreement......................................................41
Targeted Principal Balance..................................................42
Tax Returns.................................................................42
Transfer....................................................................42
Transferee..................................................................42
Transferor..................................................................42
Trust Fund..................................................................42
Trustee Fee.................................................................42
Underwriter.................................................................42
Uninsured Cause.............................................................42
United States Person........................................................43
Unpaid Accrued Certificate Interest.........................................43
Voting Rights...............................................................43
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES..........43
Section 2.01. Conveyance of Mortgage Loans......................................43
Section 2.02. Acceptance by Trustee.............................................49
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer..........................................................50
</TABLE>
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<TABLE>
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(CONTINUED)
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<S> <C> <C> <C>
Section 2.04. Representations and Warranties of Sellers.........................51
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust
Fund..............................................................52
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...........................53
Section 3.01. Master Servicer to Act as Servicer................................53
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' and Sellers'
Obligations.......................................................54
Section 3.03. Successor Subservicers............................................54
Section 3.04. Liability of the Master Servicer..................................55
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders.............................................55
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee...........................................................55
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account.................................................56
Section 3.08. Subservicing Accounts; Servicing Accounts.........................58
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans................................................59
Section 3.10. Permitted Withdrawals.............................................59
Section 3.11. Maintenance of the Primary Insurance Policies; Collections
Thereunder........................................................60
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage..........................................................61
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments......................62
Section 3.14. Realization Upon Defaulted Mortgage Loans.........................64
Section 3.15. Trustee to Cooperate; Release of Mortgage Files...................66
Section 3.16. Servicing and Other Compensation; Compensating Interest...........68
Section 3.17. Annual Statement as to Compliance.................................68
Section 3.18. Annual Independent Public Accountants' Servicing Report...........69
Section 3.19. Rights of the Depositor in Respect of the Master Servicer.........69
Section 3.20. Administration of Buydown Funds...................................70
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS...........................................70
Section 4.01. Certificate Account...............................................70
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C> <C>
Section 4.02. Distributions.....................................................71
Section 4.03. Statements to Certificateholders..................................81
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer...................................84
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.........................................................89
Section 5.01. The Certificates..................................................89
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.......................................96
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER....................................96
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
ARTICLE VII DEFAULT..................................................................98
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..................................................101
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
</TABLE>
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<TABLE>
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(CONTINUED)
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<S> <C> <C> <C>
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.............................................................110
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........................................................113
Section 10.01. REMIC Administration.............................................113
Section 10.02. Master Servicer and Trustee Indemnification......................116
ARTICLE XI MISCELLANEOUS PROVISIONS................................................117
Section 11.01. Amendment........................................................117
Section 11.02. Recordation of Agreement; Counterparts...........................119
Section 11.03. Limitation on Rights of Certificateholders.......................119
Section 11.04. Governing Law....................................................120
Section 11.05. Notices..........................................................120
Section 11.06. Notices to Rating Agency.........................................121
Section 11.07. Severability of Provisions.......................................122
EXHIBITS
Exhibit A: Form of Class A, Group X and Class PO Certificate
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Residual Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, FSB Mortgage Loan Schedule
Exhibit F: Form of Mortgage Loan Purchase Agreement
Exhibit G: Form of Request for Release
</TABLE>
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<TABLE>
TABLE OF CONTENTS
(CONTINUED)
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<S> <C> <C>
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 Certification
Exhibit Q: Planned Principal Balances, Targeted Principal Balances and Planned Notional
Amounts
</TABLE>
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This is a Pooling and Servicing Agreement, effective as of July 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 THE BANK OF NEW YORK, not in its individual capacity but solely
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.
<PAGE> 17
<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 6.650% $ 16,000,000.00 August 25, 2028 AAA AAA
Class IA-2 Regular 6.250% $ 25,000,000.00 August 25, 2028 AAA AAA
Class IA-3 Regular 6.650% $ 6,800,000.00 August 25, 2028 AAA AAA
Class IA-4 Regular 6.600% $ 23,800,000.00 August 25, 2028 AAA AAA
Class IA-5 Regular 6.500% $ 50,000,000.00 August 25, 2028 AAA AAA
Class IA-6 Regular 6.750% $ (2) August 25, 2028 AAAr AAA
Class IA-7 Regular (3) $131,355,000.00 August 25, 2028 AAA AAA
Class IA-8 Regular (4) $ 25,298,000.00 August 25, 2028 AAA AAA
Class IA-9 Regular (5) $ 8,757,000.00 August 25, 2028 AAA AAA
Class IA-10 Regular 6.750%(6) $ 8,550,000.00 August 25, 2028 AAA AAA
Class IA-11 Regular 6.750%(7) $ 3,000,000.00 August 25, 2028 AAA AAA
Class IA-12 Regular 6.750% $ 59,500,000.00 August 25, 2028 AAA AAA
Class IIA-1 Regular 6.500% $ 27,000,000.00 August 25, 2013 AAA AAA
Class IIA-2 Regular 6.500% $ 25,828,000.00 August 25, 2013 AAA AAA
Class IIA-3 Regular 6.500% $ 46,300,000.00 August 25, 2013 AAA AAA
Class IIA-4 Regular 6.500%(8) $ 900,000.00 August 25, 2013 AAA AAA
Class IIA-5 Regular 6.500%(9) $ 582,000.00 August 25, 2013 AAA AAA
Class IIA-6 Regular 6.500% $ 26,000,000.00 August 25, 2013 AAA AAA
Class I-X-1 Regular (10) $ (11) August 25, 2028 AAAr AAA
Class I-X-2 Regular (10) $ (11) August 25, 2028 AAAr AAA
Class I-X-3 Regular (10) $ (11) August 25, 2028 AAAr AAA
Class I-X-4 Regular (10) $ (11) August 25, 2028 AAAr AAA
Class II-X Regular 6.500% $ (11) August 25, 2013 AAAr AAA
Class I-PO Regular (12) $ 102,916.07 August 25, 2028 AAAr AAA
Class II-PO Regular (12) $ 291,460.39 August 25, 2013 AAAr AAA
Class IM Regular 6.750% $ 6,902,000.00 August 25, 2028 - AA
Class IB-1 Regular 6.750% $ 3,171,000.00 August 25, 2028 - A
Class IB-2 Regular 6.750% $ 1,679,000.00 August 25, 2028 - BBB
Class IB-3 Regular 6.750% $ 1,306,000.00 August 25, 2028 - BB
Class IB-4 Regular 6.750% $ 933,000.00 August 25, 2028 - B
Class IB-5 Regular 6.750% $ 932,997.84 August 25, 2028 - -
Class IIM Regular 6.500% $ 1,234,000.00 August 25, 2013 - AA
Class IIB-1 Regular 6.500% $ 454,000.00 August 25, 2013 - A
Class IIB-2 Regular 6.500% $ 325,000.00 August 25, 2013 - BBB
Class IIB-3 Regular 6.500% $ 389,000.00 August 25, 2013 - BB
Class IIB-4 Regular 6.500% $ 195,000.00 August 25, 2013 - B
Class IIB-5 Regular 6.500% $ 324,889.16 August 25, 2013 - -
Class R-I Residual 6.750% $ 50.00 August 25, 2028 AAA AAA
Class R-II Residual 6.500% $ 50.00 August 25, 2013 AAA AAA
Class R-III Residual 6.750% $ 50.00 August 25, 2028 AAA AAA
===================================================================================================
</TABLE>
(1) Interest distributed to the Certificates on each Distribution Date will
have accrued during the preceding calendar month, except for the Class
IA-7, Class IA-8 and Class IA-9 Certificates, which will accrue interest
during the period from the 25th day of the month prior to each
Distribution Date to the 24th day of the month of such Distribution
Date.
(2) The Class IA-6 Certificates will not receive distributions of principal
and will accrue interest on the Class IA-6 Notional Amount.
(3) The initial Pass-Through Rate for the Class IA-7 Certificates will be
6.150% per annum. Thereafter, the Class IA-7 Certificates will accrue
interest at a per annum rate equal to LIBOR plus 0.500%, subject to a
minimum and maximum Pass-Through Rate of 0.500% and 8.500% per annum,
respectively.
(4) The initial Pass-Through Rate for the Class IA-8 Certificates will be
9.60575% per annum. Thereafter, the Class IA-8 Certificates will accrue
interest at a per annum rate equal to 38.94230% -- (5.19231 x LIBOR),
subject to a minimum and maximum Pass-Through Rate of 0.000% and
38.94230% per annum, respectively.
2
<PAGE> 18
(5) The initial Pass-Through Rate for the Class IA-9 Certificates will be
7.500% per annum. Thereafter, the Class IA-9 Certificates will accrue
interest at a per annum rate equal to 120% -- (15 x LIBOR), subject to a
minimum and maximum Pass-Through Rate of 0.000% and 7.500% per annum,
respectively.
(6) On each Distribution Date on or before the Class IA-10 Accretion
Termination Date, an amount equal to the Class IA-10 Accrual Amount will
be added to the Class IA-10 Certificate Principal Balance, and such
amount will be distributed as principal to certain Certificates as set
forth herein and will not be distributed as interest to the Class IA-10
Certificates.
