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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 29, 1998
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1998-3
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(Exact name of registrant as specified in its charter)
New York 333-30759-5 Application Pending
- ----------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue 55479-1026
Minneapolis, Minnesota ----------
- -------------------------------------------- (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (612) 667-8058
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No Change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
AMRESCO Residential Securities Corporation registered the issuance of
up to $4,000,000,000.00 principal amount of Mortgage Loan Pass-Through
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by a Registration Statement on
Form S-3 (Registration File No. 333-30759) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1998-3 (the "Registrant" or the
"Trust") issued $724,411,000 in aggregate principal amount of its Mortgage Loan
Pass-Through Certificates, Series 1998-3, on September 29, 1998. This Current
Report on Form 8-K is being filed to satisfy an undertaking to file copies of
certain agreements executed in connection with the issuance of the Offered
Certificates (as defined below), the forms of which were filed as Exhibits to
the Registration Statement.
The Offered Certificates were issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as
Exhibit 4.1, dated as of September 1, 1998, among AMRESCO Residential Securities
Corporation (the "Depositor"), AMRESCO Residential Capital Markets, Inc., as
Seller, Master Servicer and Special Servicer, AMRESCO Residential Mortgage
Corporation, as Servicer, the Federal Home Loan Mortgage Corporation, as
Guarantor, and Norwest Bank Minnesota, National Association, in its capacity as
trustee (the "Trustee"). The Offered Certificates consist of the following
classes: the Class A-7 and Class A-8 Certificates (the "Class A Offered
Certificates"), the Class M-1A and Class M-2A Certificates (the "Mezzanine
Certificates") and the Class B-1F and Class B-1A Certificates (the "Class B-1
Certificates"). In addition, the Trust issued the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5 and Class A-6 Certificates (the "Class A Private
Certificates"), the Class C-FIO and Class C-AIO Certificates (the "Class C-IO
Certificates"), the Class S Interest Only Certificates (the "Class S
Certificates"), the Class D Certificates (the "Class D Certificates") and the
Class R Certificates (the "Class R Certificates" and together with the Class A
Private Certificates, the Class A Offered Certificates, the Mezzanine
Certificates, the Class B-1 Certificates, the Class C-IO Certificates, the Class
S Certificates and the Class D Certificates, the "Certificates"). Only the Class
A Offered Certificates, the Mezzanine Certificates and the Class B-1
Certificates (collectively, the "Offered Certificates") were offered pursuant to
the Registration Statement. The Certificates evidence, in the aggregate, 100% of
the undivided beneficial ownership interests in the Trust.
The assets of the Trust initially include a pool of closed-end mortgage
loans (the "Mortgage Loans") secured by mortgages or deeds of trust primarily on
one-to-four family residential properties. Interest distributions on the Offered
Certificates are based on the Certificate Principal Balance thereof and the
applicable Pass-Through Rate thereof. The Pass-Through Rates for the Offered
Certificates are as follows: Class A-7, a variable rate as defined in the
Pooling and Servicing Agreement; Class A-8, 5.940%; Class M-1A, a variable rate
as defined in the Pooling and Servicing Agreement; Class M-2A, a variable rate
as defined in the Pooling and Servicing Agreement; Class B-1F, 8.290% and Class
B-1A, a variable rate as defined in the Pooling and Servicing Agreement. The
Offered Certificates have initial aggregate principal amounts as follows: Class
A-7,
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$429,657,000; Class A-8, $143,000,000; Class M-1A, $55,650,000; Class M-2A,
$48,470,000; Class B-1F, $6,344,000; and Class B-1A, $41,290,000.
As of the Cut-Off Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated September 5, 1997 and the
Prospectus Supplement dated September 15, 1998 filed pursuant to Rule 424(b)(5)
of the Act on October 1, 1998. In such Prospectus Supplement, a commitment was
made to provide a description of the pool of Mortgage Loans, including loans
acquired between the Cut-Off Date (September 1, 1998) and the closing date
(September 29, 1998), in a current report on Form 8-K. Such description is
attached hereto as Exhibit 99.1
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated September 15, 1998,
between AMRESCO Residential Securities Corporation
and Morgan Stanley & Co. Incorporated, as
Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of September
1, 1998, among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential
Capital Markets, Inc., as Seller, Master Servicer and
Special Servicer, AMRESCO Residential Mortgage
Corporation, as Servicer, the Federal Home Loan
Mortgage Corporation, as Guarantor, and Norwest Bank
Minnesota, National Association, as Trustee.
99.1 Description of the Mortgage Loans as of the closing date
(September 29, 1998).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1998-3
By: AMRESCO Residential Securities Corporation, as
Depositor
By: /s/ Ronald B. Kirkland
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Name: Ronald B. Kirkland
Title: Vice President and
Chief Accounting Officer
Dated: October 9, 1998
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated September 15, 1998,
between AMRESCO Residential Securities Corporation
and Morgan Stanley & Co. Incorporated, as
Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of
September 1, 1998, among AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO
Residential Capital Markets, Inc., as Seller,
Master Servicer, and Special Servicer, AMRESCO
Residential Mortgage Corporation, as Servicer, the
Federal Home Loan Mortgage Corporation, as
Guarantor, and Norwest Bank Minnesota, National
Association, as Trustee.
99.1 Description of the Mortgage Loans as of the
closing date (September 29, 1998).
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Exhibit 1.1
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
MORGAN STANLEY & CO. INCORPORATED
As Representative of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1998-3
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-3
Class A-7 Certificates
Class A-8 Certificates
Class M-1A Certificates
Class M-2A Certificates
Class B-1A Certificates
Class B-1F Certificates
September 15, 1998
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AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1998-3
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-3
UNDERWRITING AGREEMENT
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September 15, 1998
Morgan Stanley & Co. Incorporated
as Representative of the
several Underwriters
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
AMRESCO Residential Securities Corporation (the "Depositor"), a
Delaware corporation, has authorized the issuance and sale of Mortgage Loan
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8 (the "Class A Certificates"),
Class M-1A (the "Class M-1 Certificates"), Class M-2A (the "Class M-2
Certificates" and, collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B-1F and Class B-1A (the "Class B-1 Certificates"), Class
C-FIO and Class C-AIO Certificates (collectively, the "Class C-IO Certificates"
and, collectively, with the Mezzanine Certificates and the Class B-1
Certificates, the "Subordinate Certificates") and the Class S Certificates, the
Class D and the Class R Certificates (the "Retained Certificates," and,
collectively with the Class A Certificates and the Subordinate Certificates, the
"Certificates"), evidencing interests in a pool of fixed and adjustable rate
mortgage loans (the "Mortgage Loans"). The Mortgage Loans are secured primarily
by first and second deeds of trust or mortgages on one- to four-family
residential properties. The Class A-7 Certificates, Class A-8 Certificates, the
Mezzanine Certificates and the Class B-1 Certificates (collectively, the
"Offered Certificates") will be publicly offered pursuant to the Prospectus
described below. The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and
Class A-6 Certificates will be sold pursuant to a Purchase Agreement (the
"Purchase Agreement") by the Depositor to the Federal Home Loan Mortgage
Corporation ("Freddie Mac"), which will in turn issue pass-through certificates
to be underwritten by you on the date hereof. The Class C-IO Certificates and
the Retained Certificates will not be publicly offered.
Only the Offered Certificates are being purchased by the Underwriters
named in Schedule A hereto, and the Underwriters are purchasing, severally, only
the Offered Certificates set forth opposite their names in Schedule A, except
that the amounts purchased by the Underwriters may change in accordance with
Section X of this Agreement. Morgan Stanley & Co. Incorporated is acting as
representative of the several Underwriters and, in such capacity, is hereinafter
referred to as the "Representative."
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The Certificates will be issued under a Pooling and Servicing
Agreement, dated as of September 1, 1998 (the "Pooling and Servicing Agreement")
among the Depositor, AMRESCO Residential Capital Markets, Inc., as Seller (the
"Seller"), as Master Servicer (the "Master Servicer") and Special Servicer
("Special Servicer"), AMRESCO Residential Mortgage Corporation, as Servicer (the
"Servicer"), Freddie Mac, as Guarantor, and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The Certificates will evidence
fractional undivided interests in the trust (the "Trust"). The assets of the
Trust will initially include, among other things, a pool of fixed and adjustable
rate Mortgage Loans (the "Mortgage Loans") and any accounts held by the Trustee
for the Trust. The Mortgage Loans will be acquired, in part, from the various
Originators pursuant to the various "Transfer Agreements" as such term is
defined in the Pooling and Servicing Agreement.
The Offered Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement. For purposes of this Agreement, "Business Day"
means any day on which the New York Stock Exchange, Inc. is open for trading.
SECTION I. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-30759) has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
(the "Rules and Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
and (iii) become effective under the Securities Act. Copies of such Registration
Statement have been delivered by the Depositor to the Representative. As used in
this Agreement, "Effective Time" means the date and the time as of which such
Registration Statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Registration Statement" means such registration
statement, at the Effective Time, including any documents incorporated by
reference therein at such time; "Basic Prospectus" means such final prospectus
dated September 4, 1997; and "Prospectus Supplement" means the final prospectus
supplement relating to the Offered Certificates, to be filed with the Commission
pursuant to paragraphs (2), (3) or (5) of Rule 424(b) of the Rules and
Regulations. "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. Reference made herein to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act as of the date of the
Prospectus, any reference to any amendment or supplement to the Prospectus shall
be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of the Prospectus and
incorporated by reference in the Prospectus, and any reference to any amendment
to the Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order preventing or
suspending the use of the Prospectus. There are no contracts or documents of the
Depositor which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and Regulations which have
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not been so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor pursuant to
Section VIII D hereof for filing on Form 8-K.
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations. The Registration Statement, as of the
Effective Date thereof and of any amendment thereto, did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus as of its date, and as amended or supplemented as of the Closing Date
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the Depositor in writing by
the Underwriters expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change, or any development
involving a prospective material adverse change, in the general affairs,
management, financial condition, or results of operations of the Depositor,
otherwise than as set forth or contemplated in the Prospectus as supplemented or
amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and has all
power and authority necessary to own or hold its properties, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and
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Servicing Agreement and the Purchase Agreement (collectively, the "Depositor
Agreements") and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a) which
if determined adversely to the Depositor would have a material adverse effect on
the business or financial condition of the Depositor, (b) asserting the
invalidity of the Depositor Agreements or the Certificates, (c) seeking to
prevent the issuance of the Certificates or the consummation by the Depositor of
any of the transactions contemplated by the Depositor Agreements, (d) which
might individually or in the aggregate materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, the Depositor Agreements or the Certificates or (e) which
might adversely affect the federal income tax attributes of the Certificates as
described in the Prospectus.
G. This Agreement has been, and the other Depositor Agreements, when
executed and delivered as contemplated hereby, will have been, duly authorized,
executed and delivered by the Depositor, and this Agreement constitutes, and the
other Depositor Agreements when executed and delivered as contemplated hereby,
will constitute, legal, valid and binding instruments enforceable against the
Depositor in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, (y)
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (z) with respect to rights of indemnity
under this Agreement, limitations of public policy under applicable securities
laws.
H. The execution, delivery and performance of the Depositor Agreements
by the Depositor and the consummation of the transactions contemplated hereby
and thereby, compliance with the provisions thereof, and the issuance and
delivery of the Certificates do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of the Depositor
or any of its subsidiaries is subject, which breach or violation would have a
material adverse effect on the business, operations or financial condition of
the Depositor, nor will such actions result in any violation of the provisions
of the articles of incorporation or by-laws of the Depositor (which breach or
violation would have a material adverse effect on the business, operations or
financial condition of the Depositor), or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Depositor or any of its properties or assets. The Depositor is not a party
to, bound by, or in breach or violation of, any indenture or other agreement or
instrument, or subject to or in violation of any statute, order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Depositor, which materially and adversely affects, or is
reasonably likely in the future to materially and adversely affect, (i) the
ability of the Depositor to perform its obligations under the Depositor
Agreements or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Depositor.
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I. The Depositor has no reason to know that Deloitte & Touche, LLP are
not independent public accountants with respect to the Depositor as required by
the Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute,
authenticate, issue and deliver the Certificates has been duly authorized by the
Depositor, and assuming the Trustee has been duly authorized to do so, when
executed, authenticated, issued and delivered by the Trustee in accordance with
the Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by the Depositor Agreements, except such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus, and there are no proceedings pending with
respect to which the Depositor has received service of process or, to the best
knowledge of the Depositor threatened, relating to the revocation or
modification of any such license, certificate, authority or permit which if
decided adversely to the Depositor would, singly or in the aggregate, materially
and adversely affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Mortgage Loans
conveyed by the Seller, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Mortgage
Loans, in the Pooling and Servicing Agreement or in the Certificates being
issued pursuant thereto; and (iii) have the power and authority to sell its
interest in the Mortgage Loans to the Trustee and to sell the Offered
Certificates to the Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to the
Mortgage Loans. Upon delivery to the Underwriters of the Offered Certificates,
the Underwriters will have good title to the Offered Certificates, free of any
Liens.
N. As of the Closing Date, each of the Mortgage Loans will meet the
eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
O. Neither the Depositor nor the Trust is an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder (the "1940 Act").
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P. At the Closing Date, the Offered Certificates and the Pooling and
Servicing Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
Q. At the Closing Date, the Class A Certificates shall have been rated
in the highest rating category by Moody's Investors Service, Inc. ("Moody's")
and Fitch IBCA, Inc. ("Fitch"). In addition, the Class M-1, Class M-2 and Class
B-1 Certificates shall receive ratings of at least "Aa2," "A2" and "Baa3,"
respectively from Moody's and at least "AA," "A" and "BBB," respectively, from
Fitch.
R. Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of the Depositor Agreements and the
Certificates have been paid or will be paid at or prior to the Closing Date.
S. At the Closing Date, each of the representations and warranties of
the Depositor set forth in the Pooling and Servicing Agreement will be true and
correct in all material respects.
T. The transfer of the Mortgage Loans to the Trust at the Closing Date
will be treated by the Depositor for financial accounting and reporting purposes
as a sale of assets and not as a pledge of assets to secure debt.
U. The Depositor is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Prospectus or for any
additional information, or (ii) any notification with respect to the suspension
of the qualification of the Certificates for sale in any jurisdiction or the
initiating or threatening of any proceeding for such purpose.
V. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
Any certificate signed by an officer of the Depositor and delivered to
the Representative or counsel for the Representative in connection with an
offering of the Offered Certificates shall be deemed, and shall state that it
is, a representation and warranty as to the matters covered thereby to each
person to whom the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) severally and not jointly to purchase from
the Depositor the aggregate initial principal amounts or percentage interests of
the Offered Certificates set forth opposite their names on Schedule A, at the
purchase price or prices set forth in Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for the
Offered Certificates to be purchased by the Underwriters shall be made at
offices of AMRESCO, Inc. in Dallas, Texas, or at such other place as shall be
agreed upon by the Representative and the Depositor at 10:00 A.M. central
standard time on September 29, 1998 or at such other time or date as shall be
agreed upon in writing by the Representative and the Depositor (such date being
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referred to as the "Closing Date"). Payment shall be made to the Depositor by
wire transfer of same day funds payable to the account of the Depositor.
Delivery of the Offered Certificates shall be made to the Representative for the
accounts of the Underwriters against payment of the purchase price thereof. The
Certificates shall be in such authorized denominations and registered in such
names as the Underwriters may request in writing at least two Business Days
prior to the Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. eastern time on the
first Business Day prior to the Closing Date.
SECTION IV. Offering by the Underwriters.
A. It is understood that, subject to the terms and conditions hereof,
the Underwriters propose to offer the Offered Certificates for sale to the
public as set forth in the Prospectus.
B. It is understood that the Underwriters may prepare and provide to
prospective investors certain Computational Materials and ABS Term Sheets (as
defined below) in connection with the offering of the Offered Certificates,
subject to the following conditions:
1. In connection with the use of Computational Materials, the
Underwriters shall comply with all applicable requirements of the
No-Action Letter, dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured
Asset Corporation, as made applicable to other issuers and underwriters
by the Division of Corporation Finance of the Commission in response to
the request of the Public Securities Association ("PSA"), dated May 23,
1994 (collectively, the "Kidder/PSA Letters"), as well as the PSA
Letter referred to below. In connection with the use of ABS Term
Sheets, the Underwriters shall comply with all applicable requirements
of the No-Action Letter, dated February 17, 1995, issued by the
Division of Corporation Finance to the Commission to PSA (the "PSA
Letter" and, together with the Kidder/PSA Letters, the "No-Action
Letters").
2. The term "Computational Materials" as used herein shall
have the meaning given to such term in the No-Action Letters, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriters. The terms "ABS Term Sheets," "Collateral Term Sheets" and
"Structural Term Sheets" as used herein shall have the meanings given
to such terms in the PSA Letter, but shall include only those ABS Term
Sheets, Collateral Term Sheets or Structural Term Sheets that have been
prepared or delivered to prospective investors by or at the direction
of the Underwriters.
3. All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed pursuant to the
No-Action Letters shall bear a legend on each page in a form previously
agreed upon by the Depositor and the Underwriters.
4. Any Computational Materials and ABS Term Sheets are subject
to review by and approval of the Depositor prior to their distribution
to any prospective investors
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and a copy of such Computational Materials and ABS Term Sheets
as are delivered to prospective investors shall, in addition
to the foregoing delivery requirements, be delivered to the
Depositor simultaneously with delivery to prospective
investors.
5. The Underwriters shall provide to the Depositor, for filing
on Form 8-K as provided in Section V.M, copies (in such format as
required by the Depositor) of all Computational Materials and ABS Term
Sheets that are required to be filed with the Commission pursuant to
the No-Action Letters. Each delivery of Computational Materials or ABS
Term Sheets to the Depositor pursuant to this paragraph shall be
effected by delivering a copy of such material to counsel for the
Depositor on behalf of the Depositor and one copy of such materials to
the Depositor. The Underwriters may provide copies of the foregoing in
a consolidated or aggregate form that includes all information required
to be filed. All Computational Materials and ABS Term Sheets described
in this Section must be provided to the Depositor not later than 10:00
a.m., New York time, on the Business Day before the date on which
filing thereof is required pursuant to the terms of this Agreement.
Each Underwriter agrees that it will not provide to any investor or
prospective investor in the Offered Certificates any Computational
Materials or ABS Term Sheets on or after the day on which Computational
Materials and ABS Term Sheets are required to be provided to the
Depositor pursuant to this Section (other than copies of Computational
Materials or ABS Term Sheets previously submitted to the Depositor in
accordance with this Section for filing pursuant to Section V.M),
unless such Computational Materials or ABS Term Sheets are preceded or
accompanied by the delivery of a Prospectus to such investor or
prospective investor.
6. All information included in the Computational Materials and
ABS Term Sheets shall be generated based on substantially the same
methodology and assumptions that are used to generate the information
in the Prospectus Supplement as set forth therein; provided, however,
that the Computational Materials and ABS Term Sheets may include
information based on alternative methodologies or assumptions specified
therein. If any Computational Materials or ABS Term Sheets that are
required to be filed were based on assumptions with respect to the
Mortgage Loans that are incorrect, that differ from the final
information about the Mortgage Pool in any material respect or on
Certificate structuring terms that were revised in any material respect
prior to the printing of the Prospectus, to the extent the Prospectus
Supplement does not specifically correct such inaccuracies, the
Underwriters shall prepare revised Computational Materials or ABS Term
Sheets, as the case may be, based on the final information about the
Mortgage Pool and structuring assumptions, circulate such revised
Computational Materials or ABS Term Sheets, as the case may be, to all
recipients of the preliminary versions thereof that indicated orally to
an Underwriter that they would purchase all or any portion of the
Offered Certificates and include such revised Computational Materials
or ABS Term Sheets (marked "as revised") in the materials delivered to
the Depositor pursuant to IV.B.5.
7. The Depositor shall not be obligated to file any
Computational Materials or ABS Term Sheets that (i) in the reasonable
determination of the Depositor and the Underwriters and their
respective counsel are not required to be filed pursuant to the
No-Action Letters or (ii) have been determined to contain any material
error or omission,
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provided that, at the request of an Underwriter, the Depositor will
file Computational Materials or ABS Term Sheets that contain a material
error or omission if clearly marked "superseded by materials dated
_____________" and accompanied by corrected Computational Materials or
ABS Term Sheets that are marked "material previously dated
__________________, as corrected." In the event that at any time when a
prospectus relating to the Offered Certificates is required to be
delivered under the Securities Act, any Computational Materials or ABS
Term Sheets are determined, in the reasonable judgment of the Depositor
or the Underwriters to contain a material error or omission, the
applicable Underwriter shall prepare a corrected version of such
Computational Materials or ABS Term Sheets, shall circulate such
corrected version of such Computational Materials or ABS Term Sheets to
all recipients of the prior version thereof that either indicated
orally to such Underwriter that they would purchase all or any portion
of the Offered Certificates, or actually purchased all or any portion
thereof, and shall deliver copies of such Computational Materials or
ABS Term Sheets (marked "as corrected") to the Depositor for filing
with the Commission is a subsequent Form 8-K submission (subject to the
Depositor's obtaining an accountant's comfort letter in respect of such
corrected Computational Materials or ABS Term Sheets, which shall be at
the expense of the applicable Underwriter or Underwriters).
C. Each Underwriter represents and warrants and agrees with the
Depositor that, as of the date hereof and as of the Closing Date, that: (i) the
Computational Materials and ABS Term Sheets furnished to the Depositor pursuant
to Section IV.B.5 constitute (either in original, aggregated or consolidated
form) all of the materials furnished to prospective investors by the Underwriter
prior to the time of delivery thereof to the Depositor that are required to be
filed with the Commission with respect to the Offered Certificates in accordance
with the No-Action Letters, and such Computational Materials and ABS Term Sheets
comply with the requirements of the No-Action Letters; (ii) on the date any such
Computational Materials and ABS Term Sheets with respect to such Certificates
(or any written or electronic materials furnished to prospective investors on
which the Computational Materials and ABS Term Sheets are based) were last
furnished to each prospective investor and on the date of delivery thereof to
the Depositor pursuant to Section IV.B.5 and on the related Closing Date, such
Computational Materials and ABS Terms Sheets (or materials) were accurate in all
material respects when read in conjunction with the Prospectus (taking into
account the assumptions explicitly set forth in the Computational Materials),
except to the extent of any errors therein that are caused by errors in the
Mortgage Pool information provided to the Underwriters by the Depositor; (iii)
the Underwriters have not and will not represent to potential investors that any
Computational Materials or ABS Term Sheets were prepared or disseminated on
behalf of the Depositor; and (iv) all Computational Materials and ABS Term
Sheets (or underlying materials distributed to prospective investors on which
the Computational Materials and ABS Term Sheets were based) contained and will
contain the legend in the form previously agreed upon by the Depositor and the
Underwriters as required by Section IV.B.3.
Notwithstanding the foregoing, the Underwriters make no representation
or warranty as to whether any Computational Materials or ABS Term Sheets (or any
written or electronic materials furnished to prospective investors on which the
Computational Materials or ABS Term Sheets are based) included or will include
any inaccurate statement resulting directly
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from any error contained in the Mortgage Pool information provided to the
Underwriters by the Depositor.
D. If an Underwriter does not provide any Computational Materials or
ABS Term Sheets to the Depositor pursuant to Section IV.B.4, the Underwriter
shall be deemed to have represented, as of the Closing Date, that it did not
provide any prospective investors with any information in written or electronic
form in connection with the offering of the Offered Certificates that is
required to be filed with the Commission in accordance with the No-Action
Letters.
SECTION V. Covenants of the Depositor. The Depositor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and
to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second Business Day
following the availability of the Prospectus to the Underwriters; to make no
further amendment or any supplement to the Registration Statement or to the
Prospectus prior to the Closing Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective
prior to the Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to furnish the
Underwriters with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Depositor
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Offered Certificates; to promptly advise the Underwriters of its receipt of
notice of the issuance by the Commission of any stop order or of: (i) any order
preventing or suspending the use of the Prospectus; (ii) the suspension of the
qualification of the Offered Certificates for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; (iv) any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information. In
the event of the issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or suspending any such qualification, the
Depositor promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented
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would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, the Depositor shall notify the
Underwriters and, upon any Underwriter's request, shall file such document and
prepare and furnish without charge to the Underwriters and to any dealer in
securities as many copies as the Underwriters may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which
corrects such statement or omission or effects such compliance, and in case the
Underwriters are required to deliver a Prospectus in connection with sales of
any of the Offered Certificates at any time nine months or more after the
Effective Time, upon the request of an Underwriter but at its expense, the
Depositor shall prepare and deliver to such Underwriter as many copies as such
Underwriter may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Securities Act. If such amendment or
supplement to the Prospectus is required to be contained in a post-effective
amendment to the Registration Statement, the Depositor will use its best efforts
to cause such amendment of the Registration Statement to be made effective as
soon as possible.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Depositor or the Underwriters, be required by
the Securities Act or requested by the Commission.
E. To furnish the Underwriters and counsel for the Underwriters, prior
to filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i)
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates
as soon as practicable, but in any event not later than 90 days after the close
of the period covered thereby, a statement of earnings of the Trust (which need
not be audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including, at the option of the Depositor, Rule 158) and
covering a period of at least twelve consecutive months beginning not later than
the first day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Certificates have been so qualified.
H. So long as the Offered Certificates shall be outstanding, and
pursuant to the Pooling and Servicing Agreement, the Depositor shall cause the
Trustee or the Master Servicer,
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as soon as such statements are furnished to the Trustee or the Master Servicer,
as applicable, to deliver to the Underwriters the following documents: (i) the
annual statement as to compliance delivered to the Trustee pursuant to Section
8.16 of the Pooling and Servicing Agreement; (ii) the annual statement of a firm
of independent public accountants furnished to the Trustee pursuant to Section
8.17 of the Pooling and Servicing Agreement; (iii) the Servicer's Monthly
Servicing Reports furnished by each Servicer to the Master Servicer pursuant to
Section 8.29(a) of the Pooling and Servicing Agreement, (iv) the Aggregate
Monthly Servicing Report furnished by the Master Servicer to the Trustee
pursuant to Section 8.29(g) of the Pooling and Servicing Agreement; (v) the
monthly reports furnished to the Owners of the Offered Certificates pursuant to
Section 7.09 of the Pooling and Servicing Agreement; and (vi) from time to time,
any other information concerning the Trust filed with any government or
regulatory authority that is otherwise publicly available, as the Representative
may reasonably request.
I. To apply the net proceeds from the sale of the Offered Certificates
in the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing Date,
neither the Depositor nor any trust established, directly or indirectly, by the
Depositor will, without the Representative's prior written consent (which
consent shall not be unreasonably withheld), offer or sell mortgage pass-through
certificates backed by mortgage loans, except pursuant to this Agreement and the
Purchase Agreement.
K. The Depositor will enter into the applicable agreements, to which it
is a party pursuant to the Pooling and Servicing Agreement, on or prior to the
Closing Date.
L. To cause any Computational Materials with respect to the
Certificates that are delivered to the Depositor as provided in Section IV.B.5
to be filed with the Commission on a Current Report on Form 8-K at or before the
time of filing of the Prospectus pursuant to Rule 424(b) under the Securities
Act; to cause any ABS Term Sheets with respect to the Certificates that are
delivered to the Depositor as provided in Section IV.B.5 to be filed with the
Commission on one or more Current Reports on Form 8-K (i) at or before the time
of filing of the Prospectus pursuant to Rule 424(b) of the Rules and Regulations
in the case of Structural Term Sheets, and (ii) within two Business Days of
first use in the case of Collateral Term Sheets. Prior to any such filing of
Computational Materials or ABS Term Sheets (other than any Collateral Term
Sheets that are not based on Mortgage Pool information provided to the
Underwriters by the Depositor) by the Depositor, however, the Underwriters must
comply with their obligations pursuant to Section IV.B and the Depositor must
receive a letter from independent, certified public accountants, satisfactory in
form and substance to the Depositor and its counsel, to the effect that such
accountants have performed certain specified procedures, all of which have been
agreed to by the Depositor, as a result of which they determined that all
information that is included in the Computational Materials and ABS Term Sheets
(if any) provided by the Underwriters to the Depositor for filing on Form 8-K,
as provided in Section IV.B and this Section V.M, is accurate except as to such
matters that are not deemed by the Depositor to be material. The Depositor shall
file any corrected Computational Materials or ABS Term Sheets described in
Section IV.B.7 as soon as practicable following receipt thereof.
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M. To prepare the Information Circular relating to the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates (the
"Information Circular") in a form approved by the Underwriters.
SECTION VI. Conditions to the Underwriters' Obligations. The
obligations of the Underwriters to purchase the Offered Certificates pursuant to
this Agreement are subject to: (i) the accuracy on and as of the Closing Date of
the representations and warranties on the part of the Depositor herein contained
(including those representations and warranties set forth in the Pooling and
Servicing Agreement and incorporated herein); (ii) the performance by the
Depositor of all of its obligations hereunder; (iii) the accuracy of the
statements of the Depositor made in any certificate or other document delivered
pursuant to the provisions hereof; and (iv) the following conditions as of the
Closing Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus shall
have been complied with. The Prospectus shall have been filed pursuant to Rule
424(b).
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Dewey Ballantine
LLP, counsel for the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of the Depositor Agreements, the Certificates,
the Registration Statement and the Prospectus, and all other legal matters
relating to the Depositor Agreements and the transactions contemplated hereby
shall be satisfactory in all respects to counsel for the Underwriters, and the
Depositor shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters. The
Representative shall have received the Depositor Agreements and the Offered
Certificates in form and substance satisfactory to the Representative, duly
executed by all signatories required pursuant to the respective terms thereof.
D. Arter & Hadden LLP shall have furnished to the Underwriters their
written opinion, as counsel to the Depositor, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as set
forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and not
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withdrawn and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement, the
Prospectus and each amendment or supplement thereto, as of their
respective effective or issue dates (other than the financial and
statistical information contained therein, as to which such counsel
need express no opinion), complied as to form in all material respects
with the applicable requirements of the 1933 Act and the rules and
regulations thereunder, and such counsel does not know of any amendment
to the Registration Statement required to be filed.
3. There are no material contracts, indentures or other
documents of a character required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the
captions "Description of The Securities" and in the Prospectus
Supplement under the captions "Description of The Offered Certificates"
and "The Pooling and Servicing Agreement," to the extent such
statements purport to summarize certain provisions of the Offered
Certificates or of the Pooling and Servicing Agreement, are fair and
accurate in all material respects.
5. The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the captions "ERISA Considerations,"
"Certain Federal Income Tax Consequences," "Legal Investment Matters"
and, "Certain Legal Aspects of the Mortgage Assets" to the extent that
they constitute matters of federal law, provide a fair and accurate
summary of such law or conclusions.