(7) On each Distribution Date on or before the Class IA-11 Accretion
Termination Date, an amount equal to the Class IA-11 Accrual Amount will
be added to the Class IA-11 Certificate Principal Balance, and such
amount will be distributed as principal to certain Certificates as set
forth herein and will not be distributed as interest to the Class IA-11
Certificates.
(8) On each Distribution Date on or before the Class IIA-4 Accretion
Termination Date, an amount equal to the Class IIA-4 Accrual Amount will
be added to the Class IIA-4 Certificate Principal Balance, and such
amount will be distributed as principal to certain Certificates as set
forth herein and will not be distributed as interest to the Class IIA-4
Certificates.
(9) On each Distribution Date on or before the Class IIA-5 Accretion
Termination Date, an amount equal to the Class IIA-5 Accrual Amount will
be added to the Class IIA-5 Certificate Principal Balance, and such
amount will be distributed as principal to certain Certificates as set
forth herein and will not be distributed as interest to the Class IIA-5
Certificates.
(10) The Pass-Through Rate on the Group I-X Certificates will equal the
weighted average of the Stripped Interest Rates for the Group I Premium
Rate Mortgage Loans.
(11) The Group I-X and Class II-X Certificates will not receive distributions
of principal and will accrue interest on their respective Notional
Amounts.
(12) The Class I-PO and Class II-PO Certificates will not be entitled to
receive distributions of interest.
3
<PAGE> 19
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-12 Percentage: With respect to any Distribution Date
prior to the Distribution Date occurring in August 2003, 0% and for any
Distribution Date on or after the Distribution Date occurring in August 2003,
the product of (I) the Group IA Percentage and (ii) the Class IA-12 Percentage.
Administration Fee: With respect to any Mortgage Loan, the sum of the
applicable Master Servicing Fee and Trustee Fee.
4
<PAGE> 20
Advance: As to any Mortgage Loan, any advance made by the Master Service
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 Service 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 II" will
5
<PAGE> 21
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.
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
Certificates and the 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 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.
6
<PAGE> 22
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 "The Bank of New
York, not in its individual capacity by solely as Trustee, in trust for the
registered holders of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1998-4" 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 entitled to principal on any date of determination, an amount equal to (i)
the Initial Certificate Principal Balance of such Certificate as specified in
the Preliminary Statement hereto, reduced by (ii) the sum of (x) the aggregate
of all amounts previously distributed with respect to such Certificate (or any
predecessor Certificate) and applied to reduce the Certificate Principal Balance
or amount thereof pursuant to Section 4.02(a) and (y) the aggregate of all
reductions in Certificate Principal Balance deemed to have occurred in
connection with Realized Losses which were previously allocated to such
Certificate (or any predecessor Certificate) pursuant to Section 4.05, and
increased in the case of the Class IA-10 Certificates, the Class IA-11
Certificates, the Class II-A-4 Certificates and the Class IIA-5 Certificates by
any Class IA-10 Accrual Amount, Class IA-11 Accrual Amount, Class IIA-4 Accrual
Amount or Class IIA-5 Accrual Amount, respectively, added thereto. The
Certificate Principal Balance for the Class IA-1 Certificates may be referred to
as the "Class IA-1 Certificate Principal Balance," and so on.
7
<PAGE> 23
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, Class IIA-1, Class IIA-2, Class IIA-3, Class IIA-4,
Class IIA-5 and Class IIA-6 Certificates, collectively.
Class I-PO Certificates: The Certificates designated "Class I-PO" on the
face thereof 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 Group I 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 Group I 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-1 Certificates: The Certificates designated as "Class I-X-1"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class I-X-1 Notional Amount: With respect to any Distribution Date, the
Class I-X-1 Notional Amount on the prior Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) reduced by the portion of the
Group I-X Notional Reduction Amount allocable thereto on such Distribution Date
pursuant to the definition of "Group I-X Notional Reduction Amount." The Class
I-X-1 Notional Amount as of the Closing Date will be $8,429,000.00.
Class I-X-1 Planned Notional Amount: With respect to any Distribution
Date and the Class I-X-1 Certificates, the Notional Amount of such Class for
such Distribution Date set forth on Exhibit Q hereto.
Class I-X-2 Certificates: The Certificates designated as "Class I-X-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class I-X-2 Notional Amount: With respect to any Distribution Date, the
Class I-X-2 Notional Amount on the prior Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) reduced by the portion of the
Group I-X Notional Reduction Amount allocable thereto on such Distribution Date
pursuant to the definition of "Group I-X Notional Reduction Amount." The Class
I-X-2 Notional Amount as of the Closing Date will be $114,336,000.00.
8
<PAGE> 24
Class I-X-2 Planned Notional Amount: With respect to any Distribution
Date and the Class I-X-2 Certificates, the Notional Amount of such Class for
such Distribution Date set forth on Exhibit Q hereto.
Class I-X-3 Certificates: The Certificates designated as "Class I-X-3"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class I-X-3 Notional Amount: With respect to any Distribution Date, the
Class I-X-3 Notional Amount on the prior Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) reduced by the portion of the
Group I-X Notional Reduction Amount allocable thereto on such Distribution Date
pursuant to the definition of "Group I-X Notional Reduction Amount." The Class
I-X-3 Notional Amount as of the Closing Date will be $70,972,000.00.
Class I-X-3 Planned Notional Amount: With respect to any Distribution
Date and the Class I-X-3 Certificates, the Notional Amount of such Class for
such Distribution Date set forth on Exhibit Q hereto.
Class I-X-4 Certificates: The Certificates designated as "Class I-X-4"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class I-X-4 Notional Amount: With respect to any Distribution Date, the
Class I-X-4 Notional Amount on the prior Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) reduced by the portion of the
Group I-X Notional Reduction Amount allocable thereto on such Distribution Date
pursuant to the definition of "Group I-X Notional Reduction Amount." The Class
I-X-4 Notional Amount as of the Closing Date will be $159,760,776.41.
Class IA-1 Certificates: The Certificates designated as "Class IA-1" on
the face thereof 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.
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-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-6 Notional Amount: With respect to any date of determination,
the sum of (i) the aggregate Certificate Principal Balances of the Class IA-1
and Class IA-3 Certificates divided by 67.5, (ii) the Certificate Principal
Balance of the Class IA-2 Certificates divided by 13.5, (iii) the Certificate
Principal Balance of the Class IA-4 Certificates divided by 45, and (iv)
9
<PAGE> 25
the Certificate Principal Balance of the Class IA-5 Certificates divided by 27.
The Class IA-6 Notional Amount as of the Closing Date will be $4,570,370.37.
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 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 Accretion Termination Date: The earlier to occur of (i) the
Distribution Date on which the Certificate Principal Balances of the Class IA-7,
Class IA-8 and Class IA-9 Certificates have been reduced to zero and (ii) the
Group I Credit Support Depletion Date.
Class IA-10 Accrual Amount: On each Distribution Date on or before the
Class IA-10 Accretion Termination Date, an amount equal to the accrued interest
that would otherwise be distributable in respect of the Class IA-10 Certificates
on such Distribution Date.
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 Accretion Amount: The earlier to occur of (i) the
Distribution Date on which the Certificate Principal Balances of the Class IA-7,
Class IA-8, Class IA-9 and Class IA-10 Certificates have been reduced to zero
and (ii) the Group I Credit Support Depletion Date.
Class IA-11 Accrual Amount: On each Distribution Date on or before the
Class IIA-11 Accretion Termination Date, an amount equal to the accrued interest
that would otherwise be distributable in respect of the Class IA-11 Certificates
on such Distribution Date.
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 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-12 Percentage of the
principal balance of such Mortgage Loan (exclusive of the Class I-PO Fraction
thereof, if applicable) and (ii) the Class IA-12 Percentage on any Distribution
Date occurring prior to the fifth anniversary of the first Distribution Date,
and the Class IA-12 Prepayment Percentage on any Distribution Date thereafter,
in each case, of the Liquidation Principal with respect to such Mortgage Loan.
Class IA-12 Percentage: With respect to any Distribution Date, the
lesser of (a) 100% and (b) the sum of (i) the Class IA-12 Certificate Principal
Balance and (ii) $24,000,000, divided
10
<PAGE> 26
by the aggregate Certificate Principal Balance of the Class R-I, Class R-III and
Group IA Certificates, in each case immediately prior to the Distribution Date.
Class IA-12 Prepayment Percentage: With respect to any Distribution
Date, the product of (a) the Group IA Percentage, (b) the Class IA-12 Percentage
for such Distribution Date and (c) the applicable Step Down Percentage.
Class IA-12 Priority Amount: With respect to any Distribution Date, the
sum of (i) the Adjusted Class IA-12 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-12 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-12 Liquidation Amount.
Class II-PO Certificates: The Certificates designated as "Class II-PO"
on the face thereof 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 Group II 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 Group II 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 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 $1,340,836.89.
Class IIA-1 Certificates: The Certificates designated as "Class IIA-1"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IIA-2 Certificates: The Certificates designated as "Class IIA-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
11
<PAGE> 27
Class IIA-3 Certificates: The Certificates designated as "Class IIA-3"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IIA-4 Accretion Termination Date: The earlier to occur of (i) the
Distribution Date on which the Certificate Principal Balance of the Class IIA-3
Certificates has been reduced to zero and (ii) the Group II Credit Support
Depletion Date.
Class IIA-4 Accrual Amount: On each Distribution Date on or before the
Class IIA-4 Accretion Termination Date, an amount equal to the accrued interest
that would otherwise be distributable in respect of the Class IIA-4 Certificates
on such Distribution Date.
Class IIA-4 Certificates: The Certificates designated as "Class IIA-4"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class IIA-5 Accretion Termination Date: The earlier to occur of (i) the
Distribution Date on which the Certificate Principal Balances of the Class IIA-3
and Class IIA-4 Certificates have been reduced to zero and (ii) the Group II
Credit Support Depletion Date.
Class IIA-5 Accrual Amount: On each Distribution Date on or before the
Class IIA-5 Accretion Termination Date, an amount equal to the accrued interest
that would otherwise be distributable in respect of the Class IIA-5 Certificates
on such Distribution Date.
Class IIA-5 Certificates: The Certificates designated as "Class IIA-5"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IIA-6 Certificates: The Certificates designated as "Class IIA-6"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class IIA-6 Liquidation Amount: With respect to 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 Class IIA-6 Percentage of the
principal balance of such Mortgage Loan (exclusive of the Class II-PO Fraction
thereof, if applicable) and (ii) the Class IIA-6 Percentage on any Distribution
Date occurring prior to the fifth anniversary of the first Distribution Date,
and the Class IIA-6 Prepayment Percentage on any Distribution Date thereafter,
in each case, of the Liquidation Principal with respect to such Mortgage Loan.
Class IIA-6 Percentage: With respect to any Distribution Date, the Class
IIA-6 Certificate Principal Balance divided by the aggregate Certificate
Principal Balance of the Group II Certificates (less the Class II-PO Certificate
Principal Balance), in each case immediately prior to the Distribution Date.
Class IIA-6 Prepayment Percentage: With respect to any Distribution
Date, the product of (a) the Class IIA-6 Percentage for such Distribution Date
and (b) the applicable Step Down Percentage.
Class IIA-6 Priority Amount: With respect to any Distribution Date, the
sum of (i) the Class IIA-6 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 Class IIA-
12
<PAGE> 28
6 Prepayment Percentage of the Principal Prepayment Amount for Loan Group II
(exclusive of the portion thereof attributable to the Class II-PO Principal
Distribution Amount) and (iii) the Class IIA-6 Liquidation Amount.
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 in substantially the form attached hereto as Exhibit C.
Class IB-2 Certificates: The Certificates designated as "Class IB-2" on
the face thereof in substantially the form attached hereto as Exhibit C.
Class IB-3 Certificates: The Certificates designated as "Class IB-3" on
the face thereof in substantially the form attached hereto as Exhibit C.
Class IB-4 Certificates: The Certificates designated as "Class IB-4" on
the face thereof in substantially the form attached hereto as Exhibit C.
Class IB-5 Certificates: The Certificates designated as "Class IB-5" on
the face thereof in substantially the form attached hereto as Exhibit C.
Class IIB-1 Certificates: The Certificates designated as "Class IIB-1"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class IIB-2 Certificates: The Certificates designated as "Class IIB-2"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class IIB-3 Certificates: The Certificates designated as "Class IIB-3"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class IIB-4 Certificates: The Certificates designated as "Class IIB-4"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class IIB-5 Certificates: The Certificates designated as "Class IIB-5"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class M Certificates: The Class IM and the Class IIM Certificates,
collectively.
Class IM Certificates: The Certificates designated as "Class IM" on the
face thereof in substantially the form attached hereto as Exhibit B.
Class IIM Certificates: The Certificates designated as "Class IIM" on
the face thereof in substantially the form attached hereto as Exhibit B.
Class PO Certificates: The Class I-PO and the Class II-PO Certificates,
collectively.
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<PAGE> 29
Class R-I Certificates: The Certificates designated as "Class R-I" on
the face thereof 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 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 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 Group I-X and Class II-X Certificates,
collectively.
Closing Date: July 24, 1998.
Code: The Internal Revenue Code of 1986.
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 101 Barclay Street - 12E, New York, New York 10286,
Attention: Corporate Trust - MBS Group (Fax: (212) 815-5409).
Corresponding Class: With respect to the Group I Certificates, the
"Corresponding Class" or "Corresponding Classes" of REMIC I Regular Interests
for each of such Certificates is as set forth below:
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<PAGE> 30
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Group I Certificates REMIC I Regular Interest
---------------------------------------------------------------------------
<S> <C>
Class IA-1 IA-1-L, I-X-1-L, I-X-2-L,
I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class IA-2 IA-2-L, I-X-1-L, I-X-2-L,
I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class IA-3 IA-3-L, I-X-1-L, I-X-2-L,
I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class IA-4 IA-4-L, I-X-1-L, I-X-2-L,
I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class IA-5 IA-5-L, I-X-1-L, I-X-2-L,
I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class IA-6 IA-1-L, IA-2-L, IA-3-L,
IA-4-L, IA-5-L
---------------------------------------------------------------------------
Class IA-7, IA-8, IA-9, IA-10, IA-11, IA-7-L, I-X-1-L, I-X-2-L,
IA-12, R-III I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
Class I-X-1 I-X-1-L
---------------------------------------------------------------------------
Class I-X-2 I-X-2-L
---------------------------------------------------------------------------
Class I-X-3 I-X-3-L
---------------------------------------------------------------------------
Class I-X-4 I-X-4-L
---------------------------------------------------------------------------
Class I-PO I-P01-L
---------------------------------------------------------------------------
Class IM, Class IB-1, Class IB-2, I-B-L, I-X-1-L, I-X-2-L,
Class IB-3, Class IB-4, Class IB-5 I-X-3-L, I-X-4-L, I-P02-L
---------------------------------------------------------------------------
</TABLE>
With respect to the Group II Certificates, the "Corresponding Class" or
"Corresponding Classes" of REMIC II Regular Interests 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-2, Class IIA-3,
Class IIA-4, Class IIA-5, Class IIA-6
---------------------------------------------------------------------------
Class II-X
---------------------------------------------------------------------------
Class II-PO
---------------------------------------------------------------------------
Class IIM, Class IIB-1, Class 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.
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<PAGE> 31
Custodian: A custodian appointed pursuant to a Custodial Agreement.
Cut-off Date: July 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.
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 16th day
(or if such 16th day is not a Business Day, the Business Day immediately
preceding such 16th 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
16
<PAGE> 32
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 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 The Bank of New York
acting in its fiduciary capacity, or if The Bank of New York 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.
17
<PAGE> 33
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.
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.
18
<PAGE> 34
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.
Group I Junior Subordinate Certificates: The Class IB-3, Class IB-4 and
Class IB-5 Certificates.
19
<PAGE> 35
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, Group 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 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 IA Certificates, the
Class R-I Certificates and the Class R-III Certificates have been reduced to
zero, then the Group I Subordinate Prepayment Percentage shall equal 100%.
Group I Subordinate Principal Distribution Amount: For any Distribution
Date, 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 amounts required to be distributed to the Class I-PO
Certificates pursuant to Section 4.02(a)(I)(a)(iv) on 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.
20
<PAGE> 36
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 I-X Certificates: The Class I-X-1, Class I-X-2, Class I-X-3 and
Class I-X-4 Certificates, collectively.
Group I-X Notional Amount: With respect to any Distribution Date, 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, other than the Group I
Premium Rate Mortgage Loans for which the Stripped Interest Rate equals zero.
The Group I-X Notional Amount as of the Closing Date will be $353,497,776.41.
Group I-X Notional Reduction Amount: With respect to any Distribution
Date, the excess of the Group I-X Notional Amount for the preceding Distribution
Date over the Group I-X Notional Amount for such Distribution Date. On each
Distribution Date, the Group I-X Notional Reduction Amount will be allocated in
reduction of the Notional Amounts of each Class of Group I-X Certificates
sequentially as follows:
(i) first, in reduction of the Class I-X-1 Notional Amount, until the
Class I-X-1 Notional Amount has been reduced to the Class I-X-1
Planned Notional Amount for such Distribution Date;
(ii) second, in reduction of the Class I-X-2 Notional Amount, until
the Class I-X-2 Notional Amount has been reduced to the Class
I-X-2 Planned Notional Amount for such Distribution Date;
(iii) third, in reduction of the Class I-X-3 Notional Amount, until the
Class I-X-3 Notional Amount has been reduced to the Class I-X-3
Planned Notional Amount for such Distribution Date;
(iv) fourth, in reduction of the Class I-X-4 Notional Amount, until
the Class I-X-4 Notional Amount has been reduced to zero;
(v) fifth, in reduction of the Class I-X-1 Notional Amount, without
regard to the Class I-X-1 Planned Notional Amount for such
Distribution Date, until the Class I-X-1 Notional Amount has been
reduced to zero;
(vi) sixth, in reduction of the Class I-X-2 Notional Amount, without
regard to the Class I-X-2 Planned Notional Amount for such
Distribution Date, until the Class I-X-2 Notional Amount has been
reduced to zero; and
21
<PAGE> 37
(vii) seventh, in reduction of the Class I-X-3 Notional Amount, without
regard to the Class I-X-3 Planned Notional Amount for such
Distribution Date, until the Class I-X-3 Notional Amount has been
reduced to zero.