6. The Pooling and Servicing Agreement conforms in all
material respects to the description thereof contained in the
Prospectus and the Pooling and Servicing Agreement is not required to
be qualified under the 1939 Act, and the Trust is not required to be
registered under the 1940 Act.
7. Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as such
terms are defined in the 1940 Act.
8. Assuming that (a) the Trustee causes certain assets of the
Trust Estate, as the Trustee has covenanted to do in the Pooling and
Servicing Agreement, to be treated as a "real estate mortgage
investment conduit" ("REMIC"), as such term is defined in the Internal
Revenue Code of 1986, as amended (the "Code"), and (b) the parties to
the Pooling and Servicing Agreement comply with the terms thereof, the
Lower-Tier REMIC and the Upper-Tier REMIC will be treated as a REMIC,
each Class of the Offered Certificates, the Class C-IO Certificates,
the Class S Certificates and the Class D Certificates will be treated
as the "regular interests" in the Upper-Tier REMIC and the Class R
Certificates will be treated as the sole "residual interest" in the
Upper-Tier REMIC and each Lower-Tier Interest will be treated as the
"regular interests" in the Lower-Tier REMIC and the Lower-Tier REMIC
Residual Class will be the sole "residual interest" in the Lower-Tier
REMIC. Neither the Trust nor certain assets and accounts are
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subject to tax upon its income or assets by any taxing authority of the
State of New York or the City of New York.
9. Assuming that the Class A-7 Certificates, the Class A-8
Certificates and the Class M-1A Certificates are rated at the time of
issuance in one of the two highest rating categories by a nationally
recognized statistical rating organization, such Certificates at such
time will be a "mortgage related security" as such term is defined in
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would adversely
affect the status of the Lower-Tier REMIC and the Upper-Tier REMIC as a
REMIC.
11. As a consequence of the qualification of the Upper-Tier
REMIC as a REMIC, the Offered Certificates will be treated as "regular
. . . interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code
and "real estate assets" under Section 856(c) of the Code in the same
proportion that the assets in the Trust consist of qualifying assets
under such Sections. In addition, as a consequence of the qualification
of the Upper-Tier REMIC and the Lower-Tier REMIC as a REMIC, interest
on the Offered Certificates will be treated as "interest on obligations
secured by mortgages on real property" under Section 856(c) of the Code
to the extent that such Offered Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the
description thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters to the effect that no facts have come
to the attention of such counsel which lead them to believe that: (a) the
Registration Statement, at the time such Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading (except as to financial or statistical data
contained in the Registration Statement); (b) the Prospectus, as of its date and
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (d) the Information Circular, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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E. The Underwriters shall have received the favorable opinion, dated
the Closing Date, of Arter & Hadden LLP, special counsel to the Depositor,
addressed to the Depositor and satisfactory to Moody's, Fitch and the
Underwriters, with respect to certain matters relating to the transfer of the
Mortgage Loans to the Depositor and from the Depositor to the Trust, and such
counsel shall have consented to reliance on such opinion by Moody's, Fitch and
the Underwriters as though such opinion had been addressed to each such party.
F. General Counsel for the Servicer, shall have furnished to the
Underwriters a written opinion, as counsel to the Servicer, addressed to the
Underwriters and the Depositor and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
1. The Servicer is validly existing in good standing as a
corporation under the laws of its state of incorporation.
2. The Servicer has full corporate power and authority to
serve in the capacity of servicer of the Mortgage Loans as contemplated
in the Pooling and Servicing Agreement.
3. The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Servicer, and, assuming the
due authorization, execution and delivery of such agreement by the
other parties thereto, constitutes the legal, valid and binding
agreement of the Servicer, enforceable against the Servicer in
accordance with its terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before which any proceedings with respect
thereto may be brought.
4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
having jurisdiction over the Servicer is required for the consummation
by the Servicer of the transactions contemplated by the Pooling and
Servicing Agreement, except such consents, approvals, authorizations,
registrations and qualifications as have been obtained.
5. The execution, delivery or performance by the Servicer of
the Pooling and Servicing Agreement and the transactions contemplated
thereby do not (A) conflict with or result in a breach of, or
constitute a default under, (i) any term or provision of the
certificate of incorporation or by-laws of the Servicer; (ii) any term
or provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement to
which the Servicer is a party or is bound or to which any of the
property or assets of the Servicer or any of its subsidiaries is
subject; (iii) to the best of such counsel's knowledge without
independent investigation any order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over
the Servicer; or (iv) any law, rule or regulations applicable to the
Servicer; or (B) to the best of such counsel's knowledge without
independent investigation, results in the
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creation or imposition of any lien, charge or encumbrance upon the
Trust Estate or upon the Certificates.
6. There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge without independent
investigation, threatened against the Servicer before any court,
administrative agency or other tribunal (a) asserting the invalidity of
the Pooling and Servicing Agreement or the Certificates, (b) seeking to
prevent the consummation of any of the transactions contemplated by the
Pooling and Servicing Agreement or (c) which would materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, the Pooling and Servicing
Agreement.
G. Counsel for the Depositor, the Seller, the Master Servicer and the
Special Servicer (which may be in-house counsel) shall have furnished to the
Underwriters such counsel's written opinion, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires
such qualification (except where any such failure would not have a
material adverse effect on the Depositor's ability to perform its
obligations under the Depositor Agreements) and has all power and
authority necessary to own or hold its properties and to conduct the
business in which it is engaged and to enter into and perform its
obligations under the Depositor Agreements, and to cause the
Certificates to be issued.
2. The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Depositor is a party or by which it or
its properties may be bound, which default might result in any material
adverse change in the financial condition of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor.
3. The Depositor Agreements have been duly authorized,
executed and delivered by the Depositor and, assuming the due
authorization, execution and delivery of such agreements by the other
parties thereto, such agreements constitute valid and binding
obligations, enforceable against the Depositor in accordance with their
respective terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (y)
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (z) with respect to
rights of indemnity under this Agreement, limitations of public policy
under applicable securities laws.
4. The execution, delivery and performance of the Depositor
Agreements by the Depositor, the consummation of the transactions
contemplated hereby and thereby,
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and the issuance and delivery of the Certificates (i) do not and will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party or by which the Depositor
is bound or to which any of the property or assets of the Depositor or
any of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business, operations or financial
condition of the Depositor, (ii) nor will such actions result in a
violation of the provisions of the articles of incorporation or by-laws
of the Depositor, which breach or violation would have a material
adverse effect on the business, operations or financial condition of
the Depositor (or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets) and (iii) nor will such
actions result in the creation or imposition of any lien, charge or
encumbrance upon the Trust Estate or upon the Certificates, except as
otherwise contemplated by the Pooling and Servicing Agreement.
5. The direction by the Depositor to the Trustee to execute,
issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor and, assuming that the Trustee has been
duly authorized to do so, when executed, authenticated and delivered by
the Trustee in accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing Agreement.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of
the United States is required for the issuance of the Certificates, and
the sale of the Offered Certificates to the Underwriters, or the
consummation by the Depositor of the other transactions contemplated by
the Depositor Agreements, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under the 1933 Act or state securities or Blue Sky laws in connection
with the purchase and distribution of the Offered Certificates by the
Underwriters or as have been previously obtained.
7. There are no actions, proceedings or investigations pending
with respect to which the Depositor has received service of process
before or, to the best of such counsel's knowledge, without independent
investigation, threatened by any court, administrative agency or other
tribunal to which the Depositor is a party or of which any of its
properties is the subject: (a) which if determined adversely to the
Depositor would have a material adverse effect on the business, results
of operations or financial condition of the Depositor; (b) asserting
the invalidity of the Pooling and Servicing Agreement or the
Certificates; (c) seeking to prevent the issuance of the Certificates
or the consummation by the Depositor of any of the transactions
contemplated by the Depositor Agreements; or (d) which might materially
and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the Depositor
Agreements or the Certificates.
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8. The Certificates have been duly and validly authorized and
issued, and, immediately prior to the sale of the Offered Certificates
to the Underwriters, such Certificates are owned by the Depositor, free
and clear of all Liens.
9. The Seller has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or hold
its properties and to conduct the business in which it is engaged and
to enter into and perform its obligations under the Pooling and
Servicing Agreement, and the Guaranty dated September 29, 1998
(collectively, the "Seller Agreements").
10. The Seller is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Seller is a party or by which it or its
properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or
business of the Seller or which might materially and adversely affect
the properties or assets, taken as a whole, of the Seller.
11. The Seller Agreements have been duly authorized, executed
and delivered by the Seller and, assuming the due authorization,
execution and delivery of such agreements by the parties thereto other
than the Seller, such agreements will constitute valid and binding
obligations, enforceable against the Seller in accordance with their
respective terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally (y) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
12. The execution, delivery and performance of the Seller
Agreements by the Seller and the consummation of the transactions
contemplated thereby do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Seller is a party or by
which the Seller is bound or to which any of the property or assets of
the Seller or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Seller, nor will such actions
result in a violation of the provisions of the articles of
incorporation or by-laws of the Seller or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Seller or any of its properties or assets, which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Seller.
13. There are no actions, proceedings or investigations
pending with respect to which the Seller has received service of
process before or, to the best of such counsel's knowledge, without
independent investigation, threatened by any court, administrative
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agency or other tribunal to which the Seller is a party or of which any
of its properties is the subject: (a) which if determined adversely to
the Seller would have a material adverse effect on the business,
results of operations or financial condition of the Seller; (b)
asserting the invalidity of the Pooling and Servicing Agreement or the
Certificates; (c) seeking to prevent the issuance of the Certificates
or the consummation by the Seller of any of the transactions
contemplated by the Seller Agreements; or (d) which might materially
and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, the Pooling and Servicing
Agreement or the Certificates.
14. The Master Servicer has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires
such qualification, and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is engaged
and to enter into and perform its obligations under the Pooling and
Servicing Agreement.
15. The Master Servicer is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Master Servicer is a party or by which it
or its properties may be bound, which default might result in any
material adverse changes in the financial condition, earnings, affairs
or business of the Master Servicer or which might materially and
adversely affect the properties or assets, taken as a whole, of the
Master Servicer.
16. The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Master Servicer and, assuming
the due authorization, execution and delivery of such agreement by the
parties thereto other than the Master Servicer, such agreements will
constitute valid and binding obligations, enforceable against the
Master Servicer in accordance with their respective terms, subject as
to enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
17. The execution, delivery and performance of the Pooling and
Servicing Agreement by the Master Servicer and the consummation of the
transactions contemplated thereby do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Master
Servicer is a party or by which the Master Servicer is bound or to
which any of the property or assets of the Master Servicer or any of
its subsidiaries is subject, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Master Servicer, nor will such actions result in a
violation of the provisions of the articles of incorporation or by-laws
of the Master Servicer or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Master Servicer or any of its properties or assets, which
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breach or violation would have a material adverse effect on the
business, operations or financial condition of the Master Servicer.
18. There are no actions, proceedings or investigations
pending with respect to which the Master Servicer has received service
of process before or, to the best of such counsel's knowledge, without
independent investigation, threatened by any court, administrative
agency or other tribunal to which the Master Servicer is a party or of
which any of its properties is the subject: (a) which if determined
adversely to the Master Servicer would have a material adverse effect
on the business, results of operations or financial condition of the
Master Servicer; (b) asserting the invalidity of the Pooling and
Servicing Agreement or the Certificates; (c) seeking to prevent the
issuance of the Certificates or the consummation by the Master Servicer
of any of the transactions contemplated by the Pooling and Servicing
Agreement or this Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Master Servicer
of its obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement or the Certificates.
H. The Underwriters shall have received the favorable opinion of
Timothy J. Carlin, Senior Counsel for the Trustee or of Hunton & Williams,
counsel to the Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the Underwriters, to the effect
that:
1. The Trustee is a national banking association duly
incorporated and validly existing under the laws of the United States
of America.
2. The Trustee has the full corporate trust power to execute,
deliver and perform its obligations under the Pooling and Servicing
Agreement.
3. The execution and delivery by the Trustee of the Pooling
and Servicing Agreement and the performance by the Trustee of its
obligations under the Pooling and Servicing Agreement have been duly
authorized by all necessary corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally
binding obligation of the Trustee enforceable against the Trustee.
5. The execution and delivery by the Trustee of the Pooling
and Servicing Agreement does not (a) violate the organization
certificate of the Trustee or the By-laws of the Trustee, (b) to such
counsel's knowledge, violate any judgment, decree or order of United
States federal court or United States federal governmental authority by
which the Trustee is bound or (c) assuming the non-existence of any
judgment, decree or order of any court or other governmental authority
that would be violated by such execution and delivery, violate United
States federal statute, rule or regulation or require any consent,
approval or authorization of United States federal court or United
States federal governmental authority.
6. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
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7. If the Trustee were acting in the stead of the Servicer
under the Pooling and Servicing Agreement as of the date of such
opinion, the Trustee would have the full corporate trust power to
perform the obligations of the Servicer under the Pooling and Servicing
Agreement.
8. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against or
affecting the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to the Trustee, would materially and adversely affect the
ability of the Trustee to carry out the transactions contemplated in
the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the Underwriters,
with respect to the issue and sale of the Offered Certificates, this Agreement,
the Prospectus and such other related matters as the Underwriters may reasonably
require.
J. The Depositor shall have furnished to the Underwriters a
certificate, dated the Closing Date and signed by the Chairman of the Board, the
President or a Vice President of the Depositor to the extent that the signer of
such certificate has carefully examined the Registration Statement (excluding
any documents incorporated therein by reference) and the Depositor Agreements
and that, to the best of his or her knowledge based upon reasonable
investigation:
1. The representations and warranties of the Depositor in the
Depositor Agreements and all related agreements are true and correct as
of the Closing Date; and the Depositor has complied with all agreements
and satisfied all the conditions on its part which are to have been
complied with on or prior to the Closing Date.
2. There has been no amendment or other document filed
affecting the certificate of incorporation or bylaws of the Depositor
since November 9, 1995 and no such amendment has been authorized. No
event has occurred since September 1, 1998, which has affected the good
standing of the Depositor under the laws of the State of Delaware.
3. There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Depositor from June 30, 1998.
4. There are no actions, suits or proceedings pending with
respect to which it has received service of process or, to the best of
such officer's knowledge, threatened against or affecting the Depositor
which if adversely determined, individually or in the aggregate, would
be reasonably likely to adversely affect the Depositor's obligations
under the Depositor Agreements in any material way; and no merger,
liquidation, dissolution or bankruptcy of the Depositor is pending or
contemplated.
K. The Trustee shall have furnished to the Underwriters a certificate
of the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution,
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authentication and delivery of the Certificates by the Trustee thereunder and
such other matters as the Representative shall reasonably request.
L. The Class A Certificates shall have been rated "Aaa" by Moody's and
"AAA" by Fitch. The Class M-1, Class M-2 and Class B-1 Certificates shall have
been rated "Aa2," "A2" and "Baa3," respectively, by Moody's and "AA," "A" and at
least "BBB," respectively, by Fitch.
M. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full Business Days prior to the Closing Date.
N. Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
O. Subsequent to the execution and delivery of this Agreement, none of
the following shall have occurred: (i) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the over-the counter
market shall have been suspended or minimum prices shall have been established
on either of such exchanges or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having jurisdiction;
(ii) a banking moratorium shall have been declared by federal or state
authorities; (iii) the United States shall have become engaged in hostilities,
there shall have been an escalation of hostilities involving the United States
or there shall have been a declaration of a national emergency or war by the
United States; or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States shall be
such) as to make it in each of the instances set forth in clauses (i), (ii),
(iii) and (iv) herein, in the reasonable judgment of the Representative,
impractical or inadvisable to proceed with the public offering or delivery of
the Certificates on the terms and in the manner contemplated in the Prospectus.
P. The Representative shall have received a letter from Deloitte &
Touche, LLP, dated on or before the Closing Date, in form and substance
satisfactory to the Representative and special counsel for the Underwriters,
addressed to each of the Underwriters to the effect that they have performed
certain specified procedures requested by the Representative with respect to the
information set forth in the Prospectus and certain matters relating to the
Depositor.
Q. The Representative and special counsel for the Underwriters shall
have received copies of any opinions of counsel supplied to the rating
organizations relating to any matters with respect to the Certificates. Any such
opinions shall be dated the Closing Date and addressed to each of the
Underwriters or accompanied by reliance letters to the Representative or shall
state that each of the Underwriters may rely upon them.
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R. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since June 30, 1998, of the Depositor and its
subsidiaries, that is in the Representative's judgment material and adverse and
that makes it in the Representative's judgment impracticable to market the
Offered Certificates on the terms and in the manner contemplated in the
Prospectus.
S. Freddie Mac and the Depositor shall have consummated the
transactions contemplated by the Purchase Agreement, and the Depositor shall
have performed all of its obligations thereunder that were to have been
performed by the Closing Date specified therein.
T. The Depository Agreement, dated as of October 24, 1990 as amended
(the "Depository Agreement") between Freddie Mac and the Depositor shall have
been duly authorized, executed and delivered, the Giant Participation
Certificates and Other Pass-Through Participation Certificates Agreement, dated
as of January 1, 1997, and the Terms Supplement, dated as of September 29, 1998
(together, the "Pass-Through Agreement") shall have been duly authorized,
adopted and executed, and each of the foregoing shall be in full force and
effect.
U. At or prior to the Closing, the Representative shall have received
the following documents, in each satisfactory in form and substance to the
Representative and to counsel for the Underwriters:
1. Copies of all resolutions and certificates of Freddie Mac
relating to the authorization, creation and sale of the Structured
Pass-Through Certificates ("SPCs") duly certified by appropriate
officials of Freddie Mac, together with copies of the Depository
Agreement and the Pass-Through Agreement.
2. A copy of the Freddie Mac Act and Bylaws of Freddie Mac as
of the Closing Date, certified by the Secretary or Assistant Secretary
of Freddie Mac.
3. A certificate, dated the Closing Date, of the Vice
President--Structured Finance or the Director--Structured Finance of
Freddie Mac to the effect that, (a) to the best knowledge of such
official, (i) the representations and warranties of Freddie Mac
contained in the Underwriting Agreement between Freddie Mac and the
Underwriters are true and correct on and as of the Closing Date as if
such representations and warranties had been made on and as of the
Closing Date, (ii) Freddie Mac has complied with all the terms of the
Pass-Through Agreement and the Depository Agreement to be complied with
by it prior to or concurrently with the Closing and (b)(i) the Assets
underlying the SPCs have been, as of the Closing Date, identified to
each Pass-Through Pool on the books and records of Freddie Mac (ii) no
other property of Freddie Mac has been identified to each such
Pass-Through Pool and (iii) Freddie Mac has been identified as the
holder of each of the Assets included in each such Pass-Through Pool.
4. An opinion, dated the Closing Date, addressed to Freddie
Mac and the Underwriters, of Maud Mater, Esq., Executive Vice
President--General Counsel and Secretary of Freddie Mac, reasonably
satisfactory to the Representative.
5. An opinion, dated the Closing Date, addressed to the
Underwriters, of Dewey Ballantine LLP, counsel to the Underwriters,
with respect to the creation and sale of the
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SPCs, the Offering Circular relating to the SPCs (the "Offering
Circular) and other related matters as the Representative may
reasonably request.
V. In addition, Deloitte & Touche LLP shall have provide to the
Representative and Freddie Mac at the time of delivery of the Offering Circular
to the Representative, a letter, dated the date of this Underwriting Agreement
in form and substance satisfactory to the Representative, with respect to
certain information provided by Freddie Mac and contained in the Offering
Circular concerning the SPCs, and, at the Closing, a letter, dated the Closing
Date, in form and substance satisfactory to the Representative, with respect to
the calculation of certain other information concerning the SPCs.
W. Subsequent to the respective dates as of which information is given
in the Offering Circular, there shall not have been any change or any
development involving a prospective change in or affecting the business,
financial condition or properties of Freddie Mac which change or development is,
in the reasonable opinion of the Representative, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering.
X. The executed copies of the Pass-Through Agreement as authorized,
adopted and executed by Freddie Mac shall have been delivered to the
Representative or their counsel.
Y. Freddie Mac shall not have been required to prepare an amendment or
supplement to the Offering Circular, which amendment supplement addresses
matters that are, in the reasonable opinion of the Representative, so material
and adverse as to make it impracticable to proceed with the offering and sale of
the SPCs as contemplated by Freddie Mac and the Representative in preparing the
Offering Circular. It is understood and agreed that Freddie Mac and the
Underwriter shall endeavor in good faith to revise the terms of the SPCs in
order to avoid the adverse effects of the matters addressed by such amendment or
supplement, provided that such revisions shall not have a material and adverse
effect on the offering and sale of the SPCs, in the aggregate, or on any Class
of SPCs other than the Class or Classes that were materially and adversely
affected by the matters addressed in the amendment or supplement referred to in
the preceding sentence.
If any condition specified in this Section VI shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION VII. Payment of Expenses. If the transaction closes, or if the
transaction fails to close other than as a result of a failure of the
Underwriters to perform hereunder, the Depositor, agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto (including the Prospectus);
(c) the costs of
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distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Prospectus and any amendment or supplement to the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the costs and expenses of printing and distributing the
Information Circular; (e) the costs of reproducing and distributing this
Agreement; (f) the fees and expenses of qualifying the Certificates under the
securities laws of the several jurisdictions as provided in Section V(G) hereof
and of preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Representative); (g) any fees charged by securities rating services for rating
the Offered Certificates; (h) the cost of the accountant's letter relating to
the Prospectus except for expenses relating to the accountant's audit of the
loan files; and (i) all other costs and expenses incident to the performance of
the obligations of the Depositor (including costs and expenses of its counsel);
provided that, except as provided in this Section VII, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Offered Certificates which they may sell and
the expenses of advertising any offering of the Offered Certificates made by the
Underwriters, and the Underwriters shall pay the cost of any accountant's
comfort letters which such Underwriters choose to request relating to any
Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section VI or Section XI, whether or not the transactions
contemplated hereunder are consummated, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses except
that the Depositor shall not be obligated under this Agreement to reimburse such
Underwriter for reasonable out-of-pocket expenses, excluding fees and
disbursements of counsel for such Underwriter, if this Agreement is terminated
by any Underwriter in accordance with Section VI.O herein.
SECTION VIII. Indemnification and Contribution. A. The Depositor agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 12 of the Exchange Act from and against any and all loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Offered Certificates), to which such
Underwriter or any such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereof or supplement thereto, (ii) the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state in the Prospectus a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, (v) any untrue
statement or alleged untrue statement of a material fact contained in the
Information Circular, or any amendment thereof or supplement thereto, (vi) the
omission or alleged omission to state in the Information Circular a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading or
(vii) any untrue statement of a
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material fact in the computational materials used by the Underwriters in
marketing the Freddie Mac Structured Pass-Through Certificates, Series T-014
which is a result of Seller Provided Information which is not accurate and
complete in all material respects and shall reimburse such Underwriter and each
such controlling person promptly upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Depositor shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus, or any amendment thereof or supplement
thereto, or the Registration Statement, or any amendment thereof or supplement
thereto, or the Information Statement, or any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Depositor by or on behalf of such Underwriter specifically for inclusion
therein (except to the extent that any untrue statement or alleged untrue
statement or omission or alleged omission is a result of Seller Provided
Information which is not accurate and complete in all material respects). The
foregoing indemnity agreement is in addition to any liability which the
Depositor may otherwise have to any Underwriter or any controlling person of any
of such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act or Section 12 of the
Exchange Act against any and all loss, claim, damage or liability, or any action
in respect thereof, to which the Depositor or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or supplement
thereto, or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements in the
Prospectus, when considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Depositor or any director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred, provided, however, that no Underwriter shall be liable to
the extent that such untrue statements or alleged untrue statement or omission
or alleged omission is a result of Seller Provided Information that is not
accurate and complete in all material respects. The foregoing indemnity
agreement is in addition to any liability which any Underwriter may otherwise
have to the Depositor or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section
VIII of notice of any claim or the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section VIII, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
27
<PAGE>
however, that the failure to notify an indemnifying party shall not relieve it
from any liability which it may have under this Section VIII except to the
extent it has been materially prejudiced by such failure and, provided further,
that the failure to notify any indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section VIII.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section VIII for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their controlling persons, or the
Depositor, if the indemnified parties under this Section VIII consist of the
Depositor or any of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section VIII.A and B, shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of
28
<PAGE>
counsel, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
D. Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within the meaning of Section 15 of the
Securities Act and Section 12 of the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Computational
Materials provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus, and in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that no Underwriter shall be liable to the extent that such
untrue statements or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information that is not accurate and complete in all
material respects. The obligations of an Underwriter under this Section VIII.D
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII.C shall be equally applicable
to this Section VIII.D.
E. If the indemnification provided for in this Section VIII shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section VIII.A, B or D in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII.C,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
29
<PAGE>
The relative benefits of an Underwriter and the Depositor shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Depositor bear to the total
underwriting discounts and commissions received by the related Underwriter from
time to time in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied or prepared by the Depositor or by such Underwriter, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII.E were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section
VIII.E shall be deemed to include, for purposes of this Section VIII.E, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section VIII, in no case shall any Underwriter
(except with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered Certificates) be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates over (y)
the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Depositor and each Underwriter expressly waive, and agree not to
assert, any defense to their respective indemnification and contribution
obligations under this Section VIII which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reason of public policy.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by the Seller concerning the assets
comprising the Trust.
SECTION IX. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in agreements delivered pursuant hereto or certificates
of officers of the Depositor submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of the Underwriters or controlling persons thereof, or by or on behalf of
the Depositor and shall survive delivery of any Offered Certificates to the
Underwriters.
30
<PAGE>
SECTION X. Default by One or More of the Underwriters. If one or more
of the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 48 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth (as used in this Agreement, the term
"Underwriter" includes any underwriter substituted for an Underwriter under this
Section X). If, however, the Underwriters have not completed such arrangements
within such 48-hour period, then:
(i) if the aggregate original principal amount of Defaulted
Certificates does not exceed 10% of the aggregate original principal amount of
the Offered Certificates to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be obligated to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
such non-defaulting Underwriters, or
(ii) if the aggregate original principal amount of Defaulted
Certificates exceeds 10% of the aggregate original principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this Agreement
shall terminate, without any liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section X, each of the Underwriters and the Depositor shall have the right to
postpone the Closing Date for a period not exceeding seven Business Days in
order that any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may terminate
this Agreement immediately upon notice to the Depositor, at any time at or prior
to the Closing Date if any of the events or conditions described in Section VI.O
of this Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity agreement set forth in
Section VIII, and the provisions of Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to the Representative at its address set forth above;
B. if to the Depositor, shall be delivered or sent by overnight mail or
facsimile transmission to 700 North Pearl Street, Suite 2400, LB #342, Dallas,
TX 75201-7424, Attn.: General Counsel, Fax No. 214-953-7757.
31
<PAGE>
SECTION XIII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION XIV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them. The
provisions of Sections V, VII and VIII hereof shall survive the termination or
cancellation of this Agreement.
SECTION XV. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in the
State of New York located in the City and County of New York, and appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION XVI. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION XVII. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
SECTION XVIII. Amendments and Waivers. This Agreement may be amended,
modified, altered or terminated, and any of its provisions waived, only in a
writing signed on behalf of the Depositor and the Representative.