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 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
Certificate Principal Balances of the Group I Certificates (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 Closing 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 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
22
<PAGE> 38
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) and (iii) the
Group IA Liquidation Amount.
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.
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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 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 IIA and Class R-II
Certificates have been reduced to zero, then the Group II Subordinate Prepayment
Percentage shall equal 100%.
Group II Subordinate Principal Distribution Amount: For any Distribution
Date, 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 to the Class II-PO
Principal Distribution Amount) and (iii) the Group II Subordinate Liquidation
Amount over (B) the amount required to be distributed to the Class II-PO
Certificates pursuant to Section 4.02(a)(I)(b)(iv) on 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, Class IIA-2, Class IIA-3, Class
IIA-4, Class IIA-5 and Class IIA-6 Certificates.
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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 aggregate
Certificate Principal Balances of the Group IIA and Class R-II Certificates
divided by the aggregate Certificate Principal Balances of the Group II
Certificates (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 Closing 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 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
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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 portion thereof
attributable to the Class II-PO Principal Distribution Amount) and (iii) the
Group IIA Liquidation Amount.
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 Group I-X, Class IA-6, and Class II-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-6 Certificates and
each Class of Class X Certificates, the Notional Amounts thereof as of the
Closing Date as set forth herein.
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.
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LIBOR: With respect to each Distribution Date, the London Interbank
Offered Rate for one-month United States dollar-denominated deposits determined
by the Trustee on the basis of quotations as of approximately 11:00 a.m. (London
time) on the applicable LIBOR Rate Adjustment Date appearing on the display
designated as page 3750 on the Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
offered rates of major banks). In the event that such rate does not appear on
such page (or such other page as may replace that page on that service, or if
such service is no longer offered, such other service for displaying LIBOR or
comparable rates as may be selected by the Trustee after consultation with the
Master 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 Certificates: The Class IA-7, Class IA-8 and Class IA-9
Certificates, collectively.
LIBOR Rate Adjustment Date: The LIBOR Business Day immediately prior to
the 25th day of the month preceding such Distribution Date.
Liquidated Mortgage Loan: A Mortgage Loan as to which the 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.
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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.
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.
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 amortization schedule
by reason of any bankruptcy, other than a Deficient Valuation, or similar
proceeding or any moratorium or similar waiver or grace period).
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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 July 1, 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;
(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.
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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.
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.
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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 IA-6 Certificates, the Class
IA-6 Notional Amount, with respect to the Class I-X-1 Certificates, the Class
I-X-1 Notional Amount, with respect to the Class I-X-2 Certificates, the Class
I-X-2 Notional Amount, with respect to the Class I-X-3 Certificates, the Class
I-X-3 Notional Amount, with respect to the Class I-X-4 Certificates, the Class
I-X-4 Notional Amount, and with respect to the Class II-X Certificates, the
Class II-X 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 not at the expense of 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: The Bank of New York, 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
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.
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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 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 Fitch and S&P, and references herein to the
highest
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rating available on unsecured commercial paper and short-term debt obligations
shall mean F-1 in the case of Fitch 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-1, Class IA-2, Class IA-3, Class IA-4, Class IA-5, Class IIA-1 and
Class IIA-2 Certificates, the Certificate Principal Balances of such Classes for
such Distribution Date set forth on 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 275% and 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 for the Group I Loans and the Group II Loans, respectively.
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.
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.
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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
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.
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Rating Agency: Fitch and S&P. 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.
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 90% of the
Certificate Principal Balance of the Class IA-1 Certificates and which bears
interest at a per annum rate equal to the quotient obtained by dividing (i)
product of (a) 6.750% per annum and (b) 10 by (ii) 9.
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
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uncertificated principal balance equal to 90% of the Certificate Principal
Balance of the Class IA-2 Certificates and which bears interest at a per annum
rate equal to the quotient obtained by dividing (i) product of (a) 6.750% per
annum and (b) 10 by (ii) 9.
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 90% of the
Certificate Principal Balance of the Class IA-3 Certificates and which bears
interest at a per annum rate equal to the quotient obtained by dividing (i)
product of (a) 6.750% per annum and (b) 10 by (ii) 9.
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 90% of the
Certificate Principal Balance of the Class IA-4 Certificates and which bears
interest at a per annum rate equal to the quotient obtained by dividing (i)
product of (a) 6.750% per annum and (b) 10 by (ii) 9.
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 90% of the
Certificate Principal Balance of the Class IA-5 Certificates and which bears
interest at a per annum rate equal to the quotient obtained by dividing (i)
product of (a) 6.750% per annum and (b) 10 by (ii) 9.
REMIC I Regular Interest IA-7-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 90% of the
aggregate Certificate Principal Balances of the Class IA-7, IA-8, IA-9, IA-10,
IA-11, IA-12, and RIII Certificates and which accrues interest at a per annum
rate equal to the quotient obtained by dividing (i) product of (a) 6.750% per
annum and (b) 10 by (ii) 9.
REMIC I Regular Interest IB-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 Balances of the Group I Subordinate Certificates and which
bears interest at a per annum rate equal to the quotient obtained by dividing
(i) product of (a) 6.750% per annum and (b) 10 by (ii) 9.
REMIC I Regular Interest I-PO1-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 Class Principal
Balance of the Class I-PO Certificates and which does not bear interest.
REMIC I Regular Interest I-PO2-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 (A) product of
(i) 10% and (ii) the difference between (a) the aggregate principal balance of
the Group I Mortgage Loans and (b) the Certificate Principal Balance of the
Class I-PO Certificates reduced by (B) the aggregate principal balance of REMIC
I Regular Interest I-X-1-L, REMIC I Regular Interest I-X-2-L,
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REMIC I Regular Interest I-X-3-L and REMIC I Regular Interest I-X-4-L and which
does not bear interest.
REMIC I Regular Interest I-X-1-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest have an uncertificated principal balance equal to 10% of the Class
I-X-1 Notional Amount and which bears interest at ten times the weighted average
of the Stripped Interest Rates of the Group I Premium Rate Mortgage Loans, other
than the Group I Premium Rate Mortgage Loans for which the Stripped Interest
Rate equals zero.
REMIC I Regular Interest I-X-2-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest have an uncertificated principal balance equal to 10% of the Class
I-X-2 Notional Amount and which bears interest at ten times the weighted average
of the Stripped Interest Rates of the Group I Premium Rate Mortgage Loans, other
than the Group I Premium Rate Mortgage Loans for which the Stripped Interest
Rate equals zero.
REMIC I Regular Interest I-X-3-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest have an uncertificated principal balance equal to 10% of the Class
I-X-3 Notional Amount and which bears interest at ten times the weighted average
of the Stripped Interest Rates of the Group I Premium Rate Mortgage Loans, other
than the Group I Premium Rate Mortgage Loans for which the Stripped Interest
Rate equals zero.
REMIC I Regular Interest I-X-4-L: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest have an uncertificated principal balance equal to 10% of the Class
I-X-4 Notional Amount and which bears interest at ten times the weighted average
of the Stripped Interest Rates of the Group I Premium Rate Mortgage Loans, other
than the Group I Premium Rate Mortgage Loans for which the Stripped Interest
Rate equals zero.
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-7-L, Class I-PO1-L, Class I-PO2-L, Class
I-X-1-L, Class I-X-2-L, Class I-X-3-L, Class I-X-4-L and Class IB-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 II which constitutes a REMIC II Regular
Interest having an uncertificated principal balance equal to the sum of the
Certificate Principal Balances of the Group IIA Certificates and which bears
interest at 6.500% per annum.
REMIC II Regular Interest IIB-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 sum of the
Certificate Principal Balances of the Group II Subordinate Certificates and
which bears interest at 6.500% per annum.
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REMIC II Regular Interest II-X-L: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II 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 II which constitutes a REMIC II Regular
Interest having an uncertificated principal balance equal to the Certificate
Principal Balance of the Class II-PO Certificates and which bears no interest.
REMIC II Regular Interests: Class IIA-1-L, Class IIB-L, Class II-X-L and
Class II-PO-L.
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: The Bank of New York, or any successor REMIC
Administrator. If The Bank of New York 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.
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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.
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.
Schedule 1 Targeted Principal Balance: With respect to any Distribution
Date, the amount set forth as the first targeted principal balance for Class
IIA-3 Certificates for such Distribution Date as set forth in Exhibit Q hereto.
Schedule 2 Targeted Principal Balance: With respect to any Distribution
Date, the amount set forth as the second targeted principal balance for the
Class IIA-3 Certificates for such Distribution Date as set forth in Exhibit Q
hereto.