32
<PAGE>
[Signature Page Follows]
33
<PAGE>
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
By: /s/ Janice M. Cott
--------------------------
Name: Janice M. Cott
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
By: /s/ Paul Scialabba
--------------------------
Name: Paul Scialabba
Title: Vice President
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Class of
Certificates Initial Principal Amount Purchase
Name of Purchased by the of Certificates Purchased Price
Underwriter Underwriters by Underwriters (% of Par)
- ----------- ---------------- ------------------------- ----------
<S> <C> <C> <C>
Morgan Stanley & Co. A-7 $139,638,525.00 99.75%
Incorporated A-8 46,475,000.00 99.8248%
M-1A 18,086,250.00 99.70%
M-2A 15,752,750.00 99.60%
B-1F 2,061,800.00 99.37286%
B-1A 13,419,250.00 99.31%
-------------------
TOTAL $235,433,575.00
-----
AMRESCO Securities, Inc. A-7 $21,482,850.00 99.75%%
A-8 7,150,000.00 99.8248%
M-1A 2,782,500.00 99.70%
M-2A 2,423,500.00 99.60%
B-1F 317,200.00 99.37286%
B-1A 2,064,500.00 99.31%
-------------------
TOTAL $36,220,550.00
-----
Bear Stearns & Co. A-7 $42,965,700.00 99.75%
Incorporated A-8 14,300,000.00 99.8248%
M-1A 5,565,000.00 99.70%
M-2A 4,847,000.00 99.60%
B-1F 634,400.00 99.37286%
B-1A 4,129,000.00 99.31%
-------------------
TOTAL $72,441,100.00
-----
Credit Suisse First Boston A-7 $75,189,975.00 99.75%
Corporation A-8 25,025,000.00 99.8248%
M-1A 9,738,750.00 99.70%
M-2A 8,482,250.00 99.60%
B-1F 1,110,200.00 99.37286%
B-1A 7,225,750.00 99.31%
-------------------
TOTAL $126,771,925.00
-----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class of
Certificates Initial Principal Amount Purchase
Name of Purchased by the of Certificates Purchased Price
Underwriter Underwriters by Underwriters (% of Par)
- ----------- ---------------- ------------------------- ----------
<S> <C> <C> <C>
Deutsche Bank A-7 $75,189,975.00 99.75%
Securities Inc. A-8 25,025,000.00 99.8248%
M-1A 9,738,750.00 99.70%
M-2A 8,482,250.00 99.60%
B-1F 1,110,200.00 99.37286%
B-1A 7,225,750.00 99.31%
-------------------
TOTAL: $126,771,925.00
-----
Prudential Securities A-7 $75,189,975.00 99.75%
Incorporated. A-8 25,025,000.00 99.8248%
M-1A 9,738,750.00 99.70%
M-2A 8,482,250.00 99.60%
B-1F 1,110,200.00 99.37286%
B-1A 7,225,750.00 99.31%
-------------------
TOTAL $126,771,925.00
-----
</TABLE>
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1998-3
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller, Master Servicer and Special Servicer,
AMRESCO RESIDENTIAL MORTGAGE CORPORATION,
as Servicer,
FEDERAL HOME LOAN MORTGAGE CORPORATION,
as Guarantor
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
Dated as of September 1, 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
CONVEYANCE........................................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION.......................................................................2
Section 1.01 Definitions............................................................................2
Section 1.02 Use of Words and Phrases..............................................................37
Section 1.03 Captions; Table of Contents...........................................................37
Section 1.04 Opinions..............................................................................37
Section 1.05 Consent of the Guarantor..............................................................38
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST.............................................................39
Section 2.01 Establishment of the Trust............................................................39
Section 2.02 Office................................................................................39
Section 2.03 Purposes and Powers...................................................................39
Section 2.04 Appointment of the Trustee; Declaration of Trust......................................39
Section 2.05 Expenses of the Trust.................................................................39
Section 2.06 Ownership of the Trust................................................................39
Section 2.07 Reserved..............................................................................39
Section 2.08 Miscellaneous REMIC Provisions........................................................39
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS, THE MASTER SERVICER
AND THE SELLER; COVENANT OF SELLER TO CONVEY MORTGAGE LOANS.............................................42
Section 3.01 Representations and Warranties of the Depositor.......................................42
Section 3.02 Representations and Warranties of the Servicer, the Special Servicer and the
Master Servicer.......................................................................43
Section 3.03 Representations and Warranties of the Seller..........................................47
Section 3.04 Representations and Warranties Relating to the Mortgage Loans; Covenants
of Seller to Take Certain Actions with Respect to the Mortgage Loans In Certain
Situations............................................................................49
Section 3.05 Conveyance of the Mortgage Loans and Qualified Replacement Mortgages..................55
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by
Trustee...............................................................................57
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.......................................................................59
Section 4.01 Issuance of Certificates..............................................................59
Section 4.02 Sale of Certificates..................................................................59
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS..................................................................60
Section 5.01 Terms.................................................................................60
Section 5.02 Forms.................................................................................60
Section 5.03 Execution, Authentication and Delivery................................................60
Section 5.04 Registration and Transfer of Certificates.............................................60
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.....................................63
Section 5.06 Persons Deemed Owners.................................................................63
Section 5.07 Cancellation..........................................................................63
Section 5.08 Limitation on Transfer of Ownership Rights............................................63
Section 5.09 Assignment of Rights..................................................................64
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
COVENANTS...............................................................................................65
Section 6.01 Distributions.........................................................................65
Section 6.02 Money for Distributions to be Held in Trust; Withholding..............................65
Section 6.03 Protection of Trust Estate............................................................66
Section 6.04 Performance of Obligations............................................................66
Section 6.05 Negative Covenants....................................................................66
Section 6.06 No Other Powers.......................................................................67
Section 6.07 Limitation of Suits...................................................................67
Section 6.08 Unconditional Rights of Owners to Receive Distributions...............................67
Section 6.09 Rights and Remedies Cumulative........................................................67
Section 6.10 Delay or Omission Not Waiver..........................................................68
Section 6.11 Control by Owners.....................................................................68
Section 6.12 Access to Owners of Certificates' Names and Addresses.................................68
Section 6.13 Year 2000.............................................................................68
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................................................................69
Section 7.01 Collection of Money...................................................................69
Section 7.02 Establishment of Accounts.............................................................69
Section 7.03 Flow of Funds.........................................................................69
Section 7.04 The Guarantee.........................................................................76
Section 7.05 Investment of Accounts................................................................76
Section 7.06 The Trustee Remittance Report.........................................................76
Section 7.07 Eligible Investments..................................................................77
Section 7.08 Accounting and Directions by Trustee..................................................78
Section 7.09 Reports by Trustee....................................................................79
Section 7.10 Additional Reports by Trustee.........................................................81
Section 7.11 Special Servicing Fee Reserve Fund....................................................81
Section 7.12 Pledge of Special Servicing Fee Reserve Fund..........................................81
Section 7.13 Payments From Special Servicing Fee Reserve Fund......................................82
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS.......................................................................................83
Section 8.01 Servicer and Subservicers.............................................................83
Section 8.02 Collection of Certain Mortgage Loan Payments..........................................84
Section 8.03 Subservicing Agreements...............................................................84
Section 8.04 Successor Subservicer.................................................................85
Section 8.05 Liability of Servicer and Special Servicer............................................85
Section 8.06 No Contractual Relationship Between Subservicer and the Trustee or the Owners.........85
Section 8.07 Assumption or Termination of Subservicing Agreement by Trustee........................85
Section 8.08 Principal and Interest Accounts; Escrow Accounts......................................85
Section 8.09 Delinquency Advances and Servicing Advances...........................................87
Section 8.10 Compensating Interest; Purchase of Mortgage Loans.....................................88
Section 8.11 Maintenance of Insurance..............................................................88
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements...........................89
Section 8.13 Realization Upon Defaulted Mortgage Loans.............................................89
Section 8.14 Trustee and Custodian to Cooperate; Release of Files..................................91
Section 8.15 Servicing Compensation................................................................92
Section 8.16 Annual Statement as to Compliance.....................................................93
Section 8.17 Annual Independent Certified Public Accountants' Reports..............................93
Section 8.18 Access to Certain Documentation and Information Regarding the Mortgage Loans..........93
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 8.19 Assignment of Agreement...............................................................94
Section 8.20 Events of Servicing Termination.......................................................94
Section 8.21 Resignation of the Servicer or the Special Servicer and Appointment of Successor......95
Section 8.22 Waiver of Past Events of Servicing Termination........................................98
Section 8.23 Assumption or Termination of Subservicing Agreement By the Trustee....................98
Section 8.24 Powers and Duties of the Trustee as Successor Servicer or Successor
Special Servicer......................................................................98
Section 8.25 Liability of the Servicer or the Special Servicer.....................................99
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions Insurance.....................99
Section 8.27 Merger, Conversion, Consolidation or Succession to Business of Servicer
or the Special Servicer...............................................................99
Section 8.28 Notices of Material Events...........................................................100
Section 8.29 Servicer's Monthly Servicing Report; Aggregate Monthly Servicing Report;
Reconciliation; Cooperation Procedures...............................................100
Section 8.30 Indemnification by the Servicer and the Special Servicer.............................102
Section 8.31 Servicing Standard...................................................................102
Section 8.32 No Solicitation......................................................................102
Section 8.33 Powers and Duties of the Master Servicer.............................................103
Section 8.34 Liability of the Master Servicer.....................................................103
Section 8.35 Master Servicer Not to Resign........................................................104
Section 8.36 Indemnification by Master Servicer...................................................104
Section 8.37 Appointment of Special Servicer......................................................104
Section 8.38 Transfer of Servicing Between Servicer and Special Servicer..........................104
ARTICLE IX
TERMINATION OF TRUST...................................................................................105
Section 9.01 Termination of Trust.................................................................105
Section 9.02 Auction Termination; Servicer Termination............................................105
Section 9.03 Termination Upon Loss of REMIC Status................................................107
Section 9.04 Disposition of Proceeds..............................................................107
ARTICLE X
THE TRUSTEE............................................................................................108
Section 10.01 Certain Duties and Responsibilities..................................................108
Section 10.02 Removal of Trustee for Cause.........................................................109
Section 10.03 Certain Rights of the Trustee........................................................110
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.............................111
Section 10.05 May Hold Certificates................................................................111
Section 10.06 Money Held in Trust..................................................................111
Section 10.07 Compensation and Reimbursement; No Lien for Fees.....................................111
Section 10.08 Corporate Trustee Required; Eligibility..............................................112
Section 10.09 Resignation and Removal; Appointment of Successor....................................112
Section 10.10 Acceptance of Appointment by Successor Trustee.......................................113
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee...........113
Section 10.12 Reporting; Withholding...............................................................113
Section 10.13 Liability of the Trustee.............................................................114
Section 10.14 Appointment of Co-Trustee or Separate Trustee........................................114
Section 10.15 Appointment of Custodians............................................................115
Section 10.16 No Solicitation......................................................................115
ARTICLE XI
MISCELLANEOUS..........................................................................................116
Section 11.01 Compliance Certificates and Opinions.................................................116
Section 11.02 Form of Documents Delivered to the Trustee...........................................116
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 11.03 Acts of Owners.......................................................................117
Section 11.04 Notices, etc. to Trustee.............................................................117
Section 11.05 Notices and Reports to Owners; Waiver of Notices.....................................117
Section 11.06 Rules by Trustee.....................................................................118
Section 11.07 Successors and Assigns...............................................................118
Section 11.08 Severability.........................................................................118
Section 11.09 Benefits of Agreement................................................................118
Section 11.10 Legal Holidays.......................................................................118
Section 11.11 Governing Law; Submission to Jurisdiction............................................118
Section 11.12 Counterparts.........................................................................119
Section 11.13 Usury................................................................................119
Section 11.14 Amendment............................................................................119
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...................................120
Section 11.16 REMIC Status.........................................................................120
Section 11.17 Additional Limitation on Action and Imposition of Tax................................121
Section 11.18 Appointment of Tax Matters Person....................................................122
Section 11.19 Attorneys' Fees......................................................................122
Section 11.20 Notices..............................................................................122
</TABLE>
iv
<PAGE>
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
EXHIBIT A FORM OF CLASS A, M-1, M-2 and B CERTIFICATES
EXHIBIT B-1 FORM OF CLASS C-IO CERTIFICATE
EXHIBIT B-2 FORM OF CLASS D CERTIFICATE
EXHIBIT B-3 FORM OF CLASS R CERTIFICATE
EXHIBIT B-4 FORM OF CLASS S CERTIFICATE
EXHIBIT C RESERVED
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L FORM OF CUSTODIAL AGREEMENT
EXHIBIT M AUCTION SALE BID PROCEDURES
EXHIBIT N RESERVED
EXHIBIT O REPRESENTATIONS AND WARRANTIES RELATING TO GROUP I
v
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-3, dated as of September 1,
1998, by and among AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware
corporation, in its capacity as Depositor (the "Depositor"), AMRESCO RESIDENTIAL
CAPITAL MARKETS, INC., a Delaware corporation, in its capacities as the Seller
(in such capacity, the "Seller"), the Master Servicer (in such capacity, the
"Master Servicer"), and the Special Servicer (in such capacity, the "Special
Servicer"), FEDERAL HOME LOAN MORTGAGE CORPORATION, as Guarantor (the
"Guarantor"), AMRESCO RESIDENTIAL MORTGAGE CORPORATION, as the Servicer (the
"Servicer") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, in its capacity as the Trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the Trust Estate;
WHEREAS, the Servicer has agreed to service a portion of the Mortgage
Loans which constitute the principal assets of the Trust Estate, the Special
Servicer has agreed to service the Specially Serviced Mortgage Loans and the
Master Servicer has agreed to supervise the activities of the Servicer and the
Special Servicer;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, the Guarantor has agreed to provide its Guarantee to the
Owners of the Guaranteed Certificates;
WHEREAS, Norwest Bank Minnesota, National Association is willing to
serve in the capacity of the Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, the Master
Servicer, the Special Servicer, the Guarantor and the Trustee hereby agree as
follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns, and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to any
and all benefits accruing to them from (a) the Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date)
listed in Schedules I-A and I-B to this Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Custodian, on behalf of the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06), together with the related
Mortgage Loan documents and the Seller's and the Depositor's interest in any
Property which secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in any Account (other than the Principal
and Interest Accounts) together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Trustee, the
Servicer and the Special Servicer), (c) the Guarantee; and, (d) proceeds of all
the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policy relating to the
Mortgage Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified herein ((a)-(d) above shall be
collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability.
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02,
7.11 or 8.08 hereof.
"Accrual Period": With respect to the Group I Certificates (and the
Class A-8 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs; a "calendar month" shall
be deemed to be 30 days. With respect to the Group II Certificates (other than
the Class A-8 Certificates) and any Payment Date, the period commencing on the
preceding Payment Date (or on the Closing Date in the case of the first Payment
Date) and ending on the day immediately preceding the current Payment Date. All
calculations of interest on the Group I Certificates (and the Class A-8
Certificates) will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months and calculations of interest on the Group II Certificates
(other than the Class A-8 Certificates) will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"Advisor": As defined in Section 9.02(a) hereof.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Aggregate Monthly Servicing Report": The monthly servicing report
prepared by the Master Servicer pursuant to Section 8.29(g), which report is
based on the information provided in the Servicer's Monthly Servicing Reports.
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": The Group I Applied Realized Loss
Amount or the Group II Applied Realized Loss Amount, as applicable.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, if such
sales price is less than such appraised value.
"Auction Sale Bid Date": The first Monthly Remittance Date on which the
aggregate outstanding Loan Balance of the Mortgage Loans has declined to less
than 10% of the Original Aggregate Loan Balance.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller, the Servicer, the Special Servicer, the Master Servicer
and the Guarantor initially including those individuals whose names appear on
the lists of Authorized Officers delivered at the Closing; with respect to the
Trustee, any Vice President, Assistant Vice President, Trust Officer or any
Officer of the Trustee located at the Corporate Trust Office.
"Balloon Loan": A Mortgage Loan with respect to which the principal
balance by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to a
Balloon Loan.
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<PAGE>
"Business Day": Any day other than (i) a Saturday or a Sunday, (ii) a
day on which (x) banking institutions in the States of California, Minnesota or
Maryland, or (y) any depository holding certificates issued by Freddie Mac and
backed by the Guaranteed Certificates are required or authorized by law or
executive order to be closed or (iii) a day on which the offices of the federal
government located in the District of Columbia generally or the offices of
Freddie Mac are closed for business.
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B-1 Certificates, the Class C-IO Certificates, the Class
D Certificates, the Class S Certificates or the Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office; provided that the funds in such account shall not be commingled with
other funds held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $81,000,000
Class A-2 Certificates - 60,000,000
Class A-3 Certificates - 27,000,000
Class A-4 Certificates - 59,000,000
Class A-5 Certificates - 21,289,000
Class A-6 Certificates - 27,300,000
Class A-7 Certificates - 429,657,000
Class A-8 Certificates - 143,000,000
Class M-1A Certificates - 55,650,000
Class M-2A Certificates - 48,470,000
Class B-1A Certificates - 41,290,000
Class B-1F Certificates - 6,344,000
The Class C-IO Certificates, the Class D Certificates, the Class R
Certificates and the Class S Certificates have been issued without Certificate
Principal Balance.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates and Class A-8
Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less any amounts actually distributed on such Class A
Certificates with respect to the Class A Principal Distribution Amount pursuant
to Section 7.03(f) and 7.03(g) hereof with respect to principal thereon on all
prior Payment Dates plus any Preference Amount previously distributed with
respect to principal.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount and the Class A-8
Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed to the Owners of
the Class A-1 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-1 Certificates with respect to principal.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
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<PAGE>
"Class A-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-1 Certificates as it relates to interest previously paid on the Class
A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-1 Certificates pursuant to Section 7.03(f) hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": The lesser of (x) 6.21% per annum and
(y) the Group I Net Weighted Average Coupon Rate minus 0.11% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed to the Owners of
the Class A-2 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-2 Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-2 Certificates as it relates to interest previously paid on the Class
A-2 Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of Class A-2 Certificates pursuant to Section 7.03(f) hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": The lesser of (x) 5.70% per annum and
(y) the Group I Net Weighted Average Coupon Rate minus 0.11% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed to the Owners of
the Class A-3
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<PAGE>
Certificates pursuant to Section 7.03(f) hereof on all prior Payment Dates plus
any Preference Amount previously distributed to the Owners of the Class A-3
Certificates with respect to principal.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-3 Certificates pursuant to Section 7.03(f) hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": The lesser of (x) 5.90% per annum and
(y) the Group I Net Weighted Average Coupon Rate minus 0.11% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed to the Owners of
the Class A-4 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-4 Certificates with respect to principal.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-4 Certificates as it relates to interest previously paid on the Class
A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-4 Certificates pursuant to Section 7.03(f) hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": The lesser of (x) 6.07% per annum and
(y) the Group I Net Weighted Average Coupon Rate minus 0.11% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right
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<PAGE>
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the Upper-Tier REMIC created hereunder for purposes
of the REMIC Provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed to the Owners of
the Class A-5 Certificates pursuant to Section 7.03(f) hereof thereon on all
prior Payment Dates plus any Preference Amount previously distributed to the
Owners of Class A-5 Certificates with respect to principal.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-5 Certificates as it relates to interest previously paid on the Class
A-5 Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-5 Certificates pursuant to Section 7.03(f) hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date (i) on or prior to
the Step Up Date, the lesser of (x) 6.40% per annum and (y) the Group I Net
Weighted Average Coupon Rate minus 0.11% per annum and (ii) after the Step Up
Date, the lesser of (x) 7.15% and (y) the Group I Net Weighted Average Coupon
Rate minus 0.11% per annum.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed to the Owners of
the Class A-6 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-6 Certificates with respect to principal.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-6 Certificates as it relates to interest previously paid on the Class
A-6 Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class A-6 Current Interest, (x) the Class A-6 Interest Carry
Forward Amount, (y) the Class A-6 Lockout Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(f) and (z) without
duplication, the Group I Class A Principal Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(f) hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of
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<PAGE>
the actual distribution with respect to interest made to the Owners of the Class
A-6 Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-6 Pass-Through Rate.
"Class A-6 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-6 Lockout Percentage for such Payment Date
and (ii) the Class A-6 Lockout Pro Rata Distribution Amount for such Payment
Date.
"Class A-6 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-6
Payment Dates Lockout Percentage
------------- ------------------
October 1998 - September 2001 0%
October 2001 - September 2003 45%
October 2003 - September 2004 80%
October 2004 - September 2005 100%
October 2005 and thereafter 300%
"Class A-6 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-6 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Class A Certificates relating to Group I immediately prior to such Payment
Date and (y) the Group I Class A Principal Distribution Amount for such Payment
Date.
"Class A-6 Pass-Through Rate": On any Payment Date (i) on or prior to
the Step Up Date, the lesser of (x) 5.95% per annum and (y) the Group I Net
Weighted Average Coupon Rate minus 0.11% per annum and (ii) after the Step Up
Date, the lesser of (x) 6.70% per annum and (y) the Group I Net Weighted Average
Coupon Rate minus 0.11% per annum.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposed of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed to the Owners of
the Class A-7 Certificate pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-7 Certificates with respect to principal.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-7 Certificates as it relates to interest previously paid on the Class
A-7 Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry
Forward Amount and (z) the portion of the Group II Class A Principal
Distribution Amount payable to the Owners of the Class A-7 Certificates pursuant
to Section 7.03(g) hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) interest accrued on such amount during the related Accrual
Period at the Class A-7 Pass-Through Rate.
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"Class A-7 Pass-Through Rate": With respect to the Payment Date in
October 1998, 5.62672% per annum. Thereafter, on any Payment Date (i) on or
prior to the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.24% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
(ii) after the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.48% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposed of the REMIC provisions.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed to the Owners of
the Class A-8 Certificates pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-8 Certificates with respect to principal.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-8 Certificates as it relates to interest previously paid on the Class
A-8 Certificates.
"Class A-8 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class A-8 Current Interest, (x) the Class A-8 Interest Carry
Forward Amount, (y) the Class A-8 Lockout Distribution Amount payable to the
Owners of the Class A-8 Certificates pursuant to Section 7.03(g) and (z) without
duplication, the portion of the Group II Class A Principal Distribution Amount
payable to the Owners of the Class A-8 Certificates pursuant to Section 7.03(g)
hereof.
"Class A-8 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"Class A-8 Lockout Distribution Amount": For any Payment Date, (i)
prior to October 2003 the product of (x) the applicable Class A-8 Lockout
Percentage for such Payment Date and (y) the Class A-8 Lockout Pro Rata
Distribution Amount for such Payment Date and (ii) on or after the Payment Date
in October 2003, the Group II Class A Principal Distribution Amount.
"Class A-8 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-8
Payment Dates Lockout Percentage
------------- ------------------
October 1998 - June 2000 0%
July 2000 - September 2003 500%
October 2003 - and thereafter 100%
"Class A-8 Lockout Pro Rata Distribution Amount": For any Payment Date,
(i) prior to October 2003 an amount equal to the product of (x) a fraction, the
numerator of which is the Class A-8 Certificate Principal Balance immediately
prior to such Payment Date and the denominator of which is the aggregate
Certificate Principal Balance of the Class A Certificates relating to Group II
immediately prior to such Payment Date and (y) the Group II Class A Principal
Distribution Amount for such Payment Date and (ii) on or after the Payment Date
in October 2003, the Group II Class A Principal Distribution Amount.
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"Class A-8 Pass-Through Rate": On any Payment Date (i) on or prior to
the Step Up Date, the lesser of (x) 5.94% per annum and (y) the Group II
Available Funds Cap Rate and (ii) after the Step Up Date, the lesser of (x)
6.69% per annum and (y) the Group II Available Funds Cap Rate.
"Class B-1 Certificate": Any one of the Class B-1F Certificates or the
Class B-1A Certificates.
"Class B-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group II Applied Realized
Loss Amount as of such Payment Date.
"Class B-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1A
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1A Certificates with
respect to principal.
"Class B-1A Certificate Termination Date": The Payment Date on which
the Class B-1A Certificate Principal Balance is reduced to zero.
"Class B-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1A Certificates as it relates to interest previously paid on the
Class B-1A Certificates.
"Class B-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B-1A Current Interest, (x) the Class B-1A Principal
Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward Amount,
if any, and (z) the Class B-1A Realized Loss Amortization Amount, if any.
"Class B-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1A Certificates on such immediately preceding
Payment Date and (y) interest accrued on such amount during the related Accrual
Period at the Class B-1A Pass-Through Rate.
"Class B-1A Pass-Through Rate": With respect to the Payment Date in
October 1998, 7.13672% per annum. Thereafter, on any Payment Date (i) on or
prior to the Step Up Date, the lesser of (x) One-Month LIBOR plus 1.75% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
(ii) after the Step Up Date, the lesser of (x) One-Month LIBOR plus 2.625% per
annum and (y) the Group II Available Funds Cap Rate.
"Class B-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Group II Certificates (after taking into account the payment of the Group II
Class A Principal Distribution Amount, the Class M-1A Principal Distribution
Amount and the Class M-2A Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) 95.00% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $3,590,335.
"Class B-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the
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Class M-1A Realized Loss Amortization Amount, the Class M-2A Realized Loss
Amortization Amount, the Class M-1A Interest Carry Forward Amount, the Class
M-2A Interest Carry Forward Amount and the Class B-1A Interest Carry Forward
Amount, in each case for such Payment Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group I Applied Realized
Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1F Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1F Certificates with
respect to principal.
"Class B-1F Certificate Termination Date": The Payment Date on which
the Class B-1F Certificate Principal Balance is reduced to zero.
"Class B-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1F Certificates as it relates to interest previously paid on the
Class B-1F Certificates.
"Class B-1F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B-1F Current Interest, (x) the Class B-1F Principal
Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward Amount,
if any, and (z) the Class B-1F Realized Loss Amortization Amount, if any.
"Class B-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1F
Pass-Through Rate.
"Class B-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
8.29% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-1F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is not
in effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group I Certificates (after taking into account the payment of the Group I Class
A Principal Distribution Amount on such Payment Date) over (y) the lesser of (A)
the product of (i) 96.00% and (ii) the outstanding aggregate Loan Balance of the
Mortgage Loans in Group I as of the last day of the related Remittance Period
and (B) the aggregate outstanding Loan Balance of the Mortgage Loans in Group I
as of the last day of the related Remittance Period minus $1,409,682.
"Class B-1F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1F
Certificates as of such Payment Date and (y) the excess of (i) the Group I
Monthly Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount and the Class B-1F Interest Carry Forward Amount, in each
case for such Payment Date.
"Class C-AIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-AIO Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee,
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<PAGE>
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposes of the REMIC Provisions.
"Class C-AIO Certificate Termination Date": The earlier of the Payment
Date in September 2000 and the Class M-2A Certificate Termination Date.
"Class C-AIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-AIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-AIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-AIO Certificates as it relates to interest previously paid on the
Class C-AIO Certificates.
"Class C-AIO Distribution Amount": With respect to any payment date,
the sum of (x) the Class C-AIO Current Interest and (y) the Class C-AIO Interest
Carry Forward Amount, if any.
"Class C-AIO Interest Carry Forward Amount": With respect to any
Payment Date the amount, if any, by which (i) the sum of (A) the Class C-AIO
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class C-AIO Interest Carry Forward Amount from all previous payment dates
exceeds (ii) the amount of the actual distribution made to Owners of the Class
C-AIO Certificates on such immediately preceding Payment Date.
"Class C-AIO Notional Principal Amount": Until the Payment Date
occurring in September 2000, the sum of (x) the Lower-Tier Balance of the
Lower-Tier Interest M-1A and (y) the Lower-Tier Balance of the Lower-Tier
Interest M-2A and thereafter, zero.
"Class C-AIO Pass-Through Rate": On any Payment Date, 3.00% per annum.
"Class C-FIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-FIO Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class C-FIO Certificate Termination Date": The earlier of the Payment
Date in September 2000 and the Class A-6 Certificate Termination Date.
"Class C-FIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-FIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-FIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-FIO Certificates as it relates to interest previously paid on the
Class C-FIO Certificates.
"Class C-FIO Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class C-FIO Current Interest and (y) the Class C-FIO Carry
Forward Amount, if any.
"Class C-FIO Interest Carry Forward Amount": With respect to any
Payment Date the amount, if any, by which (i) the sum of (A) the Class C-FIO
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class C-FIO Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class C-FIO Certificates on such immediately preceding
Payment Date.
"Class C-FIO Notional Principal Amount": Until the Payment Date
occurring in September 2000, the Lower- Tier Balance of the Lower-Tier Interest
A-6 and thereafter, zero.
"Class C-FIO Pass-Through Rate": On any Payment Date, 7.50% per annum.
"Class C-IO Certificate": Any one of the Class C-AIO Certificates or
Class C-FIO Certificates.
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<PAGE>
"Class D Carry Forward Amount": With respect to any Payment Date the
amount, if any, by which (x) the Class D Distribution Amount as of the
immediately preceding Payment Date exceeds (y) the amount of the actual
distribution made to Owners of the Class D Certificates on such immediately
preceding Payment Date.
"Class D Certificate": Any one of the Certificates designated on the
face thereof as a Class D Certificate, substantially in the form annexed hereto
as Exhibit B-2, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class D Distribution Amount": (A) With respect to any Payment Date
prior to October 2000, one-twelfth the sum of:
(1) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-1 immediately preceding
such Payment Date; and
(2) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-2 immediately preceding
such Payment Date; and
(3) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-3 immediately preceding
such Payment Date; and
(4) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-4 immediately preceding
such Payment Date; and
(5) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-5 immediately preceding
such Payment Date; and
(6) the product of (x) the Group I Net Weighted Average Coupon
Rate minus the Group I Net Weighted Average Coupon Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-6 immediately preceding
such Payment Date; and
(7) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Group II Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest A-7 immediately
preceding such Payment Date; and
(8) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Group II Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest A-8 immediately
preceding such Payment Date; and
(9) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Group II Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest M-1A immediately
preceding such Payment Date; and
(10) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Group II Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest M-2A immediately
preceding such Payment Date; and
(11) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Group II Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest B-1A immediately
preceding such Payment Date; and
(12) the product of (x) the Group I Net Weighted Average
Coupon Rate minus the Group I Net Weighted Average Coupon Rate times
(y) the Lower-Tier Balance of the Lower-Tier Interest B-1F immediately
preceding such Payment Date; and
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(B) With respect to any Payment Date beginning in October 2000, the sum
of:
(1) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-1 immediately preceding such Payment Date; and
(2) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-2 immediately preceding such Payment Date; and
(3) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-3 immediately preceding such Payment Date; and
(4) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-4 immediately preceding such Payment Date; and
(5) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-5 immediately preceding such Payment Date; and
(6) the product of (x) the Group I Net Weighted Average Coupon
Rate minus 8.29% per annum times (y) the Lower-Tier Balance of the
Lower-Tier Interest A-6 immediately preceding such Payment Date; and
(7) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Class B- 1A Pass-Through Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-7 immediately preceding
such Payment Date; and
(8) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Class B- 1A Pass-Through Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest A-8 immediately preceding
such Payment Date; and
(9) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Class B- 1A Pass-Through Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest M-1A immediately
preceding such Payment Date; and
(10) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Class B- 1A Pass-Through Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest M-2A immediately
preceding such Payment Date; and
(11) the product of (x) the Group II Net Weighted Average
Coupon Rate minus the Class B- 1A Pass-Through Rate times (y) the
Lower-Tier Balance of the Lower-Tier Interest B-1A immediately
preceding such Payment Date; and
(12) the product of (x) the Group I Net Weighted Average
Coupon Rate minus 8.29% per annum times (y) the Lower-Tier Balance of
the Lower-Tier Interest B-1F immediately preceding such Payment Date;
and
(13) the Class D Carry Forward Amount, if any.
"Class M-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2A Applied Realized Loss Amount and the Class B-1A Applied Realized Loss
Amount, in each case as of such Payment Date.
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<PAGE>
"Class M-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1A Certificates less the sum of (x) any amounts distributed to the
Owners of the Class M-1A Certificates pursuant to Section 7.03(g) hereof on all
prior Payment Dates, (y) the aggregate, cumulative amount of Class M-1A Applied
Realized Loss Amounts on all prior Payment Dates and (z) any Preference Amount
previously distributed to the Owners of the Class M-1A Certificates with respect
to principal.
"Class M-1A Certificate Termination Date": The Payment Date on which
the Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1A Certificates as it relates to interest previously paid on the
Class M-1A Certificates.
"Class M-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1A Current Interest, (x) the Class M-1A Principal
Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward Amount,
if any, and (z) the Class M-1A Realized Loss Amortization Amount, if any.
"Class M-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1A Certificates on such immediately preceding
Payment Date and (y) interest accrued on such amount during the related Accrual
Period at the Class M-1A Pass-Through Rate.
"Class M-1A Pass-Through Rate": With respect to the Payment Date in
October 1998, 5.80672% per annum. Thereafter, on any Payment Date (i) on or
prior to the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.42% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
(ii) after the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.63% per
annum and (y) the Group II Available Funds Cap Rate.
"Class M-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-7 Certificate
Principal Balance and the Class A-8 Certificate Principal Balance (taking into
account the payment of the Group II Class A Principal Distribution Amount on
such Payment Date) and (ii) the Class M-1A Certificate Principal Balance
immediately prior to such Payment Date over (y) the lesser of (A) the product of
(i) 69.99955% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group II as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period minus $3,590,335.
"Class M-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount and the Class M-1A Interest Carry Forward Amount, in each
case for such Payment Date.
"Class M-2A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1A
Applied Realized Loss Amount as of such Payment Date.
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"Class M-2A Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates, pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of Class M-2A
Applied Realized Loss Amounts on all prior Payment Dates, and (z) any Preference
Amount previously distributed to the Owners of the Class M-2A Certificates with
respect to principal.
"Class M-2A Certificate Termination Date": The Payment Date on which
the Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2A Certificates as it relates to interest previously paid on the
Class M-2A Certificates.
"Class M-2A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2A Current Interest, (x) the Class M-2A Principal
Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward Amount,
if any, and (z) the Class M-2A Realized Loss Amortization Amount, if any.
"Class M-2A Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class M-2A Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class M-2A Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class M-2A Certificates on such immediately
preceding Payment Date and (y) interest accrued on such amount during the
related Accrual Period at the Class M-2A Pass-Through Rate.