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
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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 and with respect to
either Loan Group I or Loan Group II, an amount equal to $4,191,712 and
$1,881,519, respectively, minus the sum of (i) the aggregate amount of Special
Hazard Losses allocated solely to the Group I or Group II Subordinate
Certificates, as applicable, in accordance with Section 4.05 and (ii) the
Adjustment Amount for Loan Group I or Loan Group II, as applicable, as most
recently calculated. For each anniversary of the Cut-off Date, the "Adjustment
Amount" for Loan Group I or Loan Group II shall be equal to the amount, if any,
by which the amount calculated in accordance with the preceding sentence for
Loan Group I or Loan Group II, as applicable, (without giving effect to the
deduction of the Adjustment Amount for such anniversary) exceeds the greater of
(A) 1% (or, if greater than 1%, the highest percentage of Group I Loans or Group
II Loans, as applicable, by principal balance, in any California zip code area)
times the aggregate principal balance of all of the Group I Loans or Group II
Loans, as applicable, on such anniversary and (ii) twice the principal balance
of the single Group I Loan or Group II Loan, as applicable, 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 August 1998 through July 2003, 0%; with respect to any Distribution Date
occurring from August 2003 through July 2004, 30%; with respect to any
Distribution Date occurring from August 2004 through July 2005, 40%; with
respect to any Distribution Date occurring from August 2005 through July 2006,
60%; with respect to any Distribution Date occurring from August 2006
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through July 2007, 80%; with respect to any Distribution Date occurring from and
after August 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% per annum. For each
Group II Mortgage Loan, the excess, if any, of the Net Mortgage Rate for such
Mortgage Loan over 6.500% per annum.
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 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.
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Targeted Principal Balance: With respect to any Distribution Date and
the Class IA-7, Class IA-8 and Class IA-9 Certificates, the amounts set forth as
the targeted principal balance for each such Class of Certificates for such
Distribution Date set forth in Exhibit Q hereto.
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.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust created by this Agreement consisting
of all of the assets of the REMICs, including:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the
Mortgage Loans due after the Cut-off Date,
(iii) property which secured a Mortgage Loan and which has
been acquired for the benefit of the Certificateholders by foreclosure
or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance
Policies, if any, and certain proceeds thereof.
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: Lehman Brothers Inc., 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.
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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 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).
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(b) In connection with such assignment, except as set forth in
Section 2.01(c) below, the Depositor does hereby deliver to, and deposit with,
the Trustee, or to and with one or more Custodians, as the duly appointed agent
or agents of the Trustee, the following documents or instruments (or copies
thereof as permitted by this Section):
(i) The original Mortgage Note, endorsed in blank and
showing an unbroken chain of endorsements from the originator thereof to
the Person endorsing it in blank, or, in the event of any Mortgage Note,
the original of which was permanently lost or destroyed and has not been
replaced, a copy of a duplicate original of the Mortgage Note, together
with an original lost note affidavit from the originator of the related
Mortgage Loan stating that the original Mortgage Note was lost,
misplaced or destroyed, together with a copy of the related Mortgage
Note;
(ii) The original Mortgage with evidence of recording
indicated thereon or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in blank;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof
to the Person assigning it in blank or a copy of such intervening
assignment or assignments of the Mortgage certified by the public
recording office in which such assignment or intervening assignments
have been recorded;
(v) The original of each modification or assumption
agreement, if any, relating to such Mortgage Loan or a copy of each
modification or assumption agreement certified by the public recording
office in which such document has been recorded; and
(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: "The Bank of New York, not
in its individual capacity but solely as Trustee for the benefit of the
registered holders of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates Series 1998-4" and shall return such Assignments to the Depositor
for recordation.
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The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of the Depositor) acceptable
to the Rating Agencies, the Trustee and the Master Servicer, 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
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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.
(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
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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.
(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
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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;
(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 to so cure or purchase
any Mortgage Loan as to which a material defect in or omission of a constituent
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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
(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
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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 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
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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
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
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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 Master
Servicer shall furnish and the Trustee shall execute 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
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).
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Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers. and Sellers' Obligations.
(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.
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
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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
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
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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 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):
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(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 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
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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 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.
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(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.
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);
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(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;
(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
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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 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
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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 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
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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
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
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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.
(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
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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,
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
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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 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
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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.
(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 at the direction of the Master Servicer 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
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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.
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
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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.
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
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not obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
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
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in the Certificate Account pursuant to Section 3.16(e), (iii) any amount
required to be paid pursuant to Section 9.01 and (iv) all other amounts
constituting the 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, 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, 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, the Group 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-10
Certificates on or before the Class IA-10 Accretion Termination Date by
the Class IA-10 Accrual Amount and further reduced in the case of the
Class IA-11 Certificates on or before the Class IA-11 Accretion
Termination Date by the Class IA-11 Accrual Amount, with the aggregate
of such amounts being distributed as principal, sequentially as follows:
(1) first, to the Class IA-7, Class IA-8 and Class
IA-9 Certificates pro rata according to their respective
Certificate Principal Balances, to the extent necessary to
reduce their Certificate Principal Balances to their respective
Targeted Principal Balances for such Distribution Date;
(2) second, to the Class IA-10 Certificates until
the Certificate Principal Balance thereof has been reduced to
zero;
(3) third, to the Class IA-7, Class IA-8 and Class
IA-9 Certificates, pro rata according to their respective
Certificate Principal Balances, without regard to their Targeted
Principal Balances for such Distribution Date, until the
Certificate Principal Balances thereof have been reduced to
zero; and
(4) fourth, to the Class IA-11 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero.
(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 as follows:
(1) first, to the Class IA-12 Certificates the
lesser of (i) the Class IA-12 Priority Amount for such
Distribution Date and (ii) 98.6% of the Group IA Principal
Distribution Amount, 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 Class IA-1 and
Class IA-3 Certificate Principal Balances have each been reduced
to their Planned Principal Balance for such Distribution Date as
follows;
(A) 19.3236714976% to the Class IA-1
Certificates to the extent necessary to reduce the Class
IA-1 Certificate Principal Balance to its Planned
Principal Balance for such Distribution Date;
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(B) 42.2705314010% to the Class IA-5
Certificates, to the extent necessary to reduce the
Class IA-5 Certificate Principal Balance to its Planned
Principal Balance for such Distribution Date; and
(C) 38.4057971014%, sequentially, as
follows:
(1) first, to the Class IA-2
Certificates, to the extent necessary to reduce
the Class IA-2 Certificate Principal Balance to
its Planned Principal Balance for such
Distribution Date; and
(2) second, to the Class IA-3
Certificates, to the extent necessary to reduce
the Class IA-3 Certificate Principal Balance to
its Planned Principal Balance for such
Distribution Date;
(4) fourth, concurrently, as follows:
(A) 61.3402061856% to the Class IA-4
Certificates, to the extent necessary to reduce the
Class IA-4 Certificate Principal Balance to its Planned
Principal Balance for such Distribution Date; and
(B) 38.6597938144% to the Class IA-5
Certificates, to the extent necessary to reduce the
Class IA-5 Certificate Principal Balance to its Planned
Principal Balance for such Distribution Date;
(5) fifth, to the Class IA-7, Class IA-8 and Class
IA-9 Certificates, pro rata according to their respective
Certificate Principal Balances to the extent necessary to reduce
the aggregate of the Certificate Principal Balances to their
respective Targeted Principal Balances for such Distribution
Date;
(6) sixth, to the Class IA-10 Certificates until the
Certificate Principal Balance thereof has been reduced to zero;
(7) seventh, to the Class IA-7, Class IA-8, and
Class IA-9 Certificates, pro rata according to their respective
Certificate Principal Balances, without regard to their Targeted
Principal Balances for such Distribution Date, until the
Certificate Principal Balances thereof have been reduced to
zero;
(8) eighth, to the Class IA-11 Certificates until
the Certificate Principal Balance thereof has been reduced to
zero;
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(9) ninth, concurrently, until the aggregate
Certificate Principal Balances of the Class IA-1 and Class IA-3
Certificates have been reduced to zero, as follows:
(A) 19.3236714976% to the Class IA-1
Certificates, without regard to their Planned Principal
Balance for such Distribution Date, until the
Certificate Principal Balance thereof has been reduced
to zero.