"Class M-2A Pass-Through Rate": With respect to the Payment Date in
October 1998, 6.08672% per annum. Thereafter, on any Payment Date (i) on or
prior to the Step Up Date, the lesser of (x) One-Month LIBOR plus 0.70% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
(ii) after the Step Up Date, the lesser of (x) One-Month LIBOR plus 1.05% per
annum and (y) the Group II Available Funds Cap Rate.
"Class M-2A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-7 Certificate
Principal Balance and the Class A-8 Certificate Principal Balance (after taking
into account the payment of the Group II Class A Principal Distribution Amount
on such Payment Date), (ii) the Class M-1A Certificate Principal Balance (after
taking into account the payment of the Class M-1A Principal Distribution Amount
on such Payment Date) and (iii) the Class M-2A Certificate Principal Balance
immediately prior to such Payment Date over (y) the lesser of (A) the product of
(i) 83.49968% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group II as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period minus $3,590,335.
"Class M-2A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-2A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-1A Interest Carry Forward Amount and the Class M-2A Interest Carry Forward
Amount, in each case for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit B-3, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Upper-Tier REMIC for the purposes
of the REMIC Provisions.
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"Class S Certificate": Any one of the Certificates designated on the
face thereof as a Class S Certificate, substantially in the form annexed hereto
as Exhibit B-4, authenticated and delivered by the Trustee representing the
right to distributions as set forth herein. The Class S Certificates are a
"regular interest" in the Lowest-Tier REMIC for the purposes of the REMIC
Provisions.
"Class S Distribution Amount": With respect to any Payment Date, the
sum of (a) the product of (x) the outstanding Loan Balance of each Mortgage Loan
as of the first day of the related Remittance Period and (y) one-twelfth of the
difference between (i) the Coupon Rate with respect to such Mortgage Loan less
the Servicing Fee Rate for such Mortgage Loans and (ii) the Coupon Rate with
respect to such Mortgage Loan less the Aggregate Servicing Fee Rate for such
Mortgage Loan and (b) any unpaid Preference Amount, if any, for the Class S
Certificates.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Period": The period beginning on the first day of the
calendar month immediately preceding the month in which a Monthly Remittance
Date occurs and ending on the last day of such immediately preceding calendar
month; provided that in the case of the first Monthly Remittance Date, the
Collection Period is the period from September 2, 1998 to September 30, 1998.
"Combined Loan-to-Value Ratio": With respect to any Mortgage Loan is
the ratio, expressed as a percentage, of (a) the sum of the Loan Balance of such
Mortgage Loan and any outstanding loan balances of mortgage loans secured by the
related Property senior to such Mortgage Loan, each determined at the time of
origination, to (b) the lesser of the appraised value of the related Property
and the purchase price of such Property, each determined at the time of
origination.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at Norwest Bank Minnesota, National Association, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-1026, Attn.: AMRESCO 1998-3 or
any other address that the Trustee advises the parties hereto is its principal
corporate trust office.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the Cumulative Realized Losses as a percentage of the Original Aggregate Loan
Balance.
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans since the
Cut-Off Date.
"Current Interest": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest, the Class M-1A Current Interest, the Class M-2A
Current Interest, the Class B-1F Current Interest, the Class B-1A Current
Interest, the Class C-AIO Current Interest, the Class C-FIO Current Interest,
and the Class S Distribution Amount for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of September 1,
1998 among the Custodian, the Trustee, the Depositor, the Seller, the Master
Servicer, the Special Servicer, the Guarantor and the Servicer.
"Custodian": Bankers Trust Company of California, N.A., or any
successor thereto.
"Cut-Off Date": As of the close of business on September 1, 1998.
"Deficiency Amount": On any Payment Date, the sum of the (a) Guaranteed
Interest Distribution Amount and (b) the Guaranteed Principal Distribution
Amount.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
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"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the corresponding day such
payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such
payment has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such payment was due, or,
if there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Seller to the Trustee on the Startup Day pursuant to
Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 55 Water Street, New York,
New York 10004, and any successor Depository hereafter named.
"Depository Certificates:" The Class A-7, Class A-8, Class M-1A, Class
M-2A, Class B-1A and Class B-1F Certificates.
"Designated Depository Institution": With respect to each Principal and
Interest Account, a trust account maintained by Norwest Bank Minnesota, National
Association, as long as it remains the Trustee, or by the trust department of a
federal or state chartered depository institution acting in its fiduciary
capacity, having combined capital and surplus of at least $50,000,000; provided,
however, that if a Principal and Interest Account is not maintained with the
Trustee, (i) such institution shall have a long-term debt rating of at least
"A2" by Moody's and, if rated by Fitch at least "A" by Fitch and (ii) the
Servicers shall provide the Trustee and the Owners with an Officer's Certificate
identifying the location of the related Principal and Interest Account.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Due Date": The day of the month on which each Scheduled Payment is due
on a Mortgage Loan, exclusive of any grace period.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Escrow Payment": The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
the Mortgage or any other document.
"Exempt Certificate": The meaning set out in Section 5.08(b) hereof.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"File": The documents delivered to the Custodian, on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Mortgage
Loan and any additional documents required to be added to the File pursuant to
this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of the Offered
Certificates is as set out in Section 2.08(a).
"First Mortgage": Mortgage Loans secured by a valid Mortgage which
represents a first lien.
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"Fitch": Fitch IBCA, Inc., or any successor thereto.
"Formula Certificates": With respect to any Payment Date, each Class of
Group II Certificates that has a Formula Rate less than the Group II Weighted
Average Coupon Rate.
"Formula Rate": With respect to any Payment Date and a Class of Group
II Certificates, the rate determined in accordance with clause (x) of the
definition of "Pass-Through Rate" for such Class.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"Group I": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group I in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof.
"Group I Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group I
Certificates on such Payment Date, after taking into account the distribution of
the Group I Principal Distribution Amount on such Payment Date but prior to the
application of the Group I Applied Realized Loss Amount, if any, on such Payment
Date over (y) the aggregate outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period.
"Group I Certificates": The Guaranteed Certificates, the Class B-1F
Certificates and the Class C-FIO Certificates.
"Group I Class A Principal Distribution Amount": As of any Payment Date
(a) prior to the Group I Stepdown Date or on or after the Group I Stepdown Date
if a Group I Trigger Event is in effect, 100% of the Group I Principal
Distribution Amount or (b) on or after the Group I Stepdown Date and as to which
a Group I Trigger Event is not in effect, the excess of (x) the aggregate
Certificate Principal Balance of the Class A Certificates relating to Group I
immediately prior to such Payment Date over (y) the lesser of (A) the product of
(i) 91.49964% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
outstanding aggregate Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $1,409,682.
"Group I Extra Principal Distribution Amount": As of any Payment Date,
the lesser of (x) the Group I Monthly Excess Interest Amount for such Payment
Date and (y) the Group I Overcollateralization Deficiency for such Payment Date.
"Group I Interest Amount Available": As of any Payment Date, the Group
I Interest Remittance Amount less (x) the Guarantee Fee, (y) the Guarantor
Reimbursement Amount and (z) the portion of the Trustee Fee and the Master
Servicer Fee related to Group I.
"Group I Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group I (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group I, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group I
and (iv) all Net Liquidation Proceeds relating to interest not previously
advanced with respect to the Mortgage Loans in Group I.
"Group I Monthly Excess Cashflow Amount": For any Payment Date, the sum
of (x) the Group I Monthly Excess Interest Amount and (y) the Group I
Overcollateralization Release Amount for such Payment Date.
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"Group I Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group I Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group I Certificates on such Payment Date and (y) the Interest Carry Forward
Amount with respect to the Class A Certificates related to Group I.
"Group I Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group I
(weighted by the Loan Balances of the Mortgage Loans in Group I as of the first
day of the related Remittance Period), less 0.52% per annum.
"Group I Overcollateralization Amount": As of any Payment Date, the
excess, if any, of (x) the Loan Balance of the Mortgage Loans in Group I as of
the last day of the immediately preceding Remittance Period over (y) the
Certificate Principal Balance of the Group I Certificates (after giving effect
to all distributions of principal on such Group I Certificates for such Payment
Date).
"Group I Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group I Targeted Overcollateralization Amount for
such Payment Date over (y) the Group I Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group I Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group I
Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any Payment Date,
the lesser of (x) the Group I Principal Remittance Amount for such Payment Date
and (y) the excess, if any, of (i) the Group I Overcollateralization Amount for
such Payment Date, assuming that 100% of the Group I Principal Remittance Amount
is applied on such Payment Date to the payment of principal on the Group I
Certificates and (ii) the Group I Targeted Overcollateralization Amount for such
Payment Date, provided that if a Group I Subordinated Trigger Event is in
effect, the Group I Overcollateralization Release Amount shall be zero.
"Group I Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group I Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group I Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group I Overcollateralization Release
Amount, if any) and (ii) the Group I Extra Principal Distribution Amount, if
any.
"Group I Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal collected or
required to be advanced by the Servicers with respect to Mortgage Loans in Group
I with respect to the related Remittance Period, (ii) all unscheduled principal
collected during the related Collection Period, (iii) the Loan Balance of each
Mortgage Loan in Group I that was purchased from the Trustee on or prior to such
Monthly Remittance Date, to the extent such Loan Balance was actually deposited
in the Principal and Interest Account, (iv) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group I to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date and (v) all Net Liquidation Proceeds actually collected by the Servicers
with respect to the Mortgage Loans in Group I during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal).
"Group I Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the Class B-1F Certificate
Principal Balance and (ii) the Group I Overcollateralization Amount, in each
case after taking into account the distribution of the Group I Principal
Distribution Amount on such Payment Date, by (y) the Loan Balance of the
Mortgage Loans in Group I as of the last day of the related Remittance Period.
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"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means 8.5%.
"Group I Stepdown Date": The later to occur of (x) the Payment Date in
October 2001 and (y) the first Group I Payment Date on which the Group I Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group I on such Payment Date but prior to any application of the
Principal Distribution Amount to the Group I Certificates) is equal to or
greater than the Group I Senior Specified Enhancement Percentage.
"Group I Subordinated Trigger Event": A Group I Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group I Cumulative Loss Test is failed with respect to a Payment Date
if the amount of the Cumulative Loss Percentage with respect to Group I equals
or exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
October 2000 - September 2001 1.50%
October 2001 - September 2002 2.60%
October 2002 - September 2003 3.30%
October 2003 - September 2006 3.50%
A Group I Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group I as a percentage
of the aggregate outstanding Loan Balance of Group I equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquent Percentage
------------- -----------------------------
October 2000 - September 2002 4.00%
October 2002 - September 2004 5.50%
October 2004 - September 2006 8.00%
"Group I Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group I Stepdown Date, 2.0% of the aggregate Certificate
Principal Balance of the Group I Certificates as of the Startup Day and (y) on
or after the Group I Stepdown Date, the greater of (A) 4.0% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period and (B) $1,409,682.
"Group I Trigger Event": A Group I Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the immediately preceding Remittance Period equals or exceeds 185% of the Group
I Senior Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group I Weighted Average Pass-Through Rate": As to any Payment Date,
the weighted average of the Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate and the
Class B-1F Pass-Through Rate (such rate calculated for this purpose on the basis
of 360-day year assumed to consist of twelve 30 day months) weighted by the
respective Certificate Principal Balance of the related Class as of such Payment
Date before taking into account any distributions to be made on such Payment
Date.
"Group II": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group II in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof.
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"Group II Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group II
Certificates on such Payment Date, after taking into account the distribution of
the Group II Principal Distribution Amount on such Payment Date but prior to the
application of the Group II Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period.
"Group II Available Escalation Amount": With respect to any Payment
Date, an amount (but not less than zero) equal to the sum of, with respect to
each Class of Formula Certificates, the product of (i) a rate equal to the Group
II Net Weighted Average Coupon Rate minus the Formula Rate for such Class and
(ii) the Certificate Principal Balance of such Class.
"Group II Available Funds Cap Rate": With respect to Group II, on any
Payment Date, a rate equal to the sum of (i) the Group II Net Weighted Average
Coupon Rate and (ii) the percentage equivalent of a fraction, the numerator of
which is the Group II Available Escalation Amount and the denominator of which
is the sum of the Certificate Principal Balances for each Class of the Group II
Capped Certificates.
"Group II Available Funds Cap Shortfall Amortization Amount": As of any
Payment Date, any amount distributed pursuant to Section 7.03(j)(2) on such
Payment Date.
"Group II Available Funds Cap Shortfall Amount": As of any Payment
Date, the excess, if any, of (x) the excess, if any, of (a) the aggregate amount
of interest due on the Group II Capped Certificates on all prior Payment Dates,
calculated at the related Formula Rate applicable to each such Payment Date over
(b) the aggregate amount of interest due on the Group II Capped Certificates on
all prior Payment Dates, calculated at the related Pass-Through Rates applicable
to each such Payment Date over (y) all Group II Available Funds Cap Shortfall
Amortization Amounts actually funded on all prior Payment Dates.
"Group II Capped Certificates": With respect to any Payment Date, each
Class of Group II Certificates that has a Formula Rate greater than the Group II
Net Weighted Average Coupon Rate.
"Group II Certificates": The Class A-7 Certificates, the Class A-8
Certificates, the Class M-1A Certificates, the Class M-2A Certificates, the
Class B-1A Certificates and the Class C-AIO Certificates.
"Group II Class A Principal Distribution Amount": As of any Payment
Date (a) prior to the Group II Stepdown Date or on or after the Group II
Stepdown Date if a Group II Trigger Event is in effect, 100% of the Group II
Principal Distribution Amount or (b) on or after the Group II Stepdown Date and
as to which a Group II Trigger Event is not in effect, the excess of (x) the
aggregate Certificate Principal Balance of the Class A-7 Certificates and the
Class A-8 Certificates immediately prior to such Payment Date over (y) the
lesser of (A) the product of (i) 54.49960% and (ii) the outstanding Loan Balance
of the Mortgage Loans in Group II as of the last day of the related Remittance
Period and (B) the outstanding aggregate Loan Balance of the Mortgage Loans in
Group II as of the last day of the related Remittance Period minus $3,590,335.
"Group II Extra Principal Distribution Amount": As of any Payment Date,
the lesser of (x) the Group II Monthly Excess Interest Amount for such Payment
Date and (y) the Group II Overcollateralization Deficiency for such Payment
Date.
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"Group II Interest Amount Available": As of any Payment Date, the Group
II Interest Remittance Amount less the portion of the Trustee Fee and the Master
Servicer Fee related to Group II.
"Group II Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group II (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group II, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group II
and (iv) all Net Liquidation Proceeds relating to interest not previously
advanced with respect to the Mortgage Loans in Group II.
"Group II Monthly Excess Cashflow Amount": For any Payment Date, the
sum of (x) the Group II Monthly Excess Interest Amount and (y) the Group II
Overcollateralization Release Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group II Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group II Certificates on such Payment Date, (y) the Class A-7 Interest Carry
Forward Amount and (z) the Class A-8 Interest Carry Forward Amount.
"Group II Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group II (weighted by the Loan Balances of the Mortgage Loans in Group II as of
the first day of the related Remittance Period), less 0.52% per annum.
"Group II Overcollateralization Amount": As of any Payment Date, the
excess, if any, of (x) the Loan Balance of the Mortgage Loans in Group II as of
the last day of the immediately preceding Remittance Period over (y) the
aggregate Certificate Principal Balance of the Group II Certificates (after
giving effect to all distributions of principal on such Group II Certificates
for such Payment Date).
"Group II Overcollateralization Deficiency": As of any Payment Date,
the excess, if any, of (x) the Group II Targeted Overcollateralization Amount
for such Payment Date over (y) the Group II Overcollateralization Amount for
such Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group II Certificates resulting from the distribution of the Group II
Principal Remittance Amount (but not the Group II Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group II
Applied Realized Loss Amount on such Payment Date.
"Group II Overcollateralization Release Amount": As of any Payment
Date, the lesser of (x) the Group II Principal Remittance Amount for such
Payment Date and (y) the excess, if any, of (i) the Group II
Overcollateralization Amount for such Payment Date, assuming that 100% of the
Group II Principal Remittance Amount is applied on such Payment Date to the
payment of principal on the Group II Certificates over (ii) the Group II
Targeted
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Overcollateralization Amount for such Payment Date; provided, that if a Group II
Subordinated Trigger Event is in effect, the Group II Overcollateralization
Release Amount shall be zero.
"Group II Post Stepdown Amount": The lesser of (x) the Group II
Principal Distribution Amount and (y) the Group II Class A Principal
Distribution Amount.
"Group II Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group II Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group II Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group II Overcollateralization Release
Amount, if any) and (ii) the Group II Extra Principal Distribution Amount, if
any.
"Group II Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal collected or
required to be advanced by the Servicers with respect to Mortgage Loans in Group
II with respect to the related Remittance Period, (ii) all unscheduled principal
collected during the related Collection Period, (iii) the Loan Balance of each
Mortgage Loan in Group II that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such Loan Balance was actually
deposited in the Principal and Interest Account, (iv) any Substitution Amounts
relating to principal delivered to the Trust in connection with a substitution
of a Mortgage Loan in Group II to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date and (v) all Net Liquidation Proceeds actually collected
by the Servicers with respect to the Mortgage Loans in Group II during the
related Remittance Period (to the extent such Net Liquidation Proceeds related
to principal).
"Group II Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group II and (ii)
the Group II Overcollateralization Amount, in each case after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period.
"Group II Senior Specified Enhancement Percentage": On any date of
determination thereof means 45.50%.
"Group II Stepdown Date": The later to occur of (x) the Payment Date in
October 2001 and (y) the first Group II Payment Date on which the Group II
Senior Enhancement Percentage (after taking into account distributions of
principal with respect to Group II on such Payment Date) is equal to or greater
than the Group II Senior Specified Enhancement Percentage.
"Group II Subordinated Trigger Event": A Group II Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group II Cumulative Loss Test is failed with respect to a Payment
Date if the Cumulative Loss Percentage with respect to Group II equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
October 2000 - September 2001 2.10%
October 2001 - September 2002 3.50%
October 2002 - September 2003 4.40%
October 2003 - September 2004 4.80%
October 2004 - September 2005 5.20%
October 2005 - September 2006 5.60%
A Group II Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group II as a percentage
of the aggregate outstanding Loan Balance of Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
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Payment Dates 60+ Day Delinquency Percentage
------------- ------------------------------
October 2000 - September 2002 4.00%
October 2002 - September 2004 5.50%
October 2004 - September 2006 8.00%
"Group II Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group II Stepdown Date, 2.50% of the aggregate Certificate
Principal Balance of the Group II Certificates as of the Startup Day and (y) on
or after the Group II Stepdown Date, the greater of (A) 5.00% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) $3,590,335.
"Group II Trigger Event": A Group II Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the immediately preceding Remittance Period equals or exceeds 40% of the Group
II Senior Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any Payment Date,
the weighted average of the Class A-7 Pass-Through Rate, the Class A-8
Pass-Through Rate, the Class M-1A Pass-Through Rate, the Class M-2A Pass-Through
Rate, and the Class B-1A Pass-Through Rate weighted by the respective
Certificate Principal Balance of the related Class as of such Payment Date
before taking into account any distributions to be made on such Payment Date.
"Guarantee": The Guarantee of the Guarantor set forth in Section 7.04,
relating to the Guaranteed Certificates.
"Guarantee Fee": As to any Payment Date, the fee payable to the
Guarantor in respect of its services as Guarantor that accrues at the Guarantee
Fee Rate on a balance equal to the aggregate Certificate Principal Balance of
the Guaranteed Certificates prior to distributions of principal, if any, on the
Guaranteed Certificates on such Payment Date.
"Guarantee Fee Rate": The per annum rate set forth in a side letter of
the Guarantor, addressed to the Trustee, the Depositor, the Seller and the
Master Servicer.
"Guaranteed Certificates": The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates and the Class A-6 Certificates.
"Guaranteed Interest Distribution Amount": The amount, if any, by which
the Class A Current Interest payable to the Guaranteed Certificates exceeds the
Group I Interest Amount Available remaining in the Certificate Account after
payments pursuant to Section 7.03(c)(iii) of this Agreement.
"Guaranteed Principal Distribution Amount": The amount, if any, by
which the aggregate Certificate Principal Balance of the Guaranteed Certificates
exceeds the sum of the aggregate Loan Balance of the Mortgage Loans in Group I
at the end of the related Remittance Period (after giving effect to all amounts
distributable and allocable to principal on the Guaranteed Certificates on such
Payment Date).
"Guarantor": Freddie Mac, or its successor in interest.
"Guarantor Payment": Any payment made by the Guarantor in respect of a
Deficiency Amount.
"Guarantor Reimbursement Amount": With respect to any Payment Date, the
sum of all amounts paid by the Guarantor in respect of Deficiency Amounts on all
prior Payment Dates to the extent not previously reimbursed, with interest
thereon at a rate equal to the weighted average of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Pass-Through Rates (to the extent
such Classes are Outstanding).
"Highest Lawful Rate": As defined in Section 11.13.
"Incentive Fee": The "incentive fee" provided in the Special Servicing
Agreement; provided, that in the event that the initial Special Servicer is
removed pursuant to Section 8.20 or resigns pursuant to Section 8.21, the
Incentive
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Fee will be that fee agreed upon by the successor Special Servicer, the
Guarantor and the Trustee; provided, further that in the event the Special
Servicer is replaced pursuant to Section 8.37, the incentive fee will be as
specified in Section 8.37.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Information Circular": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1998-3 Information Circular dated September 15, 1998
relating to the Guaranteed Certificates.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan, provided that any amount remitted
under Section 8.11 hereof shall be considered a payment under an Insurance
Policy.
"Interest Rate Adjustment Date": With respect to an adjustable rate
Mortgage Loan, the date on which the Coupon Rate is adjusted with respect to
such Mortgage Loan. The first Interest Rate Adjustment Date for each adjustable
rate Mortgage Loan is the date set forth on the Schedule of Mortgage Loans.
"Interest Remittance Amount": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer or the Special Servicer in connection with
the liquidation of any defaulted Mortgage Loan, such expenses, including,
without limitation, legal fees and expenses, and any unreimbursed Servicing
Advances expended by the Servicer or the Special Servicer pursuant to Section
8.09(b) with respect to the related Mortgage Loan, provided, that such fees and
expenses are not to include any Special Servicing Fee or Incentive Fee.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by a Servicer
in connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan and as of any date
of determination, the outstanding principal balance thereof on the Cut-Off Date,
less the sum of (i) any principal payments relating to such Mortgage Loan
(whether received from the related Mortgagor or advanced by the related
Servicer) included in previous Monthly Remittance Amounts, and (ii) any Cram
Down Losses relating to such Mortgage Loan; provided, however, that the Loan
Balance for any Mortgage Loan that has become a Liquidated Loan shall be zero as
of the first day of the Remittance Period following the Remittance Period in
which such Mortgage Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04, 3.05,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Mortgage Loan as of the date of purchase (assuming that the related Delinquency
Advance has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, (ii) the interest
portion of any Delinquency Advances which the related Servicer has theretofore
failed to remit with respect to such Mortgage Loan as required by this Agreement
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the percentage
obtained by dividing the Appraised Value into the original principal balance of
the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
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"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
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"Lower-Tier B-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1A immediately prior to such Payment Date during the related Accrual
Period of the Lower-Tier B-1A Pass-Through Rate.
"Lower-Tier B-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier B-1F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier B-1F Pass-Through Rate.
"Lower-Tier B-1F Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus an amount equal to the aggregate amount distributed as principal to the
corresponding Classes of the Offered Certificates on previous Payment Dates
pursuant to Section 7.03(f) and (g).
"Lower-Tier Group I Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly
Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly
Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly
Interest, the Lower-Tier B-1F Monthly Interest, the Group I Class A Principal
Distribution Amount and the Class B-1F Principal Distribution Amount. Such Group
I Class A Principal Distribution Amount is allocated as follows: (a) to the
Lower-Tier Interest A-6 an amount equal to the Class A-6 Lockout Distribution
Amount and (b) as a distribution on the Lower-Tier Interest A-1 until the
Lower-Tier Interest A-1 Termination Date, the Class A-1 Distribution Amount; as
a distribution on the Lower-Tier Interest A-2 until the Lower-Tier Interest A-2
Termination Date, the Class A-2 Distribution Amount; as a distribution on the
Lower-Tier Interest A-3 until the Lower-Tier Interest A-3 Termination Date, the
Class A-3 Distribution Amount; as a distribution on the Lower-Tier Interest A-4
until the Lower-Tier Interest A-4 Termination Date, the Class A-4 Distribution
Amount; as a distribution on the Lower-Tier Interest A-5 until the Lower-Tier
Interest A-5 Termination Date, the Class A-5 Distribution Amount; and as a
distribution on the Lower-Tier Interest A-6 until the Lower-Tier Interest A-6
Termination Date, the Class A-6 Distribution Amount.
"Lower-Tier Group II Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8 Monthly
Interest, the Lower-Tier M-1A Monthly Interest, the Lower-Tier M-2A Monthly
Interest, the Lower-Tier B-1A Monthly Interest, the Group II Class A Principal
Distribution Amount, the Lower-Tier M-1A Principal Distribution Amount, the
Class M-2A Principal Distribution Amount and the Class B- 1A Principal
Distribution Amount. Such Group II Class A Principal Distribution Amount is
allocated as follows: (a) to the Lower-Tier Interest A-8, an amount equal to the
Class A-8 Lockout Distribution Amount and (b) as a distribution on the
Lower-Tier Interest A-7 until the Lower-Tier Interest A-7 Termination Date, the
Class A-7 Distribution Amount and as a distribution on the Lower-Tier Interest
A-8 until the Lower-Tier Interest A-8 Termination Date, the Class A-8
Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
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"Lower-Tier Interest B-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-1F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-8 on such Payment Date.
"Lower-Tier Interest B-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1A on such Payment
Date.
"Lower-Tier Interest B-1F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1F is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1F on such Payment
Date.
"Lower-Tier Interest M-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-1A on such Payment
Date.
"Lower-Tier Interest M-2A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-2A on such Payment
Date.
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"Lower-Tier M-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1A Pass-Through Rate.
"Lower-Tier M-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier M-2A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2A Pass-Through Rate.
"Lower-Tier M-2A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate other than the Upper-Tier Group I Distribution Account, the
Upper-Tier Group II Distribution Account, the Guarantee and the Special Servicer
Reserve Fund.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
the Seller and 0.001% to Norwest Bank Minnesota, National Association., as Tax
Matters Person. Such interests shall be non-transferrable, except that Norwest
Bank Minnesota, National Association may assign such interest to another person
who accepts such assignment and the designation as Tax Matters Person pursuant
to Section 11.18 hereof. The Lower-Tier REMIC Residual Class is entitled only to
any amounts at any time held in the Certificate Account and not required to be
paid to the Upper-Tier REMIC, which is expected to be zero at all times during
the term of this Agreement.
"Manufactured Home (Mobile Home)": A residential structure built on a
steel undercarriage with necessary wheel assembly to be transported to a
permanent or semi-permanent site (1) that is permanently affixed to a concrete
foundation that assumes the characteristics commonly used for site-built housing
in the area, (2) that has the wheels, axles and trailer hitches removed, (3)
that is on a foundation with footings anchored in concrete and located below the
frost line of the property or is permanently affixed to a concrete slab, (4) is
built after June 15, 1976 and conforms to National Manufactured Home
Construction and Safety Standards, (5) is at least a double-wide structure, (6)
is legally classified and taxed as real property, and (7) has a title policy
issued and is insured as a single family residence with all title insurance
endorsements (including the merging and elimination of any vehicle or UCC
licensing or title) and indemnities against any loss of the Manufactured Home
determined not to be part of the real property.
"Master Servicer": AMRESCO Residential Capital Markets, Inc., a
Delaware corporation and any successor thereto.
"Master Servicer Fee": An amount equal to the product of (x) the
aggregate outstanding Loan Balance as of the last day of the related Collection
Period and (y) the Master Servicer Fee Rate.
"Master Servicer Fee Rate": 0.0175% per annum.
"Mezzanine Certificates": Collectively, the Class M-1A Certificates and
the Class M-2A Certificates.
"Monthly Remittance Amount": The sum of the Interest Remittance Amount
and the Principal Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if such day is
not a Business Day, the Business Day succeeding such day, commencing in October
1998.
"Moody's": Moody's Investors Service Inc., or any successor thereto.
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"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case may
be. References herein to the related Class of Offered Certificates, when used
with respect to a Mortgage Loan Group, shall mean (A) in the case of Group I,
the Group I Certificates and (B) in the case of Group II, the Group II
Certificates.
"Mortgage Loans": Such of the mortgage loans (including Specially
Serviced Mortgage Loans) transferred and assigned to the Trust pursuant to
Section 3.05(a) hereof, together with any Qualified Replacement Mortgages
substituted therefor in accordance with this Agreement, as from time to time are
held as a part of the Trust Estate, the Mortgage Loans originally so held being
identified in the Schedules of Mortgage Loans. The term "Mortgage Loan" includes
any Mortgage Loan which is Delinquent, which relates to a foreclosure or which
relates to a Property which is REO Property prior to such Property's disposition
by the Trust. Any mortgage loan which, although intended by the parties hereto
to have been, and which purportedly was, transferred and assigned to the Trust
by the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement in Section 3.04(a)(i) with respect to such mortgage loan, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses, unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued Servicing Fees relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the related Collection
Period, 90 days or more Delinquent (including any Mortgage Loans which have gone
into foreclosure or have been discharged by reason of bankruptcy).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to any
date of determination thereof, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Collection
Periods the numerator of each of which is equal to the aggregate Loan Balance of
90+ Day Delinquent Loans as of the last day of the preceding Collection Period
and the denominator of which is the aggregate Loan Balance of all of the
Mortgage Loans as of the last day of the preceding Collection Period.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Notional Principal Amount": With respect to a Class of the Class C-IO
Certificates, the related Class C-FIO Notional Principal Amount or the Class
C-AIO Notional Principal Amount.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B-1 Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for the Group II
Certificates, the rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the
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arithmetic mean of the rates quoted by major banks in New York City, selected by
the Trustee, at approximately 11:00 a.m. (New York City time) on such date for
one-month U.S. dollar loans to leading European banks.
"One-Month LIBOR Determination Date": For the initial Accrual Period
for the Group II Certificates (other than the Class A-8 Certificates), the
second London Business Day prior to the Closing Date. With respect to any
Accrual Period thereafter for the Group II Certificates (other than the Class
A-8 Certificates), the second London Business Day preceding the commencement of
such Accrual Period.
"Operative Documents": Collectively, this Agreement and the
Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
to the Depositor, the Seller, the Servicer, the Special Servicer, the Master
Servicer or the Trustee, which counsel shall be reasonably acceptable to the
Trustee and, if such opinion relates to Group I, the Guarantor. Any Opinion of
Counsel that relates to tax matters must be an opinion of independent outside
counsel.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Mortgage Loans as of the Cut-Off Date, i.e., $999,995,160.46 (consisting of
$281,933,047.53 relating to Group I and $718,062,112.93 relating to Group II).