(B) 42.2705314010% to the Class IA-5
Certificates, without regard to their Planned Principal
Balance for such Distribution Date, until the
Certificate Principal Balance thereof has been reduced
to zero; and
(C) 38.4057971014%, sequentially, as
follows:
(1) first, to the Class IA-2
Certificates, without regard to their Planned
Principal Balance for such Distribution Date,
until the Certificate Principal Balance thereof
has been reduced to zero; and
(2) second, to the Class IA-3
Certificates, without regard to their Planned
Principal Balance for such Distribution Date,
until the Certificate Principal Balance thereof
has been reduced to zero;
(10) tenth, concurrently, as follows:
(A) 61.3402061856% to the Class IA-4
Certificates, without regard to their Planned Principal
Balance for such Distribution Date, until the
Certificate Principal Balance thereof has been reduced
to zero; and
(B) 38.6597938144% to the Class IA-5
Certificates, without regard to their Planned Principal
Balance for such Distribution Date, until the
Certificate Principal Balance thereof has been reduced
to zero; and
(11) eleventh, to the Class IA-12 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero;
(iv) Fourth, to the Class I-PO Certificates, 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
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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 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;
(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;
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(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 Certificates, 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 and the Class II-X
and Class R-II Certificates, Accrued Certificate Interest and any Unpaid
Accrued Certificate Interest, reduced in the case of the Class IIA-4
Certificates on or before the Class IIA-4 Accretion Termination Date by
the Class IIA-4 Accrual Amount, and further reduced in the case of the
Class IIA-5 Certificates on or before the Class IIA-5 Accretion
Termination Date by the Class IIA-5 Accrual Amount, with the aggregate
of such amounts being distributed as principal, sequentially as follows:
(1) first, to the Class IIA-3 Certificates, until
the Certificate Principal Balance thereof has been reduced to
its Schedule 1 Targeted Principal Balance for such Distribution
Date;
(2) second, to the Class IIA-4 Certificates until
the Certificate Principal Balance thereof has been reduced to
zero;
(3) third, to the Class IIA-3 Certificates until the
Certificate Principal Balance thereof has been reduced to its
Schedule 2 Targeted Principal Balance for such Distribution
Date; and
(4) fourth, to the Class IIA-5 Certificates until
the Certificate Principal Balance thereof has been reduced to
zero;
(iii) Third, to the Group IIA Certificates and the Class R-II
Certificates, the Group IIA Principal Distribution Amount as follows:
(1) first, to the Class IIA-6 Certificates, an
amount, up to the amount of the Class IIA-6 Priority Amount for
such Distribution Date, until the Certificate Principal Balance
thereof has been reduced to zero;
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(2) second, to the Class R-II Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero;
(3) third, to the Class IIA-1 Certificates, to the
extent necessary to reduce the Class IIA-1 Certificate Principal
Balance to its Planned Principal Balance for such Distribution
Date;
(4) fourth, to the Class IIA-2 Certificates to the
extent necessary to reduce the Class IIA-2 Certificate Principal
Balance to its Planned Principal Balance for such Distribution
Date;
(5) fifth, to the Class IIA-3 Certificates to the
extent necessary to reduce the Class IIA-3 Certificate Principal
Balance to its Schedule 1 Targeted Principal Balance for such
Distribution Date;
(6) sixth, to the Class IIA-4 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero;
(7) seventh, to the Class IIA-3 Certificates to the
extent necessary to reduce the Class IIA-3 Certificate Principal
Balance to its Schedule 2 Targeted Principal Balance for such
Distribution Date;
(8) eighth, to the Class IIA-5 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero;
(9) ninth, to the Class IIA-3 Certificates, without
regard to their Schedule 1 or Schedule 2 Targeted Principal
Balance for such Distribution Date, until the Certificate
Principal Balance thereof has been reduced to zero;
(10) tenth, to the Class IIA-1 Certificates, without
regard to their Planned Principal Balance for such Distribution
Date, until the Certificate Principal Balance thereof has been
reduced to zero;
(11) eleventh, to the Class IIA-2 Certificates,
without regard to their Planned Principal Balance for such
Distribution Date, until the Certificate Principal Balance
thereof has been reduced to zero; and
(12) twelfth, to the Class IIA-6 Certificates, until
the Certificate Principal Balance thereof has been reduced to
zero;
(iv) Fourth, to the Class II-PO Certificates, 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 amounts otherwise
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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;
(xv) Fifteenth, to the Class IIB-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
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(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.
(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, 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, the Group 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, 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 Group IIA Certificates, the Class II-X
Certificates and the Class R-II Certificates, Accrued Certificate
Interest and Unpaid Accrued Certificate Interest;
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(iii) Third, to the Group IIA Certificates 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.
(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
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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 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 information as
the Trustee shall reasonably require in a format mutually acceptable to the
Master Servicer and the Trustee 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 (but no earlier than such
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,
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separately identifying any reduction thereof due to Realized Losses
other than pursuant to an actual distribution of principal;
(vii) the related Subordinate Principal Distribution Amount;
(viii) on the basis of the most recent reports furnished to it
by Subservicers, if applicable, the number and aggregate principal
balances of Mortgage 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.
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In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Certificate other than a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above aggregated
for such calendar year or applicable portion thereof during which such Person
was a Certificateholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the 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.
(g) The Master Servicer and the Trustee shall promptly provide the
Depositor, upon request, with copies of any reports prepared by them pursuant to
this Section 4.03 on a computer readable tape or disk, readable by such software
program as the Depositor may reasonably request. The Depositor may, in its sole
discretion, provide any such report on its Internet Web site. The Master
Servicer and the Trustee shall have the same responsibility hereunder for the
reports prepared by them in such electronic format and provided on the
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Depositor's Internet Web site as such parties have for the reports they are
obligated to provide pursuant to paragraphs (a)-(f) of this Section 4.03.
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 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.
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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 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 and the
Trustee, if applicable, 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 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 IA, 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 Loss is on a
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Class I-PO Mortgage Loan, the Class I-PO Fraction of such loss will first be
allocated to the Class I-PO, and the remainder of such Realized Losses will be
allocated as set forth above in this paragraph.
All Realized Losses on Group II Loans other than 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, 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 IIA and 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.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses, Extraordinary Losses or other losses of a type not covered by
Subordination with respect to the Group I Loans will be allocated on a pro rata
basis among the Group I Certificates (other than the Class I-PO Certificates)
(any such Realized Losses so allocated to the Group I Certificates will be
allocated without priority among the various Classes of Certificates (other than
the Class I-PO Certificates)). The principal portion of such losses on Class
I-PO Mortgage Loans will be allocated to the Class I-PO Certificates in an
amount equal to the Class I-PO Fraction thereof, and the remainder of such
losses on Class I-PO Mortgage Loans will be allocated among the remaining Group
I Certificates on a pro rata basis.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses, Extraordinary Losses or other losses of a type not covered by
Subordination with respect to the Group II Loans will be allocated on a pro rata
basis among the Group II Certificates (other than the Class II-PO Certificates)
(any such Realized Losses so allocated to the Group II Certificates will be
allocated without priority among the various Classes of Certificates (other than
the Class II-PO Certificates)). The principal portion of such losses on Class
II-PO Mortgage Loans will be allocated to the Class II-PO Certificates in an
amount equal to the Class II-PO Fraction thereof, and the remainder of such
losses on Class II-PO Mortgage Loans will be allocated among the remaining Group
II Certificates on a pro rata basis.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date (without
regard to any Compensating Interest for such Distribution Date) in the case of
an interest portion of a Realized
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Loss. Except as provided in the following sentence, any allocation of Realized
Losses (other than Debt Service Reductions) to a Class of Certificates shall be
made by reducing the Certificate 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. Teports 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 sum of the Principal Payment Amount, the
Principal Prepayment Amount and the Liquidation Principal, in each case 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 sum of the Principal Payment Amount, the
Principal Prepayment Amount and the Liquidation Principal, in each case, 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 deemed
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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 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 Class IA-6 and Class X Certificates)
each and integral multiples of $1 in excess thereof. The Residual Certificates
shall be issuable in minimum denominations of not less than a 99.99% Percentage
Interest; provided, however, that one Class R-I Certificate, 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 Certificates and the 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 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
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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 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.
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(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
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.
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(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 Senior Subordinate and Group II Senior
Subordinate Certificates are Book-Entry Certificates, any purchaser of such a
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:
(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
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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 permitted by law, to all
rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of
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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.
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
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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.
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.
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(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.
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
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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
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):
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(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 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
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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 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. Notwithstanding anything herein
to the contrary, the Trustee shall not represent and warrant anything as to each
Mortgage Loan which the Master Servicer provided at the closing and the Trustee
will not purchase or substitute for defective Mortgage Loans. 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
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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 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 of which a Responsible
Officer of the Trustee shall have actual knowledge (which has
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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:
(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
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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 any officer of 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; provided, that, in each of the foregoing cases the Trustee shall only be
obligated to pay the amount of any such taxes if such taxes arise out of a
breach by the Trustee of its obligations hereunder, which breach constitutes
gross negligence or willful misfeasance of the Trustee. If any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code does
not arise out of a breach by the Trustee as set forth above, such tax will be
paid as provided in Section 10.01(g).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any
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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 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
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the imposition of any federal tax on "prohibited transactions" imposed under
Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
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.
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:
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(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 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
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appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee. In addition, in the
event that the Depositor determines that the Trustee has failed (i) to
distribute or cause to be distributed to Certificateholders any amount required
to be distributed hereunder, if such amount is held by the Trustee or its Paying
Agent for distribution or (ii) to otherwise observe or perform in any material
respect any of its covenants, agreements or obligations hereunder, and such
failure shall continue unremedied for a period of 5 days (in respect of clause
(i) above) or 30 days (in respect of clause (ii) above) after the date on which
written notice of such failure, requiring that the same be remedied, shall have
been given to the Trustee by the Depositor, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument delivered as
provided in the preceding sentence. In connection with the appointment of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such
successor trustee will not result in the reduction of the ratings on any class
of Certificates below the lesser of the then current or original ratings on such
Certificates.