"Originator": Each of the companies from whom the Seller purchased the
Mortgage Loans.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Release Amount": For any Payment Date, the sum
of the Group I Overcollateralization Release Amount and the Group II
Overcollateralization Release Amount.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by the Seller or any affiliate
thereof, the Seller or such affiliate shall not be considered an Owner.
"PAG": The Seller's "Performance Assumption Groupings" as described in
the Prospectus Supplement and the Information Circular.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
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"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs.
"Percentage Interest": With respect to an Offered Certificate or a
Class C-IO Certificate, a fraction, expressed as a decimal, the numerator of
which is the initial Certificate Principal Balance (or, in the case of the Class
C-IO Certificates, the related Notional Principal Amount) represented by such
Certificate and the denominator of which is the aggregate initial Certificate
Principal Balance (or, in the case of the Class C-IO Certificates, the related
Notional Principal Amount) represented by all the Certificates of the same
Class. With respect to a Class S Certificate, a Class D Certificate or a Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate, all of which shall total
100% with respect to the related Class.
"Permitted Exceptions": The following: (a) the lien of current real
property taxes and assessments not yet due and payable; (b) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the related Originator of the Mortgage Loan and
referred to or otherwise considered in the appraisal made for the related
Originator of the Mortgage Loan; (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Property; and (d) a valid and current first lien
for Second Mortgages.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Certificates, any amounts of
Current Interest and principal included in previous distributions to the Owners
of such Certificates which are recovered from such Owners as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code in accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Owners.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the Servicer
or the Special Servicer prior to the scheduled due date for such installment,
intended by the Mortgagor as an early payment thereof and not as a Prepayment
with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer or the
Special Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.
"Prime Rate": The prime rate of major United States banks as listed in
The Wall Street Journal on the first Business Day of the month.
"Principal and Interest Account": Each principal and interest account
established by the Servicer and the Special Servicer pursuant to Section 8.08(a)
hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
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"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated September 5, 1997 constituting part
of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1998-3 Prospectus Supplement dated September 15, 1998 to the
Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a
Coupon Rate not less than and not more than 1% greater than the Coupon Rate of
the Mortgage Loan being replaced, (ii) is of the same property type (i.e.,
single family, condominium, PUD unit, etc.) or is a single family dwelling and
the same occupancy status as the replaced Mortgage Loan or is a primary
residence, (iii) shall mature no later than August 1, 2028, (iv) has a
Loan-to-Value Ratio as of the Subsequent Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (v) shall be of
the same or higher credit quality classification (determined in accordance with
the PAGs) as the Mortgage Loan which such Qualified Replacement Mortgage
replaces, (vi) has a Loan Balance as of the related Subsequent Cut-Off Date not
greater than and not substantially less than the Loan Balance of the replaced
Mortgage Loan as of such Subsequent Cut-Off Date, (vii) shall have a remaining
term to stated maturity not greater than (and not more than six months less
than) that of the Mortgage Loan being replaced; (viii) shall not provide for a
Balloon Payment if the related Mortgage Loan did not provide for a Balloon
Payment (and if such related Mortgage Loan provided for a Balloon Payment, such
Qualified Replacement Mortgage shall have an original maturity of not less than
the original maturity of such related Mortgage Loan), (ix) shall be a fixed rate
Mortgage Loan if the Mortgage Loan being replaced is a fixed rate Mortgage Loan
or an adjustable rate Mortgage Loan if the Mortgage Loan being replaced is an
adjustable rate Mortgage Loan, (x) if such Mortgage Loan being replaced is in
Group II, (a) has the index of the replaced Mortgage Loan, (b) has the same
amount of time between rate adjustment dates as the replaced Mortgage Loan and
(c) has a margin no less than the replaced Mortgage Loan, (xi) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust and (xii) such Qualified Replacement Mortgage is acceptable to the
Guarantor if the Mortgage Loan to be replaced is in Group I. In the event that
one or more home equity loans are proposed to be substituted for one or more
Mortgage Loans, the foregoing tests may be met on a weighted average (or
similar) basis, except that the requirements of clause (xi) hereof must be
satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Moody's and Fitch or any successors
thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which (x) the Loan Balance thereof plus any accrued and unpaid interest thereon
as of the date of liquidation exceeds (y) Net Liquidation Proceeds realized
thereon applied in reduction of such Loan Balance and accrued and unpaid
interest. As to any Mortgage Loan as to which there has been a Cram Down Loss,
the amount of such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and the Class
A-8 Certificates and each Payment Date, the last day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs and
with respect to the Group II Certificates other than the Class A-8 Certificates
and each Payment Date, the day immediately preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC and
National Westminster Bank PLC, provided that if any of the foregoing banks are
not suitable to serve as a Reference Bank, then any leading banks selected by
the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Seller or any affiliate thereof, (iii) whose quotations appear on Telerate
Page 3750 on the relevant One-Month LIBOR Determination Date and (iv) which have
been designated as such by the Trustee.
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"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-30759), including all amendments thereto and including the Prospectus
Supplement relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The period from and including the second day of
the calendar month preceding the month in which a Monthly Remittance Date occurs
to and including the first day of the calendar month in which a Monthly
Remittance Date occurs.
"REO Property": A Property acquired by the Special Servicer on behalf
of the Trust through foreclosure or deed-in-lieu of foreclosure in connection
with a defaulted Mortgage Loan.
"Reporting Date": The date on which the Master Servicer will provide
the Aggregate Monthly Servicing Report to the Trustee, which day shall be the
20th day of each calendar month (or if such day is not a Business Day, the next
succeeding Business Day).
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Retained Certificates": Collectively, the Class D Certificates and the
Class R Certificates.
"Schedule of Mortgage Loans": Each of the schedules of Mortgage Loans,
segregated by Mortgage Loan Group, with respect to the Mortgage Loans listing
each Mortgage Loan in the related Group to be conveyed on the Startup Day. Such
Schedule of Mortgage Loans shall identify each Mortgage Loan by:
(i) the loan number and name of the Mortgagor;
(ii) the street address, city, state and zip code of the
Property;
(iii) (A) the original term to maturity and (B) if such
Mortgage Loan is a Balloon Loan, the amortization
term thereof;
(iv) the original Loan Balance and the original Coupon
Rate;
(v) the first payment date;
(vi) whether the Mortgage Loan is a Balloon Mortgage Loan
or a Mortgage Loan the terms of which do not provide
for a Balloon Payment;
(vii) the type of Property;
(viii) the Scheduled Payment in effect as of the Cut-Off
Date;
(ix) the Loan Balance as of the Cut-Off Date;
(x) the Coupon Rate as of the Cut-Off Date;
(xi) the occupancy status;
(xii) the purpose of the Mortgage Loan;
(xiii) the collateral value of the Property;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the net Coupon Rate for such Mortgage Loan; and
(xvi) the documentation type.
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"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or, in
the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Second Mortgage": Mortgage Loans secured by a valid mortgage which
represents a second lien.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Servicer": AMRESCO Residential Mortgage Corporation, a Delaware
corporation.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Clean Up Call Date": The first Monthly Remittance Date on
which the aggregate outstanding Loan Balance of the Mortgage Loans has declined
to less than 5% of the Original Aggregate Loan Balance.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the calculation of the Servicer Loss Test, Realized Losses attributable
solely to Cram Down Losses shall be excluded from the calculation of Cumulative
Loss Percentage):
Cumulative Loss
Period Percentage
------ ---------------
September 2, 1998 - September 1, 2000 1.55%
September 2, 2000 - September 1, 2001 1.86%
September 2, 2001 - September 1, 2002 3.14%
September 2, 2002 - September 1, 2003 3.96%
September 2, 2003 - September 1, 2004 4.28%
September 2, 2004 - September 1, 2005 4.52%
September 2, 2005 and thereafter 4.76%
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if either (x) the 90+ Delinquency
Percentage (Rolling Three Month) is less than the greater of (i) 50% of the
weighted average of the Group I Senior Enhancement Percentage and the Group II
Senior Enhancement Percentage (weighted based on the outstanding Loan Balance
relating to Group I and Group II as of such date of determination) and (ii) 15%
or (y) the Servicer Loss Test is satisfied.
"Servicer's Monthly Servicing Report": Any report provided by the
Servicer or the Special Servicer pursuant to Section 8.29(a) hereof.
"Servicer's Trust Receipt": The Servicer's Trust Receipt, in the form
set out as Exhibit H hereto.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan (other than the
Specially Serviced Mortgage Loans), an amount retained by the Servicer as
compensation for servicing and administration duties relating to such Mortgage
Loan pursuant to Section 8.15 and with respect to any Specially Serviced
Mortgage Loan, an amount retained by the Special Servicer as compensation for
servicing and administration duties relating to such Specially Serviced Mortgage
Loan pursuant to Section 8.15.
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"Servicing Fee Letter": The servicing fee letter between the Seller and
the Servicer, setting forth the Servicing Fee Rate and other servicing
compensation applicable to the Servicer.
"Servicing Fee Rate": The rate per annum set forth in the Servicing Fee
Letter.
"Servicing Report Delivery Date": The date on which the Servicer and
the Special Servicer will provide its respective Servicer's Monthly Servicing
Report to the Master Servicer and the Seller, which day shall be the 7th day of
each calendar month (or if such day is not a Business Day, the immediately
preceding Business Day).
"60+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the related Collection
Period, 60 days or more Delinquent (without giving effect to any grace period).
"60+ Day Delinquency Percentage": As of any date of determination
thereof, and as to the related Mortgage Loan Group, a fraction, expressed as a
percentage, the numerator of which is the outstanding aggregate Loan Balance of
60+ Day Delinquent Loans with respect to such Mortgage Loan Group and the
denominator of which is the outstanding aggregate Loan Balance of the Mortgage
Loans in such Mortgage Loan Group.
"Special Servicer": AMRESCO Residential Capital Markets, Inc., a
Delaware corporation and any successor thereto.
"Special Servicing Agreement": The Special Servicing Agreement, dated
as of September 29, 1998, among the Trustee, the Seller, the Special Servicer
and AMRESCO Residential Mortgage Corporation, as subservicer on behalf of the
Special Servicer.
"Special Servicing Fee": The "special servicing fee" provided in the
Special Servicing Agreement; provided, that in the event that the initial
Special Servicer is removed pursuant to Section 8.20 or resigns pursuant to
Section 8.21, the Special Servicing Fee will be that fee agreed to by the
successor Special Servicer, the Guarantor and the Trustee; provided, further,
that in the event the Special Servicer is replaced pursuant to Section 8.37, the
special servicing fee will be as specified in Section 8.37.
"Special Servicing Fee Reserve Fund Balance": From time to time, the
amount on deposit in the Special Servicing Fee Reserve Fund.
"Special Servicing Fee Reserve Fund": The reserve fund established
pursuant to Section 7.11(b) hereof.
"Special Servicing Fee Reserve Fund Property": As defined in Section
7.12(a) hereof.
"Specially Serviced Mortgage Loan": Any Mortgage Loan that becomes a
60+ Day Delinquent Loan. Once a Mortgage Loan becomes a Specially Serviced
Mortgage Loan, it shall remain a Specially Serviced Mortgage Loan
notwithstanding its delinquency status.
"Startup Day": September 29, 1998.
"Step Up Date": Provided that the auction sale of the Mortgage Loans
described in Section 9.02(a) has not occurred, the date that is 90 days after
the Auction Sale Bid Date.
"Subordinate Certificates": With respect to either Group, collectively,
the Mezzanine Certificates, the Class B Certificates and the Class C-IO
Certificates related to such Group and the portion of the Class D Certificates
related to such Group.
"Subordinated Trigger Event": A Group I Subordinated Trigger Event or a
Group II Subordinated Trigger Event, as the case may be.
"Subsequent Cut-Off Date": The close of business on the first day of
the month in which a Qualified Replacement Mortgage is transferred and assigned
to the Trust.
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"Subsequent Transfer Date": With respect to a Qualified Replacement
Mortgage, the date upon which a conveyance of such Qualified Replacement
Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and
any Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tape": The meaning provided in Section 8.29(d) hereof.
"Tax Matters Certificate": The Class R Certificate, representing a
0.001% Percentage Interest of such Class of Certificates, initially issued to
Norwest Bank Minnesota, National Association as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates, which shall be issued to and held by Norwest Bank
Minnesota, National Association throughout the term hereof unless another Person
shall accept an assignment of such interest and the designation of Tax Matters
Person pursuant to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the
Bridge Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": As defined in Section 9.02(b) hereof.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan Trust
1998-3, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, not in its individual capacity but solely as Trustee under
this Agreement, and any successor hereunder.
"Trustee Fee": An amount equal to the product of (x) the aggregate
outstanding Loan Balance as of the last day of the related Collection Period and
(y) the Trustee Fee Rate.
"Trustee Fee Rate": 0.0025% per annum.
"Trustee Remittance Report": With respect to each Payment Date, the
report in a form mutually agreed upon by the Trustee and the Guarantor required
pursuant to Section 7.06 of this Agreement.
"Trustee Reporting Date": With respect to each Payment Date, 12:00 p.m.
Eastern Standard Time on the fifth Business Day prior to such Payment Date.
"Underwriters": Morgan Stanley & Co. Incorporated, AMRESCO Securities,
Inc., Bear, Stearns & Co. Inc., Credit Suisse First Boston Corporation, Deutsche
Bank Securities, Inc. and Prudential Securities Incorporated.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
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"Upper-Tier Group I Distribution Account": The Upper-Tier Group I
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier Group II Distribution Account": The Upper-Tier Group II
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Group I Distribution Account and the Upper-Tier
Group II Distribution Account, the right to receive the distributions deposited
therein with respect to each Lower-Tier Interest and the Guarantee.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
Section 1.05 Consent of the Guarantor.
Notwithstanding any provision to the contrary hereunder, in the event
the Guarantor has any consent or approval right hereunder such right shall be
terminated upon the payment in full of all Classes of the Guaranteed
Certificates.
END OF ARTICLE I
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<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1998-3".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
the Corporate Trust Office or at such other address as the Trustee may designate
by notice to the Depositor, the Seller, the Servicer, the Master Servicer, the
Special Servicer, the Guarantor and the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning, holding and disposing of the Mortgage Loans and the Trust Estate in
connection therewith; (ii) activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either the Lower-Tier REMIC or the Upper-Tier
REMIC as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the Trustee Fee, if any, (ii)
the Master Servicer Fee, (iii) the Guarantee Fee and (iv) any reasonable
expenses of the Trustee that are "unanticipated expenses of the REMIC" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3), shall be paid
pursuant to Section 7.03(c)(ii) and (d)(ii). The Seller shall pay directly the
reasonable fees and expenses of counsel to the Trustee pursuant to a fee letter
between the Seller and the Trustee. The reasonable fees and expenses of the
Trustee's counsel in connection with the review and delivery of this Agreement
and related documentation shall be paid by the Seller on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Reserved.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows,
including for federal income tax purposes the month in which the Final Scheduled
Payment Dates occur:
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<PAGE>
<TABLE>
<CAPTION>
Lower-Tier Initial Month and Year
Pass-Through Lower-Tier of Final Scheduled
Class Designation Rate Balance Payment Dates
- ----------------- ------------ ---------- ------------------
<S> <C> <C> <C>
Lower-Tier Interest A-1 (1) $81,000,000 October 2014
Lower-Tier Interest A-2 (1) 60,000,000 February 2022
Lower-Tier Interest A-3 (1) 27,000,000 March 2024
Lower-Tier Interest A-4 (1) 59,000,000 July 2027
Lower-Tier Interest A-5 (1) 21,289,000 September 2028
Lower-Tier Interest A-6 (1) 27,300,000 September 2028
Lower-Tier Interest A-7 (2) 429,657,000 July 2028
Lower-Tier Interest A-8 (2) 143,000,000 March 2015
Lower-Tier Interest M-1A (2) 55,650,000 September 2028
Lower-Tier Interest M-2A (2) 48,470,000 September 2028
Lower-Tier Interest B-1A (2) 41,290,000 September 2028
Lower-Tier Interest B-1F (1) 6,344,000 September 2028
Class S Certificate (3) 0 September 2028
Lower-Tier REMIC Residual Class (4) (4) September 2028
</TABLE>
- --------------------
(1) On any Payment Date, the Group I Net Weighted Average Coupon Rate.
(2) On any Payment Date, the Group II Net Weighted Average Coupon Rate.
(3) On any Payment Date, the rate described in clause (y) of the definition of
Class S Distribution Amount.
(4) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier Balance
or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8,
M-1A, M-2A, B-1F and B-1A Certificates shall be issued as non-certificated
interests. The Lower-Tier REMIC Residual Class shall be issued from the
Lower-Tier REMIC as a non-certificated interest.
(c) The Depositor hereby designates Lower-Tier Interest A-1, Lower-Tier
Interest A-2, Lower-Tier Interest A-3, Lower-Tier Interest A-4, Lower-Tier
Interest A-5, Lower-Tier Interest A-6, Lower-Tier Interest A-7, Lower-Tier
Interest A-8, Lower-Tier Interest M-1A, Lower-Tier Interest M-2A, Lower-Tier
Interest B-1F, Lower-Tier Interest B-2A and the Class S Certificates as "regular
interests" and the Lower-Tier REMIC Residual Class as the single class of
"residual interests" in the Lower-Tier REMIC for purposes of the REMIC
Provisions.
(d) The Depositor hereby designates Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class M-1A, Class M-2A,
Class B-1F, Class B-1A, Class C-FIO, Class C-AIO and Class D as "regular
interests," and the Class R Certificates as the single class of "residual
interests" in the Upper-Tier REMIC for purposes of the REMIC Provisions. The
Depositor hereby designates the Lower-Tier Interest A-1, the Lower-Tier Interest
A-2, the Lower-Tier Interest A-3, the Lower-Tier Interest A-4, the Lower-Tier
Interest A-5, the Lower-Tier Interest A-6, the Lower-Tier Interest A-7,
Lower-Tier Interest A-8, Lower-Tier Interest M-1A, Lower-Tier Interest M- 2A,
Lower-Tier Interest B-1F, Lower-Tier Interest B-1A, the Upper-Tier Group I
Distribution Account and the Upper-Tier Group II Distribution Account as the
only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC included therein shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC, the Lower-Tier REMIC
each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
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<PAGE>
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC; amounts, if any, distributed on the Lower-Tier REMIC
Residual Class shall be treated as distributions by the Lower-Tier REMIC. It is
expected that there shall not be any distributions to the Lower-Tier REMIC
Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) For federal income tax purposes, the month in which Final Scheduled
Payment Date for each Class of the Certificates is hereby set to be the Payment
Date indicated below:
Month and Year of
Final Scheduled
Class Payment Date
----- -----------------
Class A-1 Certificates October 2014
Class A-2 Certificates February 2022
Class A-3 Certificates March 2024
Class A-4 Certificates July 2027
Class A-5 Certificates September 2028
Class A-6 Certificates September 2028
Class A-7 Certificates July 2028
Class A-8 Certificates March 2015
Class M-1A Certificates September 2028
Class M-2A Certificates September 2028
Class B-1A Certificates September 2028
Class B-1F Certificates September 2028
Class C-FIO Certificates September 2020
Class C-AIO Certificates September 2020
Class D Certificates September 2028
Class R Certificates September 2028
END OF ARTICLE II
41
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS, THE MASTER SERVICER
AND THE SELLER; COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller, the Servicer, the Special Servicer, the Master Servicer, the
Guarantor and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery by the Depositor and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the Operative Documents to which the Depositor
is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered, or to be delivered, pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement and the
Information Circular which describe the Depositor or matters or activities for
which the Depositor is responsible in accordance with the Operative Documents or
which are attributable to the Depositor therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. The
Registration Statement and the Information Circular do not contain any untrue
statement of a material fact required to be stated therein or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. There is no fact
known to the Depositor that materially adversely affects or in the future may
(so far as the Depositor can now reasonably foresee)
42
<PAGE>
materially adversely affect the Depositor or the Mortgage Loans or the ownership
interests therein represented by the Certificates that has not been set forth in
the Registration Statement and the Information Circular.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the acquisition by the
Depositor of the Mortgage Loans, the conveyance by the Depositor of the Mortgage
Loans, the purchase and sale of the Certificates and the execution, delivery and
performance by the Depositor of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the Depositor of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(i) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicer, the
Special Servicer and the Master Servicer.
(a) The Servicer hereby represents and warrants to the Trustee, the
Depositor, the Seller, the Special Servicer, the Master Servicer, the Guarantor
and the Owners, that as of the Startup Day:
(i) It is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, is in compliance
with the laws of each state in which any Property is located to the extent
necessary to enable it to perform its obligations hereunder and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Servicer has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(ii) The execution and delivery of the Operative Documents to
which the Servicer is a party by the Servicer and its performance and compliance
with the terms thereof have been duly authorized by all necessary corporate
action on the part of the Servicer and will not violate the Servicer's articles
or certificate of incorporation or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material contract, agreement or other instrument
to which the Servicer is a party or by which the Servicer is bound or violate
any statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over the Servicer or any of its
properties.
(iii) Each Operative Document to which the Servicer is a
party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of the Servicer,
enforceable against it in accordance with the terms thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(iv) The Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which would materially and adversely
43
<PAGE>
affect the condition (financial or otherwise) or operations of the Servicer or
its properties or would materially and adversely affect its performance
hereunder.
(v) No litigation is pending with respect to which the
Servicer has received service of process or, to the best of the Servicer's
knowledge, threatened against the Servicer which litigation would prohibit its
entering into the Operative Documents to which the Servicer is a party or would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which the Servicer is a party.
(vi) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(vii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no
representation or warranty), that are necessary or advisable in connection with
the execution, delivery and performance by the Servicer of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by the Operative Documents on the part of the Servicer
and the performance by the Servicer of its obligations under the Operative
Documents to which it is a party.
(viii) The collection practices used by the Servicer with
respect to the Mortgage Loans serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage servicing
business.
(ix) The transactions contemplated by this Agreement are in
the ordinary course of business of the Servicer.
(x) The Servicer's computer and other systems used in
servicing the Mortgage Loans will be modified and maintained to operate in a
manner such that at all times, including on and after January 1, 2000, (a) the
Servicer can service the Mortgage Loans in accordance with the terms of this
Agreement and (b) the Servicer can operate its business in the same manner as it
is operating on the date hereof.
(xi) The statements contained in the Registration Statement
and the Information Circular which describe the Servicer or matters or
activities for which the Servicer is responsible in accordance with the
Operative Documents or which are attributable to the Servicer therein are true
and correct in all material respects, and the Registration Statement and the
Information Circular do not contain any untrue statements of a material fact
with respect to the Servicer required to be stated therein or necessary to make
the statements contained therein with respect to the Servicer, in light of the
circumstances under which they were made, not misleading. The Registration
Statement and the Information Circular do not contain any untrue statement of a
material fact required to be stated therein or omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) The Master Servicer hereby represents and warrants to the Trustee,
the Depositor, the Seller, the Servicer, the Guarantor and the Owners that as of
the Startup Day:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, is in compliance with the laws of each state in which any
Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Master Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under the Operative Documents to
which it is a party.
(ii) The execution and delivery of the Operative Documents to
which the Master Servicer is a party by the Master Servicer and its performance
and compliance with the terms thereof have been duly authorized by
44
<PAGE>
all necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's articles or certificate of incorporation or bylaws
or constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the Master Servicer is
a party or by which the Master Servicer is bound or violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Master Servicer or any of its properties.
(iii) Each Operative Document to which the Master Servicer is
a party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of the Master
Servicer, enforceable against it in accordance with the terms thereof, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(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 would materially and adversely
affect the condition (financial or otherwise) or operations of the Master
Servicer or its properties or would materially and adversely affect its
performance hereunder.
(v) No litigation is pending with respect to which the Master
Servicer has received service of process or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which litigation
would prohibit its entering into the Operative Documents to which the Master
Servicer is a party or would materially and adversely affect the condition
(financial or otherwise) or operations of the Master Servicer or its properties
or would materially and adversely affect its performance hereunder and under the
other Operative Documents to which the Master Servicer is a party.
(vi) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(vii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Master Servicer makes no
such representation or warranty), that are necessary or advisable in connection
with the execution, delivery and performance by the Master Servicer of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by such Operative Documents on the
part of the Master Servicer and the performance by the Master Servicer of its
obligations under such Operative Documents to which it is a party.
(viii) The Master Servicer's computer and other systems used
in servicing the Mortgage Loans will be modified and maintained to operate in a
manner such that at all times, including on and after January 1, 2000, (a) the
Master Servicer can service the Mortgage Loans in accordance with the terms of
this Agreement and (b) the Master Servicer can operate its business in the same
manner as it is operating on the date hereof.
(ix) The transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer.
(x) The statements contained in the Registration Statement and
the Information Circular which describe the Master Servicer or matters or
activities for which the Master Servicer is responsible in accordance with the
Operative Documents or which are attributable to the Master Servicer therein are
true and correct in all material respects, and the Registration Statement and
the Information Circular do not contain any untrue statements of a material fact
with respect to the Master Servicer required to be stated therein or necessary
to make the statements contained therein with respect to the Master Servicer, in
light of the circumstances under which they were made, not misleading. The
Registration Statement and the Information Circular do not contain any untrue
statement of a material fact required to be stated therein or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
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<PAGE>
(c) The Special Servicer hereby represents and warrants to the Trustee,
the Depositor, the Seller, the Servicer, the Guarantor and the Owners that as of
the Startup Day:
(i) The Special Servicer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Special Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under the Operative Documents to
which it is a party.
(ii) The execution and delivery of the Operative Documents to
which the Special Servicer is a party by the Special Servicer and its
performance and compliance with the terms thereof have been duly authorized by
all necessary corporate action on the part of the Special Servicer and will not
violate the Special Servicer's articles or certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the Special Servicer
is a party or by which the Special Servicer is bound or violate any statute or
any order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Special Servicer or any of its properties.
(iii) Each Operative Document to which the Special Servicer is
a party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of the Special
Servicer, enforceable against it in accordance with the terms thereof, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(iv) The Special Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which would materially and
adversely affect the condition (financial or otherwise) or operations of the
Special Servicer or its properties or would materially and adversely affect its
performance hereunder.
(v) No litigation is pending with respect to which the Special
Servicer has received service of process or, to the best of the Special
Servicer's knowledge, threatened against the Special Servicer which litigation
would prohibit its entering into the Operative Documents to which the Special
Servicer is a party or would materially and adversely affect the condition
(financial or otherwise) or operations of the Special Servicer or its properties
or would materially and adversely affect its performance hereunder and under the
other Operative Documents to which the Special Servicer is a party.
(vi) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Special Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(vii) The transactions contemplated by this Agreement are in
the ordinary course of business of the Special Servicer.
(viii) The Special Servicer's computer and other systems used
in servicing the Specially Serviced Mortgage Loans will be modified and
maintained to operate in a manner such that at all times, including on and after
January 1, 2000, (a) the Special Servicer can service the Specially Serviced
Mortgage Loans in accordance with the terms of this Agreement and (b) the
Special Servicer can operate its business in the same manner as it is operating
on the date hereof.
(ix) The statements contained in the Registration Statement
and the Information Circular which describe the Special Servicer or matters or
activities for which the Special Servicer is responsible in accordance with the
Operative Documents or which are attributable to the Special Servicer therein
are true and correct in all material respects, and the Registration Statement
and the Information Circular do not contain any untrue statements of a material
fact with respect to the Special Servicer required to be stated therein or
necessary to make the statements contained therein with respect to the Special
Servicer, in light of the circumstances under which they were made, not
misleading. The Registration Statement and the Information Circular do not
contain any untrue statement of a material fact required
46
<PAGE>
to be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(d) It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Mortgage Loans to
the Trustee.
(e) Upon discovery by any of the Seller, the Servicer, the Special
Servicer, the Master Servicer, the Depositor, the Guarantor or the Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners, the party discovering such
breach shall give prompt written notice to the other parties. With respect to a
breach by the Servicer or the Special Servicer, within 60 days of its discovery
or its receipt of notice of such breach, (A) the Servicer or the Special
Servicer shall cure such breach in all material respects and (B) to the extent
that such breach is not cured in accordance with clause (A) above, the Servicer
or the Special Servicer may thereafter be removed pursuant to Section
8.20(a)(iv) hereof.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Servicer , the Special Servicer, the Guarantor, the Master
Servicer and the Owners as of the Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's certificate of incorporation or bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Seller,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance under the Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the Seller
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
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(g) The statements contained in the Registration Statement and the
Information Circular which describe the Seller or matters or activities for
which the Seller is responsible in accordance with the Operative Documents or
which are attributable to the Seller therein are true and correct in all
material respects, and the Registration Statement and the Information Circular
do not contain any untrue statement of a material fact with respect to the
Seller required to be stated therein or necessary to make the statements
contained therein with respect to the Seller, in light of the circumstances
under which they were made, not misleading. There is no fact known to the Seller
that materially adversely affects or in the future may (so far as the Seller can
now reasonably foresee) materially adversely affect the Seller or the Mortgage
Loans or the ownership interests therein represented by the Certificates that
has not been set forth in the Registration Statement and the Information
Circular.
(h) Upon the receipt of each Mortgage Loan (including the related Note)
and other items of the Trust Estate by the Trustee under this Agreement, the
Trust will have good title to such Mortgage Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution, delivery and performance by the Seller of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by the other Operative Documents
on the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(j) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is it aware of any insolvency pending.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by the Servicer, the Master Servicer, the Special
Servicer, the Depositor, the Seller, the Guarantor or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the representations
and warranties set forth in this Section 3.03 which materially and adversely
affects the interests of the Owners, the party discovering such breach shall
give prompt written notice to the other parties. The Seller hereby covenants and
agrees that within 60 days of its discovery or its receipt of notice of breach,
it shall cure such breach in all material respects or, with respect to a breach
of clause (h) above, it shall on the Monthly Remittance Date next succeeding
such discovery or receipt of notice (i) within two years of the Startup Day,
substitute in lieu of any Mortgage Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Subsequent Cut-Off Date is
less than the Loan Balance of such Mortgage Loan as of such Subsequent Cut-Off
Date, deliver an amount equal to such difference together with the aggregate
amount of (A) all unreimbursed Delinquency Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan and (B) the interest portion
of any Delinquency Advances which the related Servicer has theretofore failed to
remit with respect to such Mortgage Loan (a "Substitution Amount") to the
Servicer for deposit in the related Principal and Interest Account or (ii)
purchase such Mortgage Loan from the Trust at the Loan Purchase Price, which
purchase price shall be delivered to the Servicer for deposit in the Principal
and Interest Account. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Mortgage Loan which is not in default or as to
which
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no default is imminent, no repurchase or substitution pursuant hereto shall be
made unless the Seller obtains for the Trustee an opinion of counsel experienced
in federal income tax matters (which must be outside counsel) to the effect that
such a repurchase or substitution would not constitute a Prohibited Transaction
for the Trust or any REMIC therein or otherwise subject the Trust or any REMIC
therein to tax and would not jeopardize the status of any REMIC in the Trust as
a REMIC (a "REMIC Opinion") addressed to the Servicer, the Guarantor, the Master
Servicer and the Trustee and acceptable to the Servicer, the Master Servicer,
the Guarantor and the Trustee. Any Mortgage Loan as to which repurchase or
substitution was delayed pursuant to this Section because of the inability to
deliver a REMIC Opinion shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Mortgage Loan and (b) receipt by the Trustee of a REMIC Opinion.