(c) The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.
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
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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 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.
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(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.
(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 101 Barclay Street -
12E, New York, New York 10286 for the purpose of keeping the Certificate
Register. The Trustee will maintain an office at the address stated in
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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 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
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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,
(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
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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 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.
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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 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)-1. 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.
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(d) The REMIC Administrator shall prepare or cause to be prepared
all of the Tax Returns that it determines are required with respect to any of
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
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
reason-ably 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
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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 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 any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at
any time that any Certificates are out-standing 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
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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.
(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,
which breach constitutes gross negligence or willful misfeasance by the Trustee;
provided, however, that in no event shall the Trustee be obligated to indemnify
the Trust Fund, the Depositor, the REMIC Administrator or the Master Servicer
for any special, punitive or consequential damages.
(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, which breach constitutes gross negligence or willful
misfeasance by the Trustee, 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
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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;
and, provided, further, that in no event shall the REMIC Administrator be
obligated to indemnify the Trust Fund, the Depositor or the Trustee for any
special, punitive or consequential damages . (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.
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;
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(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;
(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
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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 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
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respect to this Agreement, unless such Holder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Certificates of any Class
evidencing in the aggregate not less than 25% of the related Percentage
Interests of such Class, shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates of any Class shall have any
right in any manner whatever by virtue of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates of such Class or any other Class, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of Certificateholders of such Class or all Classes, as the case may be.
For the protection and enforcement of the provisions of this Section 11.03, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of California and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
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: Russell Thompson, 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, 101 Barclay Street - 12E, New York,
New York 10286, Attention: Corporate Trust--MBS Group (Fax: (212) 815-5309) 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 1998-4, 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, Lehman Brothers Inc., 3 World Financial Center,
New York, New York 10285, Attention: Joseph Kelly, 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
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to be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.06. Notices to Rating Agency.
The Depositor, the Master 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.
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Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
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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: /s/ John Isbrandsten
---------------------------------------
Name: John Isbrandtsen
Title: Vice President
BANK OF AMERICA, FSB, as Master Servicer
By: /s/ Russell Thompson
---------------------------------------
Name: Russell Thompson
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Kelly Sheahan
---------------------------------------
Name: Kelly Sheahan
Title: Assistant Treasurer
<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 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> 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 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 savings bank, and acknowledged to me that such savings bank
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
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 The Bank of New York, the New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE> 142
EXHIBIT A
FORM OF CLASS A, GROUP 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.]
A-1
<PAGE> 143
Certificate No. ____ [___%] [Adjustable] Pass-Through Rate
Class [ ] Senior [based on a Notional Amount]
Date of Pooling and Servicing Aggregate Initial [Certificate Principal
Agreement and Cut-off Date: Balance] [Notional Amount] of the Class [ ]
July 1, 1998 Certificates:
First Distribution Date:
August 25, 1998
Master Servicer: Bank of Initial [Certificate Principal Balance
America, FSB [Notional Amount] of this Certificate:
$-----------
Last Scheduled Distribution
Date: __________, 20__ CUSIP: ____________
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-4
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 [Notional Amount] of this Certificate by the
aggregate Certificate Principal Balance [Notional Amount] 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 "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 The Bank of New York, 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
A-2
<PAGE> 144
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.
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
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<PAGE> 145
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.
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
A-4
<PAGE> 146
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.
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<PAGE> 147
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
THE BANK OF NEW YORK, 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> 148
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> 149
EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
IN THE RELATED CERTIFICATE GROUP 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.]
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<PAGE> 150
Certificate No. ____ Variable Pass-Through Rate
Date of Pooling and Servicing Aggregate Certificate Principal
Agreement and Cut-off Date: Balance of the Class [IM][IIM]
July 1, 1998 Certificates as of the Cut-off
Date: $__________
First Distribution Date:
August 25, 1998
Master Servicer: Bank of Initial Certificate Principal
America, FSB Balance of this Certificate:
$___________
Last Scheduled Distribution CUSIP: ____________
Date: __________, 20__
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-4
evidencing a percentage interest in any distributions allocable to the
Class [IM] [IIM] 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 [IM] [IIM]
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
The Bank of New York, 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
B-2
<PAGE> 151
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 [IM][IIM] 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 [IM] [IIM] 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, 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").
B-3
<PAGE> 152
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.
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.
B-4
<PAGE> 153
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.
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<PAGE> 154
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
THE BANK OF NEW YORK, as Trustee
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [IM] [IIM] Certificates referred to in
the within-mentioned Agreement.
---------------------------------------,
as Certificate Registrar
By:
------------------------------------
Authorized Signatory
B-6
<PAGE> 155
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> 156
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 [IM] [IIM] 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.]
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<PAGE> 157
Certificate No. ____ [___%] Pass-Through Rate
Class [ ] Subordinate
Date of Pooling and Servicing Aggregate Certificate Principal
Agreement and Cut-off Date: Balance of the Class [ ]
July 1, 1998 Certificates as of the Cut-off
Date: $__________
First Distribution Date: Initial Certificate Principal
August 25, 1998 Balance of this Certificate:
$___________
Master Servicer: Bank of CUSIP: ____________
America, FSB
Last Scheduled Distribution
Date: __________, 20__
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-4
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 [ ] 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
The Bank of New York, 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
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<PAGE> 158
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 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
C-3
<PAGE> 159
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 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
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<PAGE> 160
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
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.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
THE BANK OF NEW YORK, 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
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<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.
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<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").
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 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
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<PAGE> 164
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
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<PAGE> 165
Certificate No. ____ ___% Pass-Through Rate
Class [R-I] [R-II] [R-III] Senior
Date of Pooling and Servicing Aggregate Certificate Principal
Agreement and Cut-off Date: Balance of the Class [R-I]
July 1, 1998 [R-II] [R-III] Certificates as
of the Cut-off Date:
$__________
First Distribution Date: Initial Certificate Principal
August 25, 1998 Balance of this Certificate:
$___________
Master Servicer: Bank of CUSIP: ____________
America, FSB
Last Scheduled Distribution
Date: __________, 20__
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-4
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 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 The Bank of New
York, 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
D-3
<PAGE> 166
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 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 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
D-4
<PAGE> 167
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 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
D-5
<PAGE> 168
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
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.
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<PAGE> 169
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
THE BANK OF NEW YORK, 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
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<PAGE> 170
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.
D-8
<PAGE> 171
EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
E-1-1
<PAGE> 172
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FSB
E-2-1
<PAGE> 173
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 JULY ___, 1998
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-4
================================================================================
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<PAGE> 174
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated June ___,
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 The Bank of New York, as Trustee (the "Trustee"), dated as of July 1, 1998
(the "Cut-off Date"). The Certificates are described more fully in the related
Prospectus Supplement (the "Prospectus Supplement") dated July __, 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 June , 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 Lehman Brothers Inc. (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 Date, together with interest accrued on
such principal balance at a per annum rate equal to ____% from the Cut-off Date
to but not
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<PAGE> 175
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 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.
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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 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):
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(a) 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.
(b) 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.
(c) Either (i) 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 (ii)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(d) 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 (i) any term or provision of the
documents governing the Seller's organization, or (ii) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or is bound, or (iii) 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.
(e) There are no actions or proceedings against, or
investigations of, the Seller pending or, to the Seller's knowledge, threatened
against the Seller before any court, administrative agency or other tribunal,
which would reasonably be expected to adversely affect the transfer of the
Mortgage Loans, the issuance of the Certificates, the execution, delivery or
enforceability of this Agreement or have a material adverse effect on the
financial condition of the Seller.
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(f) 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.
(g) 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.
(h) 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.
(i) 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 it has available for refinancings by sending letters
or promotional material to the mortgagors for all of the mortgage loans in its
servicing portfolio (those it owns 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 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 (a) repurchase the related Mortgage Loan from the
Depositor or its assignee at the Purchase Price, or (b) substitute for any
Mortgage Loan to which such defect relates a
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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 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:
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(a) 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.
(b) 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.
(c) Either (i) 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
(ii) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(d) 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 (i) any
term or provision of the documents governing the Depositor's organization, or
(ii) any term or provision of any material agreement, contract, instrument or
indenture, to which the Depositor is a party or is bound, or (iii) any law,
rule, regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor.
(e) There are no actions or proceedings against, or
investigations of, the Depositor pending or, to the Depositor's knowledge,
threatened against the Depositor before any court, administrative agency or
other tribunal, which would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the execution, delivery or enforceability of
this Agreement or have a material adverse effect on the financial condition of
the Depositor.
SECTION 7. Closing. The closing of the sale of the Mortgage Loans
shall be held at the office of Orrick, Herrington & Sutcliffe LLP at 7:00 a.m.,
San Francisco time, on the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller and
the Depositor shall be true and correct in all material respects as of the
Closing Date;
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(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;
(d) A cross-receipt dated the Closing Date duly executed by the
Depositor and the Seller; and
(e) A Bill of Sale in the form attached hereto as Exhibit 4 duly
executed by the Depositor and the Seller.