Section 3.04 Representations and Warranties Relating to the
Mortgage Loans; Covenants of Seller to Take Certain
Actions with Respect to the Mortgage Loans In Certain
Situations.
(a) With respect to each Mortgage Loan, the Seller represents and
warrants to, and covenants to the Trustee, the Depositor, the Master Servicer,
the Servicer, the Guarantor and the Owners that, as of the Startup Date:
(i) Title to the Mortgage Loans. Immediately prior to the
transfer and assignment of the Mortgage Loans by the Seller to the
Depositor and by the Depositor to the Trust contemplated herein, the
Seller held good title to and was the sole owner of record and holder
of the Mortgage Loan and the indebtedness evidenced by each Note. There
has been no sale or hypothecation by Seller of the Mortgage Loan. The
Mortgage Loan has not been assigned or pledged, and the Seller has
good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan free and clear of any encumbrance,
equity interest, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to
sell and assign each Mortgage Loan pursuant to this Agreement, and
following the sale of each Mortgage Loan, the Trustee will own such
Mortgage Loan free and clear of any encumbrance, equity interest,
participation interest, lien, pledge, charge, claim or security
interest.
(ii) Accuracy of the Schedule of Mortgage Loans. Each Mortgage
Loan is as described in the Schedule of Mortgage Loans, and the
information contained in each Schedule of Mortgage Loans is true and
correct as of the Cut-Off Date.
(iii) Payments. As of the Cut-Off Date, no Mortgage Loan is
thirty (30) or more days Delinquent except that there are 61 and 166
Mortgage Loans in Group I and Group II, respectively, with an
outstanding aggregate Loan Balance of $3,787,259.56 and $12,104,897.41
in Group I and Group II, respectively, that are 30 or more days
Delinquent but not more than 59 days Delinquent.
(iv) No Outstanding Charges. There are no defaults in
complying with the terms of the Mortgage, nor, with respect to any
Second Mortgage, the terms of any senior mortgage. All taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been
established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and
payable. The Seller has not advanced funds, or induced or solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest accruing from the
date of the Note or date of disbursement of the Mortgage Loan proceeds,
whichever occurred later, to the day which precedes by one month the
Due Date of the first Scheduled Payment.
(v) Original Terms Unmodified. The terms of the Note and the
Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary to protect the interests of the Trust. The substance of any
such waiver, alteration or modification has been approved by the title
insurer, to the extent required by the policy, and its terms are
reflected on the related Schedule of Mortgage Loans. No Mortgagor has
been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent
required by the policy, and which assumption agreement is part of the
File.
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(vi) Absence of Defenses. The Mortgage and the Note are not
subject to any right of rescission, set-off, counterclaim, or defense
(including the defense of usury), based on the invalidity or
unenforceability of the Note and/or Mortgage or on any conduct of the
Seller, the Depositor or any of their officers, employees,
representatives, affiliates or assignors in originating or servicing
the Mortgage Loan prior to the Cut-Off Date, nor will the operation of
any of the terms of the Mortgage or the Note, or the exercise of any
right thereunder, render the Mortgage or the Note unenforceable, in
whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense (including the defense of usury) based on any
such invalidity, unenforceability or conduct. No right of rescission,
set-off, counterclaim, or defense with respect thereto has been
asserted to the Seller or, to Seller's knowledge, has been asserted to
any other person and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated.
(vii) Hazard Insurance. Pursuant to the terms of the Mortgage,
all improvements upon the Mortgaged Property are insured by an insurer
acceptable to Freddie Mac against loss by fire and such other risks as
are usually insured against in the broad form of extended coverage
hazard insurance available from time to time, including flood hazards
if upon origination of the Mortgage Loan, the Property was in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and if flood insurance was
required by federal regulation and such flood insurance has been made
available). All such insurance policies (collectively, the "hazard
insurance policy") meet the requirements of the current guidelines of
the Federal Insurance Administration, conform to the requirements of
the Freddie Mac Seller's Guide and the Freddie Mac Servicers' Guide and
are a standard policy of insurance for the locale where the Property is
located. The amount of the insurance is at least in the amount of the
full insurable value of the Property on a replacement cost basis or the
unpaid balance of the Mortgage Loan, whichever is less. The hazard
insurance policy names (and will name) the Mortgagor as the insured and
contains a standard mortgagee loss payable clause in favor of the
related Originator and its successors and assigns. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where required by state
law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance policy, provided
the policy is not a "master" or "blanket" hazard insurance policy
covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance
policy is the valid and binding obligation of the insurer, is in full
force and effect, and will be in full force and effect and inure to the
benefit of Trust upon the consummation of the transactions contemplated
by this Agreement. The Seller has not engaged in, and has no knowledge
of the Mortgagor's or any other party's having engaged in, any act or
omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for therein, or the validity and
binding effect of either.
(viii) Compliance with Applicable Laws. Any and all
requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with. The
consummation of the transactions contemplated hereby will not involve
the violation of any such laws or regulations.
(ix) No Satisfaction of Mortgage or Note. Neither the Mortgage
nor the Note has been satisfied, canceled, subordinated or rescinded,
in whole or in part, and the Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation,
subordination or rescission.
(x) Location and Type of Property. The Property consists of a
parcel of real property with a residential dwelling erected thereon.
The Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential
lease, (A) the terms of such lease expressly permit the mortgaging of
the leasehold estate, the assignment of the lease without the lessor's
consent (or the lessor's consent has been obtained and such consent is
in the File) and the acquisition by the holder of the Mortgage of the
rights of the lessee upon foreclosure or assignment in lieu of
foreclosure to provide the holder of the Mortgage with substantially
similar protection; (B) the terms of such lease do not (i) allow the
termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity
to cure, such default, (ii) allow the termination of the lease in the
event of damage or
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destruction as long as the Mortgage is in existence or (iii) prohibit
the holder of the Mortgage from being insured under the hazard
insurance policy relating to the Property; (C) the original term of
such lease is not less than fifteen (15) years; (D) the term of such
lease does not terminate earlier than five (5) years after the maturity
date of the Note; and (E) the Property is located in a jurisdiction in
which the use of leasehold estates for residential properties is a
widely accepted practice.
(xi) Valid Lien. The Mortgage for any First Mortgage creates a
valid, subsisting, enforceable and perfected first lien on the
Property, and the Mortgage for any Second Mortgage creates a valid,
subsisting, enforceable and perfected second lien on the Property, and
in each case includes all buildings on the Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect
to the foregoing. The lien of the Mortgage is subject only to Permitted
Exceptions. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with a First Mortgage
established and created a valid, subsisting, enforceable and perfected
first lien and first priority security interest on the property
described therein, and with respect to a Second Mortgage, a second lien
and second priority security interest, and the Seller has full right to
sell and assign the same to the Trust.
(xii) Validity of Mortgage Documents. The Note and the
Mortgage and every other agreement, if any, executed and delivered by
the Mortgagor in connection with the Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All parties to the Note, the
Mortgage and each other such related agreement had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Note, the
Mortgage and each other such related agreement, and the Note, the
Mortgage and each other such related agreement have been duly and
properly executed by the respective Mortgagors. The Seller has reviewed
all of the documents constituting the File and has made such inquiries
as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
(xiii) Full Disbursement of Proceeds. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred
in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of
any amounts paid or due under the Note or Mortgage.
(xiv) Doing Business. All parties which have had any interest
in the Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed
of such interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state where the Property is
located, and (2)(a) organized under the laws of such state, or (b)
qualified to do business in such state, or (c) federal savings and loan
associations, savings banks, or national banks having principal offices
in such state, or (d) not doing business in such state.
(xv) Loan-to-Value Ratio. The Loan-to-Value Ratio for each
First Mortgage was no greater than 95%, and the Combined Loan-to-Value
Ratio for each Second Mortgage was no greater than 95%.
(xvi) Title Insurance. The Mortgage Loan is covered by either
(a) an attorney's opinion of title and abstract of title the form and
substance of which is acceptable to Freddie Mac, or (b) an ALTA
lender's title insurance policy or other generally acceptable form of
policy of insurance issued by a title insurer qualified to do business
in the jurisdiction where the Property is located, insuring the related
Originator, its successors and assigns, as to the first priority lien
of the Mortgage in the original principal amount of the First Mortgage,
and as to the second priority lien of the Mortgage in the original
principal amount of the Second Mortgage, subject only to the Permitted
Exceptions, and against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the
Mortgage providing for adjustment in the Coupon Rate and Scheduled
Payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by
or upon the Property or any interest therein. Where required by state
law or regulation, the Mortgagor has been given the opportunity to
choose the carrier of such lender's title insurance policy. The related
Originator, its successors and assigns, are the sole insureds (except
in the case of a joint protection policy, in which case the related
Originator's interest is insured) of such lender's title insurance
policy, and such lender's title insurance policy is valid and remains
in full force and effect and will be in full
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force and effect upon the sale of the Mortgage Loan to the Trust. No
claims have been made under such lender's title insurance policy, and
no prior holder of the Mortgage, including the Seller, has done
anything which would impair the coverage of such lender's title
insurance policy.
(xvii) No Defaults. Except for payment delinquencies noted on
the related Mortgage Loan Schedule, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the
Note or related documents and no event which, with the passage of time
or with notice and the expiration of any applicable grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor any of its predecessors have
waived any default, breach, violation or event of acceleration.
(xviii) No Mechanics' Liens. There are no mechanics' or
similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law could give
rise to such liens) affecting the related Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related
Mortgage.
(xix) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value
of the Property lay wholly within the boundaries and building
restriction lines of the Property and no improvements on adjoining
properties encroach upon the Property. No improvement located on or
being part of the Property is in violation of any applicable zoning law
or regulation; provided, that in no event shall a legal non-conforming
use of the Property be considered a violation of any such zoning law or
regulation.
(xx) Payment Terms. For fixed rate Mortgage Loans, the Note is
payable on the same (or corresponding) day of each month in equal
monthly installments (other than the last payment) of principal and
interest sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years from
inception of the Mortgage Loan. For adjustable rate Mortgage Loans, the
Coupon Rate is adjusted in accordance with the terms of the Note and
the Note is payable on the same (or corresponding) day of each month
and, during an adjustment period or initial period, in equal monthly
installments of principal and interest. Installments of interest are
subject to change due to the adjustments to the Coupon Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years from
inception of the Mortgage Loan.
(xxi) Interest Rate Adjustments. All required notices of
interest rate and payment amount adjustments have been sent to the
Mortgagor on a timely basis and the computations of such adjustments
were properly calculated. All interest rate adjustments applicable to
the Mortgage Loans have been made in strict compliance with state and
federal law and the terms of the related Note. Any interest required to
be paid pursuant to state and local law has been properly paid and
credited.
(xxii) Customary Provisions. The Mortgage contains customary
and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Property of
the benefits of the security provided thereby, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale,
and (ii) otherwise by judicial or nonjudicial foreclosure. Upon default
by an Mortgagor on a Mortgage Loan and foreclosure on, or trustee's
sale of, the Property pursuant to the proper procedures, the holder of
the Mortgage Loan will be able to deliver good and merchantable title
to the Property. There is no homestead or other exemption available to
the Mortgagor which would interfere with the right to sell the Property
at a trustee's sale or the right to foreclose the Mortgage subject to
applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption.
(xxiii) Occupancy of the Property. All inspections, licenses
and certificates required to be made or issued with respect to all
occupied portions of the Property and with respect to the use and
occupancy of the same, including, but not limited to, certificates of
occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities.
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(xxiv) No Additional Collateral. The Note is not and has not
been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement
or chattel mortgage referred to in subsection 3.04(a)(xi) above.
(xxv) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and duly qualified under
applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by Trust to such trustee under the
deed of trust, except in connection with a trustee's sale after default
by the Mortgagor.
(xxvi) Due on Sale. Each Mortgage, together with any such
documents as may be required under applicable law, contains a provision
for the acceleration of the payment of the unpaid Loan Balance of the
Mortgage Loan in the event that the Property is sold or transferred
without the prior written consent of the mortgagee thereunder, at the
option of the mortgagee. This provision provides that the mortgagee
cannot exercise its option if either (a) the exercise of such option is
prohibited by federal law or (b)(i) the Mortgagor causes to be
submitted to the mortgagee information required by the mortgagee to
evaluate the intended transferee as if a new loan were being made to
such transferee and (ii) the mortgagee reasonably determines that the
mortgagee's security will not be impaired by the assumption of such
Mortgage Loan by the transferee and that the risk of breach of any
covenant or agreement in the documents evidencing such Mortgage Loan is
acceptable to the mortgagee. To the best of the Seller's knowledge,
such provision is enforceable.
(xxvii) Transfer of Loans. Each of the Mortgages is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Property is located, and each Mortgage has
been delivered to the appropriate recorder's office for recording.
(xxviii) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid with
funds deposited in any separate account established by the Seller, the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any source
other than the Mortgagor, nor does it contain any other similar
provisions currently in effect which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature.
(xxix) Consolidation of Future Advances. Any future advances
made to the Mortgagor prior to the Startup Day have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest
readjustment feature or rate and single repayment term. For First
Mortgages, the lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to the
Trustee. For Second Mortgages, the lien of the Mortgage securing the
consolidated principal amount is expressly insured as having second
lien priority by a title insurance policy, an endorsement to the policy
insuring the mortgagee's consolidated interest or by other title
evidence acceptable to Trustee. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. With
respect to Second Mortgages, no future advances are permitted under the
senior mortgage.
(xxx) Property Undamaged; No Condemnation Proceedings. There
is no proceeding pending or, threatened for the total or partial
condemnation of the Property. The Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, water, tornado or other
casualty so as to adversely affect the value of the Property as
security for the Mortgage Loan or the use for which the premises were
intended and each Property is in good repair. There have not been any
condemnation proceedings with respect to the Property and the Seller
and the Depositor have no knowledge of any such proceedings in the
future.
(xxxi) Appraisals. The related Originator has delivered to the
Seller an appraisal of the Property signed by a qualified appraiser,
who (i) is licensed in the state where the Property is located, (ii)
has no interest, direct or indirect, in the Property or in any Mortgage
Loan or the security therefor, and (iii) does not receive compensation
that is affected by the approval or disapproval of the Mortgage Loan.
The appraisal shall have been made within ninety (90) days of the
origination of the Mortgage Loan, be completed in compliance with
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the Uniform Standards of Professional Appraisal Practice, and all
applicable Federal and state laws and regulations.
(xxxii) Soldier's and Sailors' Relief Act. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Solider's and Sailors'
Civil Relief Act of 1940.
(xxxiii) Environmental Matters. There exists no violation of
any local, state or federal environmental law, rule or regulation in
respect of the Property which violation has or could have a material
adverse effect on the market value of such Property. The Seller has no
knowledge of any pending action or proceeding directly or indirectly
involving the related Property in which compliance with any
environmental law, rule or regulation is in issue; and, to the best of
the Seller's knowledge, nothing further remains to be done to satisfy
in full all requirements of each such law, rule or regulation
constituting a prerequisite to the use and enjoyment of such Property.
(xxxiv) Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure
materials required by applicable law with respect to the making of
adjustable rate mortgage loans. The Seller shall deliver such statement
to the Trustee in the related File.
(xxxv) No Construction Loans. The Mortgage Loan was not made
in connection with (a) the construction or rehabilitation of a Property
or (b) facilitating the trade-in or exchange of a Property.
(xxxvi) Circumstances Affecting Value, Marketability or
Prepayment. Except as otherwise disclosed to Trustee, the Seller has no
knowledge of any circumstances or conditions with respect to the
Mortgage, the Property, or the Mortgagor, that could reasonably be
expected to adversely affect the value or the marketability of any
Property or Mortgage Loan, subject to the economic and geological
conditions generally and specifically to the area in which the
Mortgaged Property is located, or cause the Mortgage Loan to become
delinquent.
(b) In addition to the foregoing representations and warranties set out
in subsection (a) above, the Seller represents and warrants to, and covenants to
the Guarantor that, as of the Startup Day each of the representations and
warranties set out in Exhibit O hereto is true and correct in all material
respects and each such representation and warranty is incorporated herein and
made a part hereof as if such representations and warranties were set out in
full herein.
(c) Upon the earliest to occur of the Seller's discovery, its receipt
of notice of breach of a representation or warranty set out in subsection (a)
above or in Exhibit O hereto from any one of the other parties hereto or such
time as a breach of any representation and warranty materially and adversely
affects the interests of the Owners, the Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or, if such
breach is not cured, the Seller shall, subject to the further requirements of
this paragraph (but in any case for a Mortgage Loan that is not a "qualified
mortgage", within 90 days of discovery thereof) (i) within two years of the
Startup Day, substitute in lieu of each Mortgage Loan which has given rise to
the requirement for action a Qualified Replacement Mortgage and deliver the
Substitution Amount applicable thereto, to the related Servicer for deposit in
the related Principal and Interest Account or (ii) purchase such Mortgage Loan
from the Trust at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be delivered to the related Servicer for deposit in
the related Principal and Interest Account by the Seller. In connection with any
such proposed purchase or substitution, the Seller shall deliver to the
Servicer, the Special Servicer, the Master Servicer, the Guarantor and the
Trustee a REMIC Opinion, and the Seller shall only be required to take either
such action to the extent such action would not constitute a Prohibited
Transaction for the Trust or would not jeopardize the status of any REMIC in the
Trust as a REMIC. Any required purchase or substitution, if delayed by the
absence of such opinion, shall nonetheless occur upon the earlier of (i) the
occurrence of a default or imminent default with respect to the Mortgage Loan or
(ii) the delivery of such opinion by the Seller. Any repurchase or substitution
shall occur prior to the related Monthly Remittance Date and the Seller shall
provide the Guarantor, the Servicer and the Special Servicer with written notice
no less than five Business Days in advance of such repurchase or substitution.
It is understood and agreed that the obligation of the Seller to cure the
defect, or substitute for or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect and has not been
remedied shall constitute the sole remedy available to the Owners, the Depositor
and the Trustee.
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(d) In the event that any Qualified Replacement Mortgage is delivered
by the Seller to the Trust pursuant to this Section 3.04 or Section 3.06 hereof,
the Seller shall take the actions described in Section 3.04(b) with respect to
such Qualified Replacement Mortgage upon the discovery by any of the Owners, the
Seller, the Servicer, the Master Servicer, the Special Servicer, the Guarantor
or the Trustee that the representations and warranties set forth in Section
3.04(a) above or in Exhibit O hereto, are untrue in any material respect on the
date such Qualified Replacement Mortgage is conveyed to the Trust such that the
interests of the Owners in the related Qualified Replacement Mortgage are
materially and adversely affected.
(e) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee, the Master Servicer and the Servicers shall have no
duty to conduct any affirmative investigation other than as specifically set
forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this Section or the
eligibility of any Mortgage Loan for purposes of this Agreement.
Section 3.05 Conveyance of the Mortgage Loans and Qualified Replacement
Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners, all
their respective right, title and interest in and to the Trust Estate; provided,
however, that the Seller reserves and retains all its right, title and interest
in and to principal (including Prepayments collected) and interest due on each
Mortgage Loan on or prior to the Cut-Off Date. The transfer by the Depositor of
the Mortgage Loans set forth on the Schedule of Mortgage Loans to the Trustee is
absolute and is intended by the Owners and all parties hereto to be treated as a
sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Mortgage Loans conveying good title
thereto free and clear of any liens and encumbrances from the Seller to the
Depositor and from the Depositor to the Trust and that the Mortgage Loans not be
part of the Depositor's or the Seller's estate in the event of insolvency. In
the event that either such conveyance or a conveyance of a Qualified Replacement
Mortgage is deemed to be a loan, the parties intend that the Seller shall be
deemed to have granted to the Depositor and the Depositor shall be deemed to
have granted to the Trustee a security interest in the Trust Estate, and that
this Agreement shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Mortgage Loans and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of the
Seller as a debtor and the Depositor as the secured party on such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's and the Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance,
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of Texas and Delaware, a UCC-1 financing
statement executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Mortgage Loans and the other property (including any
Qualified Replacement Mortgage) described above as collateral. The
characterization of the Depositor as a debtor and the Trustee as the secured
party in such financing statements is solely for protective purposes and shall
in no way be construed as being contrary to the intent of the parties that this
transaction be treated as a sale of the Depositor's entire right, title and
interest in the Trust Estate. In connection with such filing, the Depositor
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's and the Owners' interest
in the Trust Estate.
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(b) In connection with the transfer and assignment of the Mortgage
Loans and prior to each Subsequent Transfer Date with respect to any Qualified
Replacement Mortgage, the Depositor agrees to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Mortgage Loan or
on each Subsequent Transfer Date with respect to any Qualified
Replacement Mortgage, (A) the original Notes endorsed to the order of
the Trustee, (B) the original title insurance policy or any one of an
original title binder, an original preliminary title report or an
original title commitment or a copy of any of the foregoing certified
by the issuer of the title insurance policy, or the attorney's opinion
of title, (C) originals or certified copies of all intervening recorded
assignments, showing a complete chain of title from origination to the
Trustee, if any, with evidence of recording thereon, (D) originals of
all assumption, modification, written assurance or substitution
agreements, if any and (E) either: (1) the original Mortgage, with
evidence of recording thereon, (2) a certified copy if such original
Mortgage has not been returned by the applicable recording office, or
(3) a copy of the Mortgage certified by the public recording office in
those instances where the original recorded Mortgage has been lost;
(ii) cause the Custodian, on behalf of the Trustee, within 60
days following the Startup Day with respect to the Mortgage Loans or
each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages to complete the assignments of the Mortgages to "Norwest Bank
Minnesota, National Association, as Trustee of AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1998-3 under the Pooling and
Servicing Agreement dated as of September 1, 1998" to be submitted to
the Seller for recording in the appropriate jurisdictions; provided,
however, that the Depositor shall not be required to cause the Seller
to record an assignment for any Mortgage with respect to a Property
located in California or with respect to which the original recording
information is lacking; and
(iii) if not delivered on the Startup Day, deliver the title
insurance policy or title searches, the original Mortgages and such
recorded assignments, together with originals or duly certified copies
of any and all prior assignments, to the Custodian, on behalf of the
Trustee within 15 days of receipt thereof by the Depositor (but in any
event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within one year
after the Startup Day with respect to the Mortgage Loans or each
Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages).
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Custodian, on behalf of
the Trustee, of a copy of such Mortgage, such assignment or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
Copies of all Mortgage assignments received by the Custodian, on behalf
of the Trustee, shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Mortgage Loans which have been prepaid in full after
the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D and
will deposit the funds received with respect to such Mortgage Loans in the
Principal and Interest Account as provided herein.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Trustee all right, title and interest of such party in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such party pursuant to Section 3.03, 3.04 or 3.06 hereof and all
such party's right, title and interest to principal and interest due on such
Qualified Replacement Mortgage after the applicable Subsequent Cut-Off Date;
provided, however, that such party shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage on or prior to the applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to
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such released Mortgage Loan and all the Trust's right, title and interest to
principal and interest due on such released Mortgage Loan after the applicable
Subsequent Cut-Off Date; provided, however, that the Trust shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such released Mortgage Loan on or prior to the applicable
Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Custodian, on
behalf of the Trustee on the date of delivery of such Qualified Replacement
Mortgage the original Note relating thereto, endorsed in blank or to the order
of the Trustee, (ii) cause promptly to be recorded an assignment in the
appropriate jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or duly certified
copies of any and all prior assignments, to the Custodian, on behalf of the
Trustee within 15 days of receipt thereof by the Seller (but in any event within
120 days after the date of conveyance of such Qualified Replacement Mortgage),
(iv) deliver the title insurance policy, or where no such policy is required to
be provided under Section 3.05(b)(i)(B), the other evidence of title in same
required in Section 3.05(b)(i)(B) and (v) deliver originals of all assumption,
modification, written assurance or substitution agreements, if any.
(g) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage the Trustee shall cause the
Custodian, on behalf of the Trustee to deliver on the date of conveyance of such
Qualified Replacement Mortgage to the party providing such Qualified Replacement
Mortgage (i) the original Note relating thereto, endorsed without recourse or
representation, to such party, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
(i) The Seller shall reflect on its records that the Mortgage Loans
have been sold to the Depositor and the Depositor shall reflect on its records
that the Mortgage Loans have been sold to the Trust.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and deliver on
the Trustee's behalf on the Startup Day an acknowledgment of receipt of the
items delivered by the Seller or the Depositor in the form attached as Exhibit E
hereto, and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian, on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners. The Trustee agrees to cause the Custodian to
review on the Trustee's behalf, for the benefit of the Owners, such items within
45 days after the Startup Day (or, with respect to any document delivered after
the Startup Day, within 45 days of receipt and with respect to any Qualified
Replacement Mortgage, within 45 days after the Subsequent Transfer Date) and to
deliver to the Depositor, the Master Servicer, the Seller, the Guarantor, the
Special Servicer and the Servicer a certification in the form attached hereto as
Exhibit F (a "Pool Certification") to the effect that, as to each Mortgage Loan
listed in the Schedule of Mortgage Loans (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such Pool Certification as
not covered by such Pool Certification), (i) all documents required to be
delivered to it pursuant to Section 3.05(b)(i) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth on items (1), (3) and (4) of the Schedule of Mortgage Loans accurately
reflects the information set forth in the File. Neither the Trustee nor the
Custodian shall have any responsibility for reviewing any File except as
expressly provided in this subsection 3.06(a). Without limiting the effect of
the preceding sentence, in reviewing any File, neither the Trustee nor the
Custodian shall have any responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document (other than
the assignments) has been recorded in accordance with the requirements of any
applicable jurisdiction or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded. Neither the Trustee nor the
Custodian shall be under any duty or obligation to inspect, review or examine
any such documents, instruments, certificates or
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other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they are other than what they purport to be on
their face, nor shall either the Trustee or the Custodian be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Mortgage Loan.
(b) If the Trustee or the Custodian, on behalf of the Trustee during
such 45-day period finds any document constituting a part of a File which is not
executed, has not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform to the description thereof as set forth in the Schedule of Mortgage
Loans, the Trustee or the Custodian, on behalf of the Trustee shall promptly so
notify the Depositor, the Seller, the Master Servicer, the Guarantor and the
Servicer. In performing any such review, the Trustee or the Custodian, on behalf
of the Trustee may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's and the Custodian's review of the items
delivered by the Depositor pursuant to Section 3.05(b)(i) or the Seller pursuant
to Section 3.05(f) is limited solely to confirming that the documents listed in
Section 3.05(b)(i) or Section 3.05(f), respectively, have been executed and
received, relate to the Files identified in the Schedule of Mortgage Loans and
conform to the description thereof in the Schedule of Mortgage Loans. The Seller
agrees to use its best efforts to remedy a material defect in a document
constituting part of a File of which it is so notified by the Trustee. If,
however, within 60 days after the Trustee's notice to the Seller and the
Guarantor respecting such defect the Seller has not remedied the defect and the
defect materially and adversely affects the interest in the related Mortgage
Loan of the Owners, the Seller will (i) upon delivery of a REMIC Opinion,
substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage and
deliver the Substitution Amount to the applicable Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the applicable Servicer for deposit in the related Principal and
Interest Account. The Seller shall obtain for the Trustee a REMIC Opinion
addressed and acceptable to the Trustee and the Guarantor.
(c) In addition to the foregoing, the Trustee also agrees to cause the
Custodian to provide an updated report during the 12th month after the Startup
Day indicating the current status of the exceptions previously indicated on the
Pool Certification (the "Final Certification"). After delivery of the Final
Certification, the Trustee shall provide to the Servicers and the Master
Servicer, no less frequently than monthly, updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 9 a.m., Central time on the Startup Day (the "Closing"), at the
offices of AMRESCO, INC., 700 North Pearl Street, Suite 2400, Dallas, Texas
75201 (or at such other location acceptable to the Seller), the Seller will sell
and convey the Mortgage Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the
Mortgage Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters, the
Depository Certificates with an aggregate Percentage Interest in each Class
equal to 100%, registered in the name of Cede & Co., or in such other names as
the Underwriters shall direct, against payment of the purchase price thereof by
wire transfer of immediately available funds to the Trustee, (ii) to Freddie
Mac, the Guaranteed Certificates with an aggregate Percentage Interest in each
Class equal to 100%, registered in the name of the Federal Home Loan Mortgage
Corporation against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, (iii) to the initial purchasers
thereof, Class S Certificates with a cumulative Percentage Interest equal to
100%, (iv) to the initial purchasers thereof, Class C-IO Certificates with an
aggregate Percentage Interest in each Class of 100%, (v) to the respective
registered owners thereof, a Class D Certificate with a Percentage Interest
equal to 100% and a Class R Certificate with a Percentage Interest equal to
99.999%, registered in the names designated by the Depositor and (vi) to the
Trustee, the Tax Matters Person Residual Interest.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates (other than the
Guaranteed Certificates) or the underlying Notes guaranteed by any Person
(except that the Notes may be recourse to the Mortgagors thereof to the extent
permitted by law). The Certificates are payable solely from payments received on
or with respect to the Mortgage Loans (other than the Servicing Fee, the Master
Servicer Fee, the Trustee Fee and, with respect to Group I, the Guarantee Fee
and the Guarantor Reimbursement Amount), money in the Principal and Interest
Account, except as otherwise provided herein, earnings and the proceeds of
property held as a part of the Trust Estate. Each Certificate entitles the Owner
thereof to receive monthly on each Payment Date, in order of priority of
distributions with respect to such Class of Certificates as set forth in Section
7.03, a specified portion of such payments with respect to the Mortgage Loans,
pro rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate prior to receiving the final distribution due thereon. Any such
Certificate as to which the Trustee has made the final distribution thereon
shall be deemed cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms.
Each Class of the Offered Certificates shall be in substantially the
form set forth as Exhibit A hereto and the Class C-IO Certificates, the Class D
Certificates, the Class R Certificates and the Class S Certificates shall be in
substantially the forms set forth in Exhibits B-1, B-2, B-3 and B-4 hereof,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement or as may in the
Depositor's judgment be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any applicable securities laws or
as may, consistently herewith, be determined by the Authorized Officer of the
Depositor executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners and the Trustee shall have the right to inspect the
Register during the Registrar's normal hours and to obtain copies thereof, and
the Trustee shall have the right to rely upon a
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certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar
by the Owners of a majority of the aggregate Percentage Interests represented by
the Offered Certificates then Outstanding related to each Mortgage Loan Group
or, if there are no longer any Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates,
the Trustee will give the Owners prompt written notice of the appointment of
such Registrar and of the location, and any change in the location, of the
Register.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Depository Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of the Depository Certificates shall, except as otherwise
provided in Subsection (h), be initially issued in the form of a single fully
registered Offered Certificate of such Class. Upon initial issuance, the
ownership of each of the Depository Certificate shall be registered in the
Register in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
On the Startup Day, no Depository Certificates shall be issued in
denominations of less than $1,000 except that one Certificate in each class may
be in an amount less than $1,000. No Class C-IO Certificates shall be issued in
denominations of less than $1,000 (based on the original Notional Principal
Amount thereof). The Class D Certificates, the Class R Certificates and the
Class S Certificates (other than the Tax Matters Person Residual Interest) shall
be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Depository Certificates registered in the Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Special Servicer, the Master Servicer, the Seller, the Guarantor
and the Trustee shall have no responsibility or obligation to Direct or Indirect
Participants or beneficial owners for which the Depository holds the Depository
Certificates from time to time as a Depository. Without limiting the immediately
preceding sentence, the Depositor, the Servicer, the Special Servicer, the
Master Servicer, the Seller, the Guarantor and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records of
the Depository, Cede & Co., or any Direct or Indirect Participant with respect
to the ownership interest in the Depository Certificates,
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(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Depository Certificate as shown in the
Register, of any notice with respect to the Offered Certificates or (iii) the
payment to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Depository Certificate as shown in the Register, of any
amount with respect to any distribution of principal or interest on the
Depository Certificates. No Person other than a registered Owner of a Depository
Certificate as shown in the Register shall receive a certificate evidencing such
Depository Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Depository Certificates and the Depositor or the Trustee is unable to locate a
qualified successor, the Offered Certificates shall no longer be restricted to
being registered in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the Depositor may determine
that the Depository Certificates shall be registered in the name of and
deposited with a successor depository operating a global book-entry system, as
may be acceptable to the Depositor and at the Depositor's expense, or such
depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Depository Certificates may be
registered in whatever name or names registered Owners of Depository
Certificates transferring Depository Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Depository Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates and all notices with respect to such
Offered Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
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Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee harmless, then, in the absence of notice to the Trustee or the
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the Owner of such Certificate for the
purpose of receiving distributions with respect to such Certificate and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or
assignment of an interest in a Class R Certificate or assignment of an interest
in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class R
Certificate or assignment of an interest in the Lower-Tier REMIC Residual Class
(whether pursuant to a purchase, a transfer resulting from a default under a
secured lending agreement or otherwise) to a Disqualified Organization shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate or
Lower-Tier REMIC Residual Class. Furthermore, in no event shall the Trustee
accept surrender for transfer, registration of transfer, or register the
transfer, of any Class R Certificate nor authenticate and make available any new
Class R Certificate unless the Trustee has received an affidavit from the
proposed transferee in the form attached hereto as Exhibit I. Each holder of a
Class R Certificate by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 5.08(a). The Lower-Tier
REMIC Residual Class is not transferable except that the Owner of the Tax
Matters Person Residual Interest in the Lower-Tier REMIC may assign its interest
to another Person who accepts such assignment and the designation as Tax Matters
Person pursuant to Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Guaranteed Certificate, a Class C-IO Certificate, a Class D Certificate, a
Class R Certificate, or a Class S Certificate (collectively, the "Exempt
Certificates") shall be made unless such transfer is exempt from the
registration requirements of the Securities Act of
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1933, as amended (the "Securities Act"), and any applicable state securities
laws or is made in accordance with said Securities Act and laws. In the event
such a transfer is to be made within three years from the Startup Day, (i) the
Trustee or the Depositor shall require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Depositor in the event that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Securities Act and laws or is being
made pursuant to said Securities Act and laws, which Opinion of Counsel shall
not be an expense of the Trustee, the Trust Estate, the Master Servicer, the
Special Servicer, the Guarantor or the Servicer and (ii) the Trustee shall
require the transferee to execute an investment letter in substantially the form
of Exhibit J hereto acceptable to and in form and substance satisfactory to the
Seller certifying to the Trustee and the Seller the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee, the
Trust Estate or the Seller. The Owner of an Exempt Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Servicer, the Master Servicer, the Special Servicer, the Guarantor, the
Depositor and the Seller against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
(c) No transfer of an Exempt Certificate (other than a Guaranteed
Certificate) shall be made unless the Trustee shall have received a
representation letter in substantially the form of Exhibit J hereto from the
transferee of such Exempt Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act ("ERISA") nor a plan or other arrangement subject to Section 4975
of the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor
using the assets of any Plan to effect such transfer. Notwithstanding anything
else to the contrary herein, any purported transfer of an Exempt Certificate to
or on behalf of any Plan shall be null and void and of no effect.
(d) No transfer of all or any portion of any Class M-1A Certificates,
Class M-2A Certificates, Class B-1A Certificates or Class B-1F Certificates
shall be made to a transferee that is a Plan unless such Plan qualifies for an
exemption from Sections 406 and 407 of ERISA and Section 4975 of the Code, and
each beneficial owner of such certificate shall be deemed to have represented,
by virtue of its acquisition of such a Certificate, either (i) that it is not a
Plan or (ii) that an exemption from Sections 406 and 407 of ERISA and Section
4975 of the Code will apply to the acquisition, holding and resale of such
Certificates by the beneficial owner thereof. The Owner of each of the Class M-
1A Certificates, Class M-2A Certificates, Class B-1A Certificates and Class B-1F
Certificates desiring to effect such transfer shall, and hereby does agree to,
indemnify the Trustee, the Servicer, the Master Servicer, the Special Servicer,
the Guarantor, the Depositor and the Seller against any liability that may
result if such transfer is not made in accordance with ERISA and the Code.
(e) No sale or other transfer of any Offered Certificate may be made to
the Depositor or the Seller or any Originator. No sale or other transfer of any
Offered Certificate may be made to a Seller affiliate unless the Trustee shall
have been furnished with an Opinion of Counsel acceptable to the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. No sale or other transfer of the Class R
Certificate issued to the Tax Matters Person appointed on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
By 12:00 noon, eastern time, on each Payment Date, the Trustee will
withdraw amounts from the related Account(s) and make the distributions with
respect to the Certificates in accordance with the terms of the Certificates and
this Agreement. Such distributions shall be made (i) by check or draft mailed on
each Payment Date or (ii) if to Freddie Mac or if requested by any Owner of (A)
an Offered Certificate having an original principal balance of not less than
$1,000,000, (B) a Class C-IO Certificate having an original Notional Principal
Amount of not less than $1,000,000, or (C) a Class D, a Class R or Class S
Certificate having a Percentage Interest of not less than 10% in writing not
later than five Business Days prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to Freddie Mac and
to such Owner by wire transfer to an account within the United States designated
no later than five Business Days prior to the related Record Date, made on each
Payment Date, in each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account shall be made by and on behalf of the Trustee, and no amounts may be so
withdrawn from the Certificate Account for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and Class S
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Offered
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent before being required to make any such payment, may
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which shall be not fewer than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the Class R Certificates. The Trustee shall, at
the direction of the Depositor, also adopt and employ, at the expense of the
Trust, any other reasonable means of notification of such payment (including but
not limited to mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Registrar, the Trustee or any Paying Agent, at the last address
of record for each such Owner).
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Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and, at the request of the Depositor, will from time to time execute
and deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the interests of the Owners represented
thereby, in such Trust Estate against the contrary claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Depositor to take any action pursuant to this Section 6.03 to the other parties
hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the Owners, by
action, suit or proceeding at law or equity; provided, however, that nothing in
this Section shall require any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by this Agreement, have been requested to take such action by the
Owners of at least a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding related to either Mortgage Loan Group or,
if there are no longer any Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
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(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly permitted
hereby or (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Guarantor and the Trustee of such Owner's
intention to institute such proceeding;
(2) the Owners of not less than a majority of the Percentage
Interests represented by the Offered Certificates then
Outstanding related to either Mortgage Loan Group or, if there
are no Offered Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class R Certificates, shall have made written request to the
Trustee to institute such proceeding in its own name as
Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Owners
of a majority of the Percentage Interests represented by the
Offered Certificates related to such Mortgage Loan Group or,
if there are no Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class
D Certificates and the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee or to the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right
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or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Seller or any Owner of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein. Every right
and remedy given by this Article VI or by law to the Trustee or to the Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding related to either Mortgage Loan Group or,
if there are no longer any Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates
then Outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that the Seller or the
Trustee, as the case may be, need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 Access to Owners of Certificates' Names and Addresses. (a)
If any Owner (for purposes of this Section 6.12, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
Section 6.13 Year 2000. The Trustee's computer and other systems used
in performing its duties and obligations under the Agreement will be modified
and maintained to operate in a manner such that at all times, including on and
after January 1, 2000, (a) the Trustee can perform such duties and obligations
in accordance with the terms of this Agreement and (b) the Trustee can operate
its business in the same manner as it is operating on the date hereof.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Trustee by the Servicer, the
Special Servicer or by any Subservicer. The Trustee shall hold all such money
and property received by it, other than pursuant to or as contemplated by
Section 6.02(e) hereof, as part of the Trust Estate and shall apply it as
provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain at the Corporate Trust Office as a segregated
account, the Certificate Account, to be held by the Trustee on behalf of the
Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office, as two segregated accounts, the
Lower-Tier Group I Distribution Account and the Lower-Tier Group II Distribution
Account to be held by the Trustee in the name of the Lower-Tier REMIC for the
benefit of the Owners.
(c) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office , as two segregated accounts, the
Upper-Tier Group I Distribution Account and the Upper-Tier Group II Distribution
Account to be held by the Trustee in the name of the Upper-Tier REMIC for the
benefit of the Owners.
Section 7.03 Flow of Funds.
(a) (i) With respect to Group I, the Servicer and the Special
Servicer shall, no later than the related Monthly Remittance Date, remit and the
Trustee shall deposit to the Certificate Account, without duplication, (x) any
proceeds received upon liquidation of the Trust insofar as such proceeds relate
to Group I, (y) all remittances made to the Trustee pursuant to Sections 8.09
and 8.10 insofar as such remittances relate to Group I and (z) the portion of
the Monthly Remittance Amount relating to Group I required to be remitted by the
Servicer and the Special Servicer.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group I Distribution Amount from the Certificate Account to the
Upper-Tier Group I Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute from
the Certificate Account to the Special Servicing Fee Reserve Fund on behalf of
the Owners of the Class S Certificates, the Class S Distribution Amount relating
to Group I.
(b) (i) With respect to Group II, the Servicer and the Special
Servicer shall, no later than the related Monthly Remittance Date, remit and the
Trustee shall deposit to the Certificate Account without duplication, (x) any
proceeds received upon liquidation of the Trust insofar as such proceeds relate
to Group II, (y) all remittances made to the Trustee pursuant to Sections 8.09
and 8.10 insofar as such remittances relate to Group II and (z) each portion of
the Monthly Remittance Amount relating to Group II remitted by the Servicer and
the Special Servicer.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group II Distribution Amount from the Certificate Account to the
Upper-Tier Group II Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute from
the Certificate Account to the Special Servicing Fee Reserve Fund on behalf of
the Owners of the Class S Certificates, the Class S Distribution Amount relating
to Group II.
(c) With respect to the Upper-Tier Group I Distribution Account, on
each Payment Date, the Trustee shall make the following disbursements from the
Group I Interest Remittance Amount transferred thereto pursuant to
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subsection (a)(ii), in the following order of priority, and each such
disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, to the Guarantor, the Guarantee Fee and the
Guarantor Reimbursement Amount;
(ii) Second, to the Trustee, the portion of the Trustee
Fee and reasonable expenses, if any, incurred by the
Trustee relating to Group I and to the Master
Servicer, the portion of the Master Servicer Fee
relating to Group I;
(iii) Third, to the Owners of the Class A Certificates
related to Group I, the related Class A Current
Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Group I
Interest Amount Available is not sufficient to make a
full distribution of interest with respect to all
Classes of the Class A Certificates related to Group
I and the Guarantor has defaulted under the
Guarantee, the Group I Interest Amount Available will
be distributed among the outstanding Classes of Class
A Certificates related to Group I pro rata based on
the aggregate amount of interest due on each such
Class, and the amount of the shortfall will be
carried forward with accrued interest at the related
Class A Pass-Through Rate;
(iv) Fourth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
B-1F Certificates, the Class B-1F Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount
Available then remaining, to the Special Servicing
Fee Reserve Fund on behalf of the Owners of the Class
C-FIO Certificates, the Class C-FIO Current Interest;
and
(vi) Sixth, the Group I Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (h) of this Section 7.03.
(d) With respect to the Upper-Tier Group II Distribution Account on
each Payment Date, the Trustee shall make the following disbursements from the
Group II Interest Remittance Amount transferred thereto pursuant to subsection
(b)(ii), in the following order of priority, and each such disbursement shall be
treated as having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee
and reasonable expenses, if any, incurred by the
Trustee relating to Group II and to the Master
Servicer, the portion of the Master Servicer Fee
relating to Group II;
(ii) Second, to the Owners of the Class A Certificates
related to Group II, the related Class A Current
Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Group II
Interest Amount Available is not sufficient to make a
full distribution of interest with respect to all
Classes of the Class A Certificates related to Group
II, the Group II Interest Amount Available will be
distributed among the outstanding Classes of Class A
Certificates related to Group II pro rata based on
the aggregate amount of interest due on each such
Class, and the amount of the shortfall will be
carried forward with accrued interest at the related
Class A Pass-Through Rate;
(iii) Third, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-1A Certificates, the Class M-1A Current Interest;
(iv) Fourth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-2A Certificates, the Class M-2A Current Interest;
(v) Fifth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
B-1A Certificates, the Class B-1A Current Interest;
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(vi) Sixth, to the extent of the Group II Interest Amount
Available then remaining, to the Special Servicing
Fee Reserve Fund on behalf of Owners of the Class
C-AIO Certificates, the Class C-AIO Current Interest;
and
(vii) Seventh, the Group II Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (i) of this Section 7.03.
(e) On each Payment Date, the Trustee will disburse from the portion of
the Upper-Tier Group I Distribution Account that consists of principal to the
Guarantor any Guarantee Fee and Guarantor Reimbursement Amount not paid pursuant
to Section 7.03(c)(i) hereof.
(f) With respect to the Upper-Tier Group I Distribution Account on each
Payment Date, the Trustee shall make the following disbursements from amounts
relating to principal transferred thereto, in the following order of priority
and each such disbursement shall be treated as having occurred only after all
preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group I Stepdown
Date or (b) on or after the Group I Stepdown Date if
a Group I Trigger Event is in effect, the Owners of
the Class A Certificates related to Group I will be
entitled to receive payment of 100% of the Group I
Principal Distribution Amount remaining after any
distribution to the Guarantor pursuant to clause (e)
above as follows: (I) to the Owners of the Class A-6
Certificates, the Class A-6 Lockout Distribution
Amount and (II) to the Owners of the Class A
Certificates related to Group I, as follows: first,
to the Owners of the Class A-1 Certificates, until
the Class A-1 Certificate Principal Balance is
reduced to zero; second, to the Owners of the Class
A-2 Certificates, until the Class A-2 Certificate
Principal Balance is reduced to zero; third, to the
Owners of the Class A-3 Certificates, until the Class
A-3 Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates,
until the Class A-4 Certificate Principal Balance is
reduced to zero; fifth, to the Owners of the Class
A-5 Certificates, until the Class A-5 Certificate
Principal Balance is reduced to zero; and, sixth, to
the Owners of the Class A-6 Certificates, until the
Class A-6 Certificate Principal Balance is reduced to
zero; provided, however, that if the Guarantor has
defaulted on the Guarantee then on any Payment Date
on which the sum of (x) the Class B-1F Certificate
Principal Balance and the (y) Group I
Overcollateralization Amount is zero, any amounts of
principal payable to the Owners of the Class A
Certificates related to Group I on such Payment Date
shall be distributed pro rata and not sequentially.
(ii) Notwithstanding the provisions of Section 7.03(f)(i),
if the Certificate Principal Balance of the Class A
Certificates related to Group I is reduced to zero
and it is prior to the Group I Stepdown Date or
during the continuation of a Group I Trigger Event,
the Owners of the Class B-1F Certificates relating to
Group I will be entitled to receive payment of 100%
of the Group I Principal Distribution Amount
remaining after any distribution to the Guarantor
pursuant to clause (e) above.
(iii) On each Payment Date on or after the Group I Stepdown
Date and as long as a Group I Trigger Event is not in
effect, the Owners of the Group I Certificates will
be entitled to receive payments of principal, in the
order of priority, in the amounts set forth below and
to the extent of the Group I Principal Distribution
Amount remaining after any distribution to the
Guarantor pursuant to clause (e) above as follows:
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(A) First, the lesser of (x) the Group I
Principal Distribution Amount and (y) the
Group I Class A Principal Distribution
Amount shall be distributed (I) to the
Owners of the Class A-6 Certificates, in an
amount equal to the Class A-6 Lockout
Distribution Amount and (II) the remainder
paid to the Owners of the Class A
Certificates related to Group I as follows:
first, to the Owners of the Class A-1
Certificates, until the Class A-1
Certificate Principal Balance is reduced to
zero; second, to the Owners of the Class A-2
Certificates, until the Class A-2
Certificate Principal Balance is reduced to
zero; third, to the Owners of the Class A-3
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Certificates, until the Class A-3
Certificate Principal Balance is reduced to
zero; fourth, to the Owners of the Class A-4
Certificates, until the Class A-4
Certificate Principal Balance is reduced to
zero; fifth, to the Owners of the Class A-5
Certificates, until the Class A-5
Certificate Principal Balance is reduced to
zero; and, sixth, to the Owners of the Class
A-6 Certificates, until the Class A-6
Certificate Principal Balance is reduced to
zero; provided, however, that if the
Guarantor has defaulted on the Guarantee
then on any Payment Date on which the sum of
(x) the Class B-1F Certificate Principal
Balance and (y) the Group I
Overcollateralization Amount is zero, any
amounts of principal payable to the Owners
of the Class A Certificates related to Group
I on such Payment Date shall be distributed
pro rata and not sequentially;
(B) Second, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates
related to Group I pursuant to clause (A)
above and (y) the Class B-1F Principal
Distribution Amount shall be distributed to
the Owners of the Class B-1F Certificates,
until the Class B-1F Certificate Principal
Balance has been reduced to zero; and,
(C) Third, any portion of the Group I Principal
Remittance Amount remaining after making all
of the distributions in clauses (A) and (B)
above shall be distributed as provided in
subsection (h) of this Section 7.03.
(g) With respect to the Upper-Tier Group II Distribution Account on
each Payment Date, the Trustee shall make the following disbursements from
amounts relating to principal transferred thereto, in the following order of
priority and each such disbursement shall be treated as having occurred only
after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group II Stepdown
Date or (b) on or after the Group II Stepdown Date if
a Group II Trigger Event is in effect, the Owners of
the Class A Certificates related to Group II will be
entitled to receive payment of 100% of the Group II
Principal Distribution Amount as follows: (I) to the
Owners of the Class A-8 Certificates, the Class A-8
Lockout Distribution Amount and (II) to the Owners of
the Class A-7 Certificates until the Class A-7
Certificate Termination Date and then to the Owners
of the Class A-8 Certificates until the Class A-8
Certificate Termination Date.
(ii) Notwithstanding the provisions of Section 7.03(g)(i)
if the Certificate Principal Balance of the Class A-7
Certificates and the Class A-8 Certificates are
reduced to zero and it is prior to the Group II
Stepdown Date or during the continuation of a Group
II Trigger Event, the Owners of the Subordinate
Certificates relating to Group II will be entitled to
receive payment of 100% of the Group II Principal
Distribution Amount as follows:
(a) to the Class M-1A Certificates until
the Class M-1A Certificate
Termination Date;
(b) to the Class M-2A Certificates until
the Class M-2A Certificate
Termination Date; and
(c) to the Class B-1A Certificate; until
the Class B-1A Certificate
Termination Date.
(iii) On each Payment Date (a) on or after the Group II
Stepdown Date and (b) as long as a Group II Trigger
Event is not in effect, the Owners of the Group II
Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts
set forth below and to the extent of the Group II
Principal Distribution Amount as follows:
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(A) First, until the Class A-8 Certificate
Termination Date, the Group II Post Stepdown
Amount shall be distributed as follows: (I)
to the Owners of the Class A-8 Certificates,
the Class A-8 Lockout Distribution Amount
and (II) to the Owners of the Class A-7
Certificates until the Class A-7 Certificate
Termination Date and thereafter to the
Owners of the Class A-8 Certificates until
the Class A-8 Certificate Termination Date;
(B) Second, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the amount distributed to the
Owners of the Class A-7 Certificates and
Class A-8 Certificates in clause (A) above
and (y) the Class M-1A Principal
Distribution Amount shall be distributed to
the Owners of the Class M-1A Certificates,
until the Class M-1A Certificate Principal
Balance has been reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-7 Certificates
and Class A-8 Certificates in clause (A)
above and the amount distributed to the
Owners of the Class M-1A Certificates in
clause (B) above and (y) the Class M-2A
Principal Distribution Amount shall be
distributed to the Owners of the Class M-2A
Certificates, until the Class M-2A
Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-7 Certificates
and Class A-8 Certificates pursuant to
clause (A) above, the amount distributed to
the Owners of the Class M-1A Certificates
pursuant to clause (B) above and the amount
distributed to the Owners of the Class M-2A
Certificates pursuant to clause (C) above
and (y) the Class B-1A Principal
Distribution Amount shall be delivered to
the Owners of the Class B-1A Certificates,
until the Class B- 1A Certificate Principal
Balance has been reduced to zero; and
(E) Fifth, any portion of the Group II Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B),
(C) and (D) above shall be distributed as
provided in subsection (i) of this Section
7.03.
(h) On any Payment Date, the Group I Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund any remaining Class A Interest Carry Forward
Amount with respect to Group I;
(2) to fund the Group I Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class B-1F Interest Carry Forward Amount,
if any;
(4) to fund the Class B-1F Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class C-FIO Interest Carry Forward
Amount, if any;
(6) to the Servicer or the Special Servicer, as
applicable, to the extent of any unreimbursed
Delinquency Advances or Servicing Advances made by it
with respect to Group I, including such Delinquency
Advances and Servicing Advances deemed by the
Servicer or the Special
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Servicer, as applicable, to be nonrecoverable (pro
rata based on the amount of such Delinquency Advances
and Servicing Advances remaining unreimbursed);
(7) to the Special Servicer, first, the Incentive Fee, if
any, and, second, to the extent not paid pursuant to
Section 7.13 hereof from the Special Servicing Fee
Reserve Fund Balance, the Special Servicing Fee, in
each case, with respect to the Specially Serviced
Mortgage Loans in Group I;
(8) to fund any amounts listed in clauses (1) through (9)
of Section 7.03(i) to the extent such amounts have
not been funded in full through the application of
Group II Monthly Excess Cashflow Amounts; and,
(9) as provided in Section 7.03(j) hereof.
(i) On any Payment Date, the Group II Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund any remaining Class A Interest Carry Forward
Amount with respect to Group II;
(2) to fund the Group II Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1A Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1A Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2A Interest Carry Forward Amount,
if any;
(6) to fund the Class M-2A Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1A Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1A Realized Loss Amortization
Amount for such Payment Date;
(9) to fund the Class C-AIO Interest Carry Forward
Amount, if any;
(10) to the Servicer or the Special Servicer, as
applicable, to the extent of any unreimbursed
Delinquency Advances or Servicing Advances made by it
with respect to Group II, including such Delinquency
Advances and Servicing Advances deemed by the
Servicer or the Special Servicer, as applicable, to
be nonrecoverable (pro rata based on the amount of
such Delinquency Advances and Servicing Advances
remaining unreimbursed);
(11) to the Special Servicer, first, the Incentive Fee, if
any, and, second, to the extent not paid pursuant to
Section 7.13 hereof from the Special Servicing Fee
Reserve Fund Balance, the Special Servicing Fee, in
each case, with respect to the Specially Serviced
Mortgage Loans in Group II ;
(12) as provided in Section 7.03(j) hereof.
(j) On any Payment Date, any Group I Monthly Excess Cashflow Amount
remaining after the application of Section 7.03(h)(1)-(8) and any Group II
Monthly Excess Cashflow Amount remaining after the application of Section
7.03(i)(1)-(11) shall be distributed as follows:
(1) the Group II Available Funds Cap Shortfall Amount for
such Payment Date distributed to the Owners of the
related Class or Classes of the Group II
Certificates;
(2) to fund a distribution to Owners of the Class D
Certificates, the lesser of (x) the amount of the sum
of the Group I Monthly Excess Cashflow Amount and the
Group II Monthly Excess
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Cashflow Amount then remaining and (y) the sum of (i)
the Class D Distribution Amount and (ii) the
Overcollateralization Release Amount; provided,
however, that if the Overcollateralization Release
Amount is zero solely due to the existence of a
Subordinated Trigger Event for the related Group,
then the amount which otherwise would constitute the
related Overcollateralization Release Amount shall be
distributed as a reduction of the Certificate
Principal Balance of the Subordinate Certificates as
follows: first, to the Owners of the related Class
B-1 Certificates until the related Class B-1
Certificate Termination Date; second, with respect to
Group II, to the Owners of the Class M-2A
Certificates, until the Class M-2A Certificate
Termination Date; third, with respect to Group II, to
the Owners of the related Class M-1A Certificates
until the Class M-1A Certificate Termination Date;
fourth, to the Special Servicer, any unpaid Special
Servicing Fee or Incentive Fee and fifth, to the
Owners of the Class D Certificates; and
(3) to fund a distribution to the Owners of the Class R
Certificates, the remainder.
(k) On each Payment Date, the Trustee shall allocate the Group I
Applied Realized Loss Amount to reduce the Class B-1F Certificate Principal
Balance to zero.
(l) On each Payment Date, the Trustee shall allocate the Group II
Applied Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group II in the following order of priority:
(i) to the Class B-1A Certificates until the Class B-1A
Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the Class M-2A
Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the Class M-1A
Certificate Principal Balance is reduced to zero.
(m) Notwithstanding the foregoing provisions of this Section 7.03 with
respect to Group I, in the event that the Certificate Principal Balance of the
Guaranteed Certificates have been reduced to zero, all amounts of principal that
would have been distributed to such Guaranteed Certificates will be distributed
to the Class B-1F Certificates. Notwithstanding the foregoing provisions of this
Section 7.03 with respect to Group II, in the event that the Certificate
Principal Balances of the Class A-7 Certificates and the Class A-8 Certificates
have been reduced to zero, all amounts of principal that would have been
distributed to such Class A Certificates will be distributed to the Subordinate
Certificates relating to Group II sequentially in the following order: Class
M-1A, Class M-2A and Class B-1A Certificates, in that order. Similarly, if the
Certificate Principal Balance of the Class M-1A Certificates has been reduced to
zero, all amounts of principal that would have been distributed to such Class
M-1A Certificates will be distributed to the Class M-2A and Class B-1A
Certificates, in that order. Finally, if the Class M-2A Certificate Principal
Balance has been reduced to zero, all amounts of principal that would have been
distributed on such Class M-2A Certificates will be distributed to the Class
B-1A Certificates.
(n) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clauses (f) and (g) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(o) The rights of the Owners to receive distributions from the proceeds
of the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class D Certificates and the Class R Certificates to
receive distributions in respect of the Class D Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class D
Certificates and the Class R Certificates, in and to such distributions, shall
be subject and subordinate to the preferential rights of the Owners of the
Offered Certificates and Class S Certificates to receive distributions thereon
and the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Owners
of the Class D Certificates and the Class R Certificates in amounts deposited in
the Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the Class D Certificates and the Class R
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Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Owners of the Class D
Certificates and the Class R Certificates shall not be required to refund any
amount properly distributed on the Class D Certificates and the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 The Guarantee.
On each Payment Date following receipt of a statement (as set forth in
Section 7.06) that indicates a Deficiency Amount for such Payment Date, the
Guarantor shall distribute a Guarantee Payment in an aggregate amount equal to
the Deficiency Amount for such Payment Date directly to the Guaranteed
Certificateholders, without first depositing such amount in the Certificate
Account, as follows: (i) the portion of any such Deficiency Amount related to
clause (a) of the definition of Deficiency Amount shall be distributed to the
Owners of the Guaranteed Certificates on a pro rata basis based on the Class A
Current Interest payable on such Certificates with respect to such Payment Date;
and (ii) the portion of any such Deficiency Amount related to clause (b) of the
definition of Deficiency Amount shall be distributed in the order provided in
Section 7.03(f).
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the
Code, all or a portion of any Account held by the Trustee for the benefit of the
Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Servicer or the Special
Servicer in the case of the related Principal and Interest Account, in one or
more Eligible Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the Servicer or the
Special Servicer as additional compensation for the performance of their duties
as Servicer and Special Servicer, respectively. Earnings on the Certificate
Account are payable to the Trustee as additional compensation for the
performance of its duties as Trustee. The bank serving as Trustee or any
affiliate thereof may be the obligor, manager or advisor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next Payment
Date unless such investment is an obligation of the Trustee or is a fund for
which the Trustee or any affiliate of the Trustee is a manager or advisor, in
which case such investment may mature not later than the next Payment Date.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest the funds in such Accounts in money market
funds described in Section 7.07(k) to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor in its corporate
capacity thereon).
(c) All income from investments in any Account held by the Trustee
shall be deposited in such Account immediately on receipt (other than the
Principal and Interest Accounts, which income or other gains shall be retained
by the related Servicer and the Certificate Account, which income or other gains
shall be retained by the Trustee), and any loss resulting from such investments
shall be charged to such Account, provided that the related Servicer and the
Trustee shall each contribute funds in an amount equal to such loss in the case
of the Principal and Interest Account and the Certificate Account, respectively.
Section 7.06 The Trustee Remittance Report.
(a) On each Trustee Reporting Date by 12:00 noon New York City time,
the Trustee shall furnish a report (the "Trustee Remittance Report") to the
Guarantor by electronic medium and in writing both as agreed to by the Trustee
and the Guarantor.
(b) Subject to paragraph (e) below, if in any month the Trustee fails
to deliver the Trustee Remittance Report by the close of business on the related
Trustee Reporting Date, the Guarantor shall use its best efforts to determine
the amount of any required Guarantor Payment, if any. If on any Payment Date the
Guarantor makes any Guarantor Payment as a result of such failure of the Trustee
to deliver the Trustee Remittance Report, the Trustee shall pay the Guarantor
from its own funds (not from the proceeds of the Trust), not later than the
fourth day following such Payment Date, an amount equal to the product of (i)
the principal portion of such Guarantor Payment, (ii) a percentage
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equal to (A) the Prime Rate divided by (B) 365 and (iii) the number of days
between the Trustee Reporting Date and the date on which Freddie Mac received
the Trustee Remittance Report.