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's fees.
SECTION 10. Servicing. The Mortgage Loans are to be delivered
free and clear of any servicing agreements with third party servicers.
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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: John Isbrandtsen 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: Russell Thompson, or to such other addresses as the
Seller may designate in writing to the Depositor.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 13. Further Assurances. The Seller and the Depositor each
agree to execute and deliver such instruments and take such actions as the other
may, from time to time, reasonably request in order to effectuate the purpose
and to carry out the terms of this Agreement.
SECTION 14. Survival. The Seller and the Depositor agree that the
representations, warranties and agreements made herein and in any certificate or
other instrument delivered pursuant hereto shall be deemed to be relied upon by
the other party, notwithstanding any investigation heretofore or hereafter made
by such party or on such party's behalf, and that the representations,
warranties and agreements made by the Seller and the Depositor herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans.
SECTION 15. Miscellaneous. This Agreement is to be governed by,
and construed in accordance with, the laws of the State of California. The
rights and obligations of the Seller under this Agreement shall not be assigned
by the Seller without the prior written consent of the Depositor. The Depositor
has the right to assign its interest under this Agreement, in whole or in part,
to the Trustee as may be required to effect the purposes of the Pooling
Agreement, by written notice to the Seller, without the consent of Seller, and
the Trustee shall thereupon succeed to the rights and obligations hereunder of
the Depositor. Notwithstanding any such assignment of the Depositor's interest
under this Agreement, the Depositor shall be entitled to indemnification from
the Seller in the circumstances and to the extent described in Section 9. Notice
is hereby given to the Seller by the Depositor that the representations and
warranties made by the Seller and contained in Exhibit 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
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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, 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 in (A) and (B) below: (A) the
Mortgage Loans, including all Qualified Substitute Mortgage Loans
and including the related Mortgage and Mortgage Note and all
distributions with respect to such Mortgage Loans and Qualified
Substitute Mortgage Loans payable on or after the Cut-off Date;
and (B) amounts paid or payable by the insurer under any
insurance policy relating to any Mortgage Loan;
(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
clause (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 clauses (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
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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, 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 any person holding for, 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.
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:
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EXHIBIT 1
15 YEAR LOAN SCHEDULE
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EXHIBIT 2
30 YEAR LOAN SCHEDULE
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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 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;
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(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;
(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
F-3-2
<PAGE> 189
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;
(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;
(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
F-3-3
<PAGE> 190
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, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) 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;
(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
F-3-4
<PAGE> 191
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
(xl) The Mortgage Loans in the aggregate conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
F-3-5
<PAGE> 192
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 July [ ], 1998
(the "Mortgage Loan Purchase Agreement"), between the Seller and the Depositor
and all of the following property:
(a) 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 in (A) and (B) below: (A) the
Mortgage Loans, including all Qualified Substitute Mortgage Loans
and including the related Mortgage and Mortgage Note and all
distributions with respect to such Mortgage Loans and Qualified
Substitute Mortgage Loans payable on or after the Cut-off Date;
and (B) amounts paid or payable by the insurer under any
insurance policy relating to any Mortgage Loan;
(b) 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
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> 193
IN WITNESS WHEREOF, each of the parties hereto has caused this
Bill of Sale to be duly executed and delivered on this [ ] day of July, 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> 194
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 1998-4
Pooling and Servicing Agreement Dated: July 1, 1998
Pool/Series#: 1998-4
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.
G-1
<PAGE> 195
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> 196
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 1998-4,
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.
H-1-1
<PAGE> 197
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. That 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 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 (as defined in the
Pooling and Servicing Agreement under which the Class [R-1][R-II][R-III]
Certificates were issued) 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. That the Owner's Taxpayer Identification Number is __________.
10. That 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 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
H-1-2
<PAGE> 198
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. That 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> 199
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> 200
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Attention: BA Mortgage Securities, Inc., Series 1998-4
Re: Mortgage Pass-Through Certificates,
Series 1998-4, 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 1998-4 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 July 1, 1998 among BA Mortgage
Securities, Inc., as depositor (the "Depositor"), Bank of America, FSB, as
master servicer (the "Master Servicer"), and The Bank of New York, 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 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
H-2-1
<PAGE> 201
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> 202
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Attention: BA Mortgage Securities, Inc., Series 1998-4
RE: Mortgage Pass-Through Certificates,
Series 1998-4, Class [ ]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase
from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1998-4, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of July 1,
1998 among BA Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of
America, FSB, as master servicer (the "Master Servicer"), and The Bank of New
York, 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 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
I-1
<PAGE> 203
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 July
___, 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 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,
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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: _________________________________
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EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
____________________, 19
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Bank of America, FSB
555 California Street
San Francisco, California 94104
Attention: BA Mortgage Securities, Inc., Series 1998-4
Re: Mortgage Pass-Through Certificates,
Series 1998-4, 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 1998-4, Class _____ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of July 1, 1998 among BA Mortgage
Securities, Inc., as depositor (the "Depositor"), Bank of America, FSB, as
master servicer (the "Master Servicer"), and The Bank of New York, 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 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
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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: _________________________________
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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 July 1, 1998 among BA Mortgage
Securities, Inc., as Depositor, Bank of America, FSB, as Master Servicer and The
Bank of New York, 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.
(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
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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.
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IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
__________________________________ __________________________________
Print Name of Seller Print Name of Buyer
By: ______________________________ By: ______________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. ______________________________ No. ______________________________
Date: ____________________________ Date: ____________________________
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<PAGE> 210
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 insurance commissioner or a similar official or agency of a
State or territory or the District of Columbia.
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___ 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.
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?
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6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
________________________________________
Print Name of Buyer
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
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<PAGE> 213
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.
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.
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6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
________________________________________
Print Name of Buyer
By: ____________________________________
Name: ______________________________
Title: _____________________________
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date: __________________________________
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<PAGE> 215
EXHIBIT L
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
Bank of America, FSB
555 California Street
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Re: Mortgage Pass-Through Certificates, Series 1998-4 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 July 1, 1998 among BA Mortgage Securities, Inc., as depositor, Bank of
America, FSB, as master servicer (the "Master Servicer"), and The Bank of New
York, 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
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(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
________________________________________
(Lender)
By: ____________________________________
Name: __________________________________
Title: _________________________________
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EXHIBIT M
SCHEDULE OF MORTGAGE LOAN EXCEPTIONS
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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
Gross Margin
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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
(each as defined below) with respect to the obligations of the other parties
hereto, by and among The Bank of New York, as Trustee (including its successors
under the Pooling Agreement, 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, 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 July 1, 1998,
relating to the issuance of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1998-4 (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:
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.
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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;
(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 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
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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.
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.
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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.
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
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 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
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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 relates 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
within five (5) Business Days of receipt of such Request for Release. The
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.
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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.
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 is 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
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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 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
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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 3.8 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 3.6 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.
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
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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,
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: THE BANK OF NEW YORK,
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> 230
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 The Bank of New York, a New York banking
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of such 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> 231
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 such 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> 232
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 such federal savings bank, and acknowledged to me that
such federal savings bank 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> 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 such
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
[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 [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 such [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> 235
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
_____________, 1998
[name and address
of Owner]
Re: Custodial Agreement dated as of __________, 1998, by and
among The Bank of New York, 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 1998-4
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: ________________________________
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<PAGE> 236
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 The Bank of New York, 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 1998-4
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 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
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<PAGE> 237
(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: ________________________________
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<PAGE> 238
EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
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<PAGE> 239
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
To: [Address]
Re: Custodial Agreement dated as of __________, 1998, by and
among The Bank of New York, 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 1998-4
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: _______________________
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<PAGE> 240
Upon our return of the above documents to you as the Custodian,
please acknowledge your receipt by signing in the space indicated below, and
returning this form.
[Name of Owner or Master Servicer, as applicable]
By:
--------------------------------------------
Name: [Name of Servicing Officer]
------------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
Acknowledgement of Documents returned to the Custodian:
------------------------------------------------,
as Custodian
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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<PAGE> 241
EXHIBIT P
FORM OF TRUSTEE'S CERTIFICATION
[ ], 1998
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, CA 94104
Re: Pooling and Servicing Agreement dated July 1, 1998 by and among
BA Mortgage Securities, Inc., Bank of America, FSB, and The Bank
of New York, Mortgage Pass-Through Certificates Series 1998-4
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;
(v) The original of each modification or assumption
agreement, if any, relating to such Mortgage Loan or a copy of each
modification or assumption agreement certified by the public recording
office in which such document has been recorded; and
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<PAGE> 242
(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.
THE BANK OF NEW YORK, as Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
P-2
<PAGE> 243
EXHIBIT Q
PLANNED PRINCIPAL BALANCES,
TARGETED PRINCIPAL BALANCES AND
PLANNED NOTIONAL AMOUNTS
[See Appendix A, Appendix B and Appendix C of the Prospectus Supplement]
Q-1
<PAGE> 244
EXHIBIT R
[reserved]
R-1