(c) Subject to paragraph (e) below, if in any month the Trustee fails
to provide the Guarantor the Trustee Remittance Report on or prior to the
Trustee Reporting Date, the Trustee shall pay to the Guarantor the following
amounts: (i) upon the first such failure, $2,500; (ii) upon the second such
failure, $5,000; and (iii) upon the third such failure, $7,500; provided,
however, that the Trustee shall not be required to make any such payment upon
the first such failure during each successive one year period following the
Closing Date. The fourth consecutive such failure to provide a Trustee
Remittance Report to the Guarantor shall constitute an event of default and
permit the Guarantor to remove the Trustee for cause.
(d) Notwithstanding paragraphs (b) and (c) above, if any failure of the
Trustee to deliver the Trustee Remittance Report is caused by the failure of the
Servicer or the Special Servicer to provide the Servicer's Monthly Servicing
Report by the fifth Business Day prior to the related Payment Date, the Servicer
or the Special Servicer, as applicable, shall pay the amounts indicated in
paragraphs (b) and (c), as applicable, to the Guarantor. Further, the Trustee
shall have no responsibility or liability (including removal as Trustee) under
paragraphs (b) and (c) of this Section 7.06 if the Trustee's failure to timely
deliver the Trustee Remittance Report is due to the failure of the Master
Servicer to furnish the Trustee with a complete and accurate Aggregate Monthly
Servicing Report in accordance with Section 8.29(g).
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, Freddie Mac senior debt obligations,
but excluding any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures; provided, that any such
investment shall be rated in one of the two highest ratings categories by each
Rating Agency;
(c) Freddie Mac participation certificates and other Freddie Mac
guaranteed mortgage-backed securities and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch and P-1 by Moody's;
(f) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Fitch) which has
combined capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the FDIC;
(g) Repurchase agreements collateralized by securities described in (a)
or (c) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's, A-1+ or AA, respectively or better by Fitch, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank or (b) a
bank which
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is a member of the FDIC and which has combined capital, surplus and
undivided profits of not less than $125 million, and the Trustee shall
have received written confirmation from such third party that it holds
such securities, free and clear of any lien, as agent for the Trustee,
and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than monthly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(h) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency
having a remaining maturity of not more than 30 days; and
(i) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the Securities
Act and rated Aaa by Moody's and AAA, if rated by Fitch, including any such
funds for which the Trustee or any affiliate of the Trustee acts as manager or
advisor;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) On or before the Business Day preceding each Payment Date, the
Trustee shall notify (subject to the terms of Section 10.03(j) hereof) the
Depositor, the Guarantor and the Seller of the following information with
respect to such Payment Date (which notification may be given by facsimile, or
by telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes of the Class A Certificates in the
aggregate, on the next Payment Date, the Class M-1A Distribution
Amount, the Class M-2A Distribution Amount, the related Class B-1
Distribution Amount, the related Class C-IO Distribution Amount and the
Class S Distribution Amount;
(3) The application of the amounts described in clause (1)
above to the allocation and distribution of the related Class A
Distribution Amount, the Class M-1A Distribution Amount, the Class M-2A
Distribution Amount, the related Class B-1 Distribution Amount and the
Class C-IO Distribution Amount, on such Payment Date in accordance with
Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the
Offered Certificates, the Notional Principal Amount for each Class of
Class C-IO Certificates the aggregate amount of the principal of each
Class of the Offered Certificates to be paid on such Payment Date and
the remaining Certificate Principal Balance of each Class of the
Offered Certificates (or the Notional Principal Amount for each Class
of C-IO Certificates) following any such payment;
(5) The amount, if any, of Realized Losses relating to each
Group for the related Collection Period and the amount of Cumulative
Realized Losses relating to each Group as of the last day of the
related Collection Period;
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(6) The amount of the Class D Distribution Amount;
(7) The amount of 60+ Day Delinquent Loans relating to each
Group; and
(8) Any Deficiency Amount.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor (which report shall be made available in electronic format), each
Owner, the Master Servicer, the Guarantor, the Underwriters and their designees
(designated in writing to the Trustee) and the Rating Agencies:
(i) the amount of the distribution with respect to the
related Class of the Certificates (based on a Certificate in the
original principal amount of $1,000);
(ii) (a) the amount of such distribution allocable to
scheduled principal on the Mortgage Loans in each Mortgage Loan Group
and in the aggregate, separately identifying the aggregate amount of
any Prepayments, repurchases or Liquidation Proceeds and (b) with
respect to each Mortgage Loan Group (based on a Certificate in the
original principal amount of $1,000);
(iii) the amount of such distribution allocable to interest on
the Mortgage Loans in each Mortgage Loan Group (based on a Certificate
in the original principal amount of $1,000);
(iv) the Interest Carry-Forward Amount for each Class;
(v) the principal amount (or notional principal amount) of
each Class of Certificates (based on a Certificate in the original
principal amount of $1,000) which will be Outstanding and the aggregate
Loan Balance of each Mortgage Loan Group and in the aggregate, in each
case after giving effect to any payment of principal on such Payment
Date;
(vi) the aggregate Loan Balance of the Mortgage Loans in each
Mortgage Loan Group and in total, in each case, after giving effect to
any payment of principal on such Payment Date;
(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Mortgage Loan Group and in the aggregate;
(viii) the weighted average Coupon Rate and the weighted
average remaining term to maturity of the Mortgage Loans with respect
to each Mortgage Loan Group and in the aggregate, calculated both as of
the first and last day of the related Collection Period;
(ix) the Servicing Fees, the Master Servicing Fees and
Trustee Fees allocable to each Mortgage Loan Group, and in the
aggregate;
(x) the amount of any Group I Extra Principal Distribution
Amount or any Group II Extra Principal Distribution Amount;
(xi) the Group I Senior Enhancement Percentage and the Group
II Senior Enhancement Percentage and whether a Group I Trigger Event or
Group II Trigger Event has occurred as shown by the percentage of 60+
Day Delinquent Loans;
(xii) the Group I Overcollateralization Amount, the Group II
Overcollateralization Amount, and the Certificate Principal Balance of
each Class of the Offered Certificates then outstanding after giving
effect to any payment of principal on such Payment Date;
(xiii) the amount of any Group I or Group II Applied Realized
Loss Amount and the Unpaid Realized Loss Amount for each Class of
Subordinated Certificates as of the close of such Payment Date; and
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(xiv) the amount of any Guarantor Payments.
The Master Servicer shall provide to the Trustee the information
required by Section 8.29(g) with respect to the Mortgage Loans to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vi), (viii), (x), (xi), (xii) and (xiii) above shall be based solely upon
information contained in the Aggregate Monthly Servicing Report provided by the
Master Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, the Guarantor, each Owner, the Master Servicer, the Underwriters
and the Rating Agencies, together with the information described in Section
7.09(a), the following information with respect to each Mortgage Loan Group
which information shall be in hard copy or tape format prepared by the Master
Servicer (other than the information in clause (i)) and furnished to the Trustee
to the extent provided for in Section 8.29(g) for such purpose on the Reporting
Date:
(i) the number and aggregate principal balances of
Mortgage Loans in each Mortgage Loan Group and in the aggregate (a)
30-59 days Delinquent, (b) 60-89 days Delinquent, and (c) 90 or more
days Delinquent (inclusive of foreclosures, REO Properties and
bankruptcies), as of the close of business on the last Business Day of
the related Collection Period;
(ii) the number and aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and in the aggregate as of
the last day of the related Collection Period;
(iii) the number and dollar amounts of all Mortgage Loans
in each Mortgage Loan Group and in the aggregate in foreclosure
proceedings as of the close of business on the last day of the prior
Collection Period;
(iv) the number of Mortgagors and the Loan Balances of
the related Mortgage Loans in each Mortgage Loan Group and in the
aggregate involved in bankruptcy proceedings as of the close of
business on the last day of the prior Collection Period;
(v) the number and aggregate principal balance of
Mortgage Loans in each Mortgage Loan Group and in the aggregate related
to REO Properties and, to the extent reported by the Servicer and the
Special Servicer, the aggregate book value of the Mortgage Loans
related to REO Properties (as of the last day such value was
determined);
(vi) the total of any Substitution Amounts and any Loan
Purchase Price amounts with respect to each Mortgage Loan Group and in
the aggregate;
(vii) the amount of Cumulative Realized Losses for each
Mortgage Loan Group and in the aggregate, the current period Realized
Losses and the Cumulative Loss Percentage for such Mortgage Loan Group
and in the aggregate, in each case as of the last day of the prior
Collection Period;
(viii) the aggregate Loan Balance of 60+ Day Delinquent
Loans with respect to each Mortgage Loan Group as of the last day of
the prior Collection Period; and
(ix) the 90+ Delinquency Percentage (Rolling Three
Month) for each Mortgage Loan Group.
Within a reasonable time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was an Owner of a Certificate, if requested in writing by such person, a
statement containing the information described in clauses (ii) and (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was an Owner. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information has been
prepared and furnished by the Trustee to Owners pursuant to any requirements of
the Code as in effect from time to time.
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(c) The Servicer and the Special Servicer shall each furnish to the
Master Servicer, the Guarantor and the Trustee, during the term of this
Agreement, such periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans serviced by it,
as may be necessary, reasonable, or appropriate with respect to the purposes of
this Agreement, all such reports or information to be provided by and in
accordance with such applicable instructions and directions as the Master
Servicer and the Trustee may reasonably require; provided, that the Servicer and
the Special Servicer shall be entitled to be reimbursed by the requesting party,
for the fees and actual expenses associated with providing such reports, if such
reports are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
The Trustee shall provide monthly bank statements to the Depositor, the
Seller, the Guarantor, the Underwriters and each Owner, with respect to the
amount on deposit in the Certificate Account and the identity of the investments
included therein, as the Depositor, the Guarantor or the Seller may from time to
time request. Without limiting the generality of the foregoing, the Trustee
shall, at the request of the Depositor, the Guarantor or the Seller, transmit
promptly to the Depositor, the Guarantor and the Seller copies of all
accountings of receipts in respect of the Mortgage Loans furnished to it by the
Servicer, the Special Servicer or the Master Servicer and shall notify the
Seller, the Master Servicer, the Special Servicer, the Guarantor and the
Servicer if any Monthly Remittance Amount has not been received by the Trustee
when due.
Section 7.11 Special Servicing Fee Reserve Fund.
(a) The Owners of the Class S Certificates and the Class C-IO
Certificates, by acceptance of their Certificates, hereby pledge their interest
in the Special Servicing Fee Reserve Fund to secure the payment of the Special
Servicing Fee. This obligation shall be non-recourse to such Owners and shall be
limited to the Special Servicing Fee Reserve Fund Balance from time to time.
Payment from the Special Servicing Fee Reserve Fund shall be made as provided in
Section 7.13 hereof.
(b) The Owners of the Class S Certificates and the Class C-IO
Certificates, by acceptance of their Certificates hereby (i) instruct the
Trustee to establish an Account entitled "AMRESCO 1998-3 Special Servicing Fee
Reserve Fund" to be held in trust for the benefit of the Special Servicer and
the Owners of Class S Certificates and Class C-IO Certificates, (ii) acknowledge
that the Special Servicing Fee Reserve Fund and all amounts on deposit therein
are owned by them, and (iii) agree to treat the same as their assets and
earnings for federal income tax and all other purposes. The Special Servicing
Fee Reserve Fund is not owned by either the Lower-Tier REMIC or the Upper-Tier
REMIC and is an "outside reserve fund" within the meaning of Treasury Regulation
ss. 1.860G-2(h). For all Federal tax purposes, amounts transferred from the
Upper-Tier REMIC to the Special Servicer Reserve Fund are treated as amounts
distributed by the Upper-Tier REMIC to the designated Owners or transferees of
the designated Owners.
(c) Following payment of the Special Servicing Fee in full, all amounts
on deposit in the Special Servicing Fee Reserve Fund shall be distributed by the
Trustee to the Owners of the Class S Certificates and the Class C-IO
Certificates as provided in Section 7.13.
Section 7.12 Pledge of Special Servicing Fee Reserve Fund.
(a) In order to assure the availability of the amounts maintained in
the Special Servicing Fee Reserve Fund, the Owners of the Class S Certificates
and Class C-IO Certificates by acceptance of their respective Certificates
hereby pledge to the Trustee, and its successors and assigns, all amounts
deposited in or credited to the Special Servicing Fee Reserve Fund from time to
time pursuant to Section 7.03 as provided in this Agreement (all the foregoing,
subject to the limitations set forth below, the "Special Servicing Fee Reserve
Fund Property"), to have and to hold all the aforesaid property, rights and
privileges unto the Trustee, its successors and assigns, in trust for the uses
and purposes, and subject to the terms and provisions, set forth in this
Section. The Trustee hereby acknowledges such transfer and accepts the trusts
hereunder and shall hold and distribute the Special Servicing Fee Reserve Fund
Property in accordance with the term and provisions of this Section and the
Agreement.
(b) Consistent with the limited purposes for which such pledge is
granted, the amounts on deposit in the Special Servicing Fee Reserve Fund on
each Payment Date shall be available for distribution as provided in Section
7.13.
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Section 7.13 Payments From Special Servicing Fee Reserve Fund.
(a) Within five Business Days after each Servicing Report Delivery
Date, the Master Servicer shall determine, based on the Servicer's Monthly
Servicing Report prepared by the Special Servicer the amount of the Special
Servicing Fee for the related Payment Date.
(b) On each Payment Date, after making all of the allocations and
payments required by Section 7.03, the Trustee shall distribute from the portion
of the Special Servicing Fee Reserve Fund Balance on such Payment Date that was
a distribution on the Class S Certificates pursuant to Section 7.03(a)(iv) and
7.03(b)(iv), first, to the Special Servicer an amount equal to but not to exceed
the Special Servicing Fee for such Payment Date allocating such payments to
Group I and Group II, pro rata, based on the respective Special Servicing Fee
payable for Group I and Group II, and second, to the Owners of the Class S
Certificates, the remainder.
(c) On each Payment Date, after making the payments required by Section
7.13(b) the Trustee shall distribute the portion of the Special Servicing Fee
Reserve Fund Balance that was a distribution on the Class C-FIO Certificates
pursuant to Section 7.03(c)(v), first, to the Special Servicer an amount equal
to the difference, if any, between (x) the portion of the Special Servicing Fee
for such Payment Date relating to Specially Serviced Mortgage Loans in Group I
and (y) the amount paid to the Special Servicer pursuant to Section 7.13(b) on
such Payment Date and second, to the Owners of the Class C-FIO Certificates, the
remainder.
(d) On each Payment Date, after making the payments required by Section
7.13(b) and allocating such payments to Group I and Group II, pro rata, as
described therein, the Trustee shall distribute the portion of the Special
Servicing Fee Reserve Fund Balance that was a distribution on the Class C-AIO
Certificates pursuant to Section 7.03(d)(vi), first, to the Special Servicer an
amount equal to the difference, if any, between (x) the portion of the Special
Servicing Fee for such Payment Date relating to Specially Serviced Mortgage
Loans in Group II and (y) the amount paid to the Special Servicer pursuant to
Section 7.13(b) by such Payment Date and second, to the Owners of the Class
C-AIO Certificates, the remainder.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicer and Subservicers. (a) Acting directly or through
one or more subservicers as provided in Section 8.03, the Servicer and the
Special Servicer, as applicable, shall service and administer the Mortgage Loans
as described below and with reasonable care, and using that degree of skill and
attention that the Servicer or the Special Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. In performing such servicing functions the Servicer and
the Special Servicer shall (i) take into account the mortgagor non-conforming
credit quality of the Mortgage Loans, (ii) follow the policies and procedures
that it would apply to similar loans held for its own account, unless such
policies and procedures are not generally in accordance with standard industry
practices, in which case the Servicer and the Special Servicer shall service the
loans generally in accordance with standard industry practices applicable to
servicing similar loans, (iii) comply with all applicable laws and follow
collection practices with respect to the related Mortgage Loans that are in all
material respects legal, proper and prudent, and (iv) subject to its obligation
to comply with clauses (i), (ii) and (iii) will not materially change its
collection and servicing practices that are in existence as of the Startup Day
without the consent of the Seller and the Guarantor (such consent not to be
unreasonably withheld).
(b) The duties of the Servicer and the Special Servicer shall include
the collecting and posting of all payments, responding to inquiries of
Mortgagors or by federal, state or local government authorities with respect to
the Mortgage Loans, investigating delinquencies, reporting tax information to
Mortgagors in accordance with its customary practices and accounting for
collections, furnishing monthly statements to the Trustee, the Master Servicer,
the Guarantor and the Seller with respect to remittances on the Mortgage Loans,
advising the Trustee, the Master Servicer, the Guarantor and the Seller of the
amount of Compensating Interest and Delinquency Advances due as of any Monthly
Remittance Date with respect to the Mortgage Loans serviced by it and funding
such Compensating Interest and Delinquency Advances, to the extent set forth in
this Agreement. The Servicer and the Special Servicer shall reasonably cooperate
with the Trustee and the Master Servicer to assist in the performance of their
duties hereunder. The Servicer, the Special Servicer, the Guarantor and the
Master Servicer shall furnish upon reasonable request to the Trustee with
reasonable promptness information in its possession as may be necessary or
appropriate to enable the Trustee to perform its tax reporting duties hereunder.
(c) The Seller and the Depositor intend that the Lower-Tier REMIC and
the Upper-Tier REMIC shall constitute and that the affairs of each such REMIC be
conducted so as to qualify it as a REMIC. In furtherance of such intention, the
Servicer and the Special Servicer each covenants and agrees that it shall not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any REMIC in the Trust or that
would subject any REMIC in the Trust to tax.
(d) The Servicer or the Special Servicer may, and each is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Mortgage Loans through a subservicer as it may from time to
time designate in accordance with Section 8.03 but no such designation of a
subservicer shall serve to release the Servicer or Special Servicer from any of
its obligations under this Agreement. Such subservicer shall have all the rights
and powers of the Servicer or Special Servicer, as the case may be, with respect
to such Mortgage Loans under this Agreement.
(e) Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer or the Special Servicer in its own name or
in the name of a subservicer is hereby authorized and empowered and this
subsection shall constitute a power of attorney to carry out its servicing and
administrative duties hereunder, on behalf of itself, the Owners and the Trust
or any of them; to institute foreclosure proceedings or obtain a deed in lieu of
foreclosure so as to effect ownership of any Property on behalf of the Trust and
to hold title to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Trust; provided, however, that Section 8.14(a) and
(c) shall constitute a power of attorney from the Trustee to the Servicer and
the Special Servicer with respect to the matters described therein and in
accordance with the terms thereof. Subject to Sections 8.13 and 8.14, the
Trustee shall furnish the Servicer, the Special Servicer or any Subservicer with
any additional powers of attorney and other documents as the Servicer or Special
Servicer shall reasonably request to enable the Servicer or the Special Servicer
or any Subservicer thereof to carry out its respective servicing and
administrative duties hereunder.
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(f) The Servicer and the Special Servicer shall give prompt notice to
the Trustee, the Guarantor and the Seller of any action of which a responsible
officer of such party has actual knowledge, seeking to (i) assert a claim
against the Trust or (ii) assert control over the Trust or any portion of the
Trust Estate.
(g) Servicing Advances incurred by the Servicer or the Special Servicer
in connection with the servicing of the Mortgage Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by such party to the extent described in
Section 8.09 and in Section 7.03(j) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a) The
Servicer and the Special Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any applicable
Insurance Policies, follow such collection procedures as it follows from time to
time with respect to mortgage loans in its servicing portfolio that are
comparable to the Mortgage Loans; provided that the Servicer and the Special
Servicer shall always at least follow collection procedures that are consistent
with Section 8.01(a) hereof. Consistent with the foregoing, the Servicer and the
Special Servicer may, respectively, in its discretion (i) waive any assumption
fees, late payment charges, charges for checks returned for insufficient funds
or other fees which may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with such party's general policies with respect
to comparable mortgage loans subject to such Act. Neither the Servicer nor the
Special Servicer shall be required to institute or join in litigation with
respect to collection of any payment (whether under a Mortgage, Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law. Consistent with the terms of this Agreement,
the Servicer or the Special Servicer may waive, modify or vary any term of any
Mortgage Loan or consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor; provided, however, that
(unless the Mortgagor is in default with respect to the Mortgage Loan, or such
default is, in the judgment of the Servicer or the Special Servicer, imminent
and the Servicer or the Special Servicer has the consent of the Seller) the
Servicer or the Special Servicer may not permit any modification that would
constitute a significant modification under Treasury Regulation ss. 1.1001-3 and
with respect to any Mortgage Loan that would change the Coupon Rate (except for
any change made pursuant to the adjustment provisions of a Note evidencing an
adjustable rate Mortgage Loan), forgive the payment of any principal or interest
or prepayment penalties (unless the Servicer or the Special Servicer with the
written consent of the Seller believes that forgiving such prepayment penalties
will result in a financial benefit to the Trust), change the outstanding
principal amount, require any future advances, provide for the substitution or
release of any material portion of the collateral or extend the final maturity
date on such Mortgage Loan; provided further that no such indulgence shall
affect the Servicer's or the Special Servicer's obligation to make Delinquency
Advances pursuant to Section 8.09.
(b) The Servicer and the Special Servicer shall deposit into the
related Principal and Interest Account in accordance with Section 8.08(a) all
Prepaid Installments received by it, and shall apply such Prepaid Installments
as directed by such Mortgagor and as set forth in the related Note.
Section 8.03 Subservicing Agreements. The Servicer or the Special
Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is acceptable to the
Owners of a majority of the Percentage Interests of the Class R Certificates, as
indicated in writing, and which represents and warrants that it is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement; provided, that the Guarantor shall have
consented (such consent not to be unreasonably withheld) to any subservicer
appointed hereunder. For this purpose, subservicing shall not be deemed to
include the use of a tax service, or services for reconveyance, insurance or
brokering REO Property. The Servicer or the Special Servicer shall give prior
notice to the Seller, the Master Servicer, the Guarantor and the Trustee of the
appointment of any Subservicer and shall furnish to the Seller a copy of such
Subservicing Agreement. For purposes of this Agreement, the Servicer or the
Special Servicer shall be deemed to have received payments on Mortgage Loans
when any Subservicer has received such payments. Any such Subservicing Agreement
shall be consistent with and not violate the provisions of this Agreement. Each
Subservicing Agreement shall provide that a successor Servicer or successor
Special Servicer shall have the option to terminate such agreement without
payment of any fees if the predecessor Servicer or predecessor Special Servicer
is terminated or resigns. The Guarantor shall have the right to terminate any
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subservicer that, having previously been an approved Freddie Mac
Seller/Servicer, no longer has such approval. It is understood that as of the
Startup Day, Wendover Financial Services Corporation ("Wendover") is acting as
Subservicer on behalf of the Servicer pursuant to the Subservicing Agreement
dated as of October 1, 1997 between the Servicer and Wendover and the Servicer
is acting as Subservicer on behalf of the Special Servicer pursuant to the
Subservicing Agreement dated September 29, 1998 between the Servicer and the
Special Servicer.
Section 8.04 Successor Subservicer. The Servicer or the Special
Servicer may terminate any Subservicing Agreement to which it is a party in
accordance with the terms and conditions of such Subservicing Agreement and
either itself directly service the related Mortgage Loans or enter into a
Subservicing Agreement with a successor Subservicer that qualifies under Section
8.03.
Section 8.05 Liability of Servicer and Special Servicer. The Servicer
and the Special Servicer shall not be relieved of their respective obligations
under this Agreement notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer or Special Servicer and a Subservicer or otherwise, and the Servicer
and the Special Servicer shall be obligated to the same extent and under the
same terms and conditions as if it alone were servicing and administering the
Mortgage Loans as such terms and conditions may be limited pursuant to the terms
of this Agreement. The Servicer and the Special Servicer shall be entitled to
enter into any agreement with a Subservicer for indemnification of the Servicer
and the Special Servicer by such Subservicer and nothing contained in such
Subservicing Agreement shall be deemed to limit or modify this Agreement. The
Trust shall not indemnify the Servicer or the Special Servicer for any losses
due to any Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and the
Trustee or the Owners. Any Subservicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Subservicer shall be deemed
to be between the Subservicer and the Servicer or the Special Servicer alone and
the Trustee and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Subservicer except as set forth in Section 8.07 hereof or in the related
Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer or the
Special Servicer hereunder by the Trustee pursuant to Section 8.20, it is
understood and agreed that the Servicer's or the Special Servicer's rights and
obligations under any Subservicing Agreement then in force between the Servicer
or the Special Servicer and a Subservicer may be assumed or terminated by the
Trustee at its option. The Servicer or the Special Servicer shall, upon request
of the Trustee, but at the expense of the Servicer or the Special Servicer,
deliver to the assuming party documents and records relating to each
Subservicing Agreement and an accounting of amounts collected and held by the
Servicer or the Special Servicer and otherwise use its best reasonable efforts
to effect the orderly and efficient transfer of the Subservicing Agreement to
the assuming party.
Section 8.08 Principal and Interest Accounts; Escrow Accounts. (a) The
Servicer and the Special Servicer shall each establish in its name on behalf of
the Trustee for the benefit of the Owners of the Certificates and maintain or
cause to be maintained at a Designated Depository Institution a Principal and
Interest Account to be held as a trust account. The Principal and Interest
Accounts shall be identified on the records of the Designated Depository
Institution as follows: [Name of Servicer or Special Servicer] on behalf of
Norwest Bank Minnesota, National Association, as Trustee under the Pooling and
Servicing Agreement relating to the AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1998-3 dated as of September 1, 1998. If the institution at
any time holding a Principal and Interest Account ceases to be eligible as a
Designated Depository Institution hereunder, then the Servicer or the Special
Servicer shall, within 15 days, be required to name a successor institution
meeting the requirements for a Designated Depository Institution hereunder. If
such party fails to name such a successor institution, then the Trustee shall
cause such Account to be held as a trust account with a qualifying Designated
Depository Institution. The Servicer or the Special Servicer shall notify the
Trustee, the Seller and the Depositor if there is a change in the name, account
number or institution holding a Principal and Interest Account. Subject to
Subsection (c) below, the Servicer and the Special Servicer shall deposit all
receipts related to the Mortgage Loans into the related Principal and Interest
Accounts on a daily basis (but no later than the second Business Day after
receipt).
(b) All funds in the Principal and Interest Accounts may only be held
(i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments as selected by the Servicer and the Special Servicer, as
applicable. The Principal and Interest Accounts shall be held in trust in the
name of the Trustee for the benefit of the Owners of the
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Certificates (other than the earnings thereon which shall be retained by the
Servicer and the Special Servicer). Any investments of funds in the Principal
and Interest Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Monthly Remittance Date. Any investment earnings on funds
held in a Principal and Interest Account shall be for the account of the
Servicer or the Special Servicer, as applicable, and may only be withdrawn from
the Principal and Interest Account by such party immediately following the
remittance of the Monthly Remittance Amount (and the Monthly Excess Interest
Amount included therein) by such party. Any investment losses on funds held in
the Principal and Interest Account shall be for the account of the Servicer or
the Special Servicer, as applicable, and promptly upon the realization of such
loss shall be contributed by the Servicer or the Special Servicer, as
applicable, to the related Principal and Interest Account. Any references herein
to amounts on deposit in the related Principal and Interest Account shall refer
to amounts net of such investment earnings.
(c) Subject to Sections 8.09 and 8.10, the Servicer and the Special
Servicer shall deposit on a daily basis (except as described below), and in any
case not later than two Business Days following receipt, to the related
Principal and Interest Account all scheduled principal and interest payments on
the Mortgage Loans serviced by it due after the Cut-Off Date, and all
unscheduled principal and interest collections received after the Cut-Off Date,
including any Prepayments and Net Liquidation Proceeds, all Loan Purchase Prices
and Substitution Amounts received by the Servicer or the Special Servicer with
respect to the Mortgage Loans, other recoveries or amounts related to the
Mortgage Loans received by the Servicer or the Special Servicer after the
Cut-Off Date, Compensating Interest (which shall be deposited into the
Certificate Account on or prior to each Monthly Remittance Date) and Delinquency
Advances (which shall be deposited no later than the related Monthly Remittance
Date) but net of (i) the Servicing Fee with respect to each Mortgage Loan and
other servicing compensation to the Servicer or the Special Servicer as
permitted by Section 8.15 hereof, (ii) principal retained by the Depositor
(including Prepayments) and due on the related Mortgage Loans on or prior to the
Cut-Off Date, (iii) interest retained by the Depositor and accruing on the
related Mortgage Loans on or prior to the Cut-Off Date, and (iv) reimbursements
for unreimbursed and nonrecoverable Delinquency Advances and Servicing Advances
pursuant to Section 8.09.
(d) The Servicer and the Special Servicer may each make withdrawals
from the related Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the
Monthly Remittance Amount due on each Monthly
Remittance Date and to effect the timely remittance
to the Trustee on each Monthly Remittance Date of any
Compensating Interest;
(B) to reimburse itself pursuant to Section 8.09 hereof
for unreimbursed Delinquency Advances and Servicing
Advances and unrecovered Delinquency Advances and
Servicing Advances determined by it to be
nonrecoverable;
(C) to withdraw investment earnings on amounts on deposit
in its Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the
related Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25 and
Section 8.29(f); and
(F) to clear and terminate the related Principal and
Interest Accounts following the termination of the
Trust Estate pursuant to Article IX hereof.
(e) On each Monthly Remittance Date, the Servicer and the Special
Servicer shall remit to the Trustee by wire transfer in immediately available
funds from the related Principal and Interest Account for deposit to the
Certificate Account, the portion of the Monthly Remittance Amount calculated by
the Master Servicer pursuant to Section 8.29(f) hereof remaining after the
withdrawals permitted by clauses (B)-(E) of Section 8.08(d) related to the
Mortgage Loans serviced by the Servicer or the Special Servicer for such Monthly
Remittance Date.
(f) The Servicer and the Special Servicer shall establish and maintain
one or more custodial accounts (each, an "Escrow Account") and deposit and
retain therein all collections from the Mortgagors, if any, received with
respect to the Mortgage Loans, or advances by the Servicer or the Special
Servicer, for the payment of taxes, assessments, hazard insurance premiums and
primary mortgage insurance policy premiums or comparable items for the
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account of the Mortgagors. Nothing herein shall require the Servicer or the
Special Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or primary mortgage insurance policy premiums, condominium or PUD
association dues, or comparable items, to reimburse the Servicer or the Special
Servicer, to refund to any Mortgagors any sums as may be determined to be
overages, to pay interest, if required, to Mortgagors on balances in the Escrow
Account or to clear and terminate the Escrow Account at the termination of this
Agreement. As part of its servicing duties, the Servicer and the Special
Servicer shall be required to pay to the Mortgagors interest on funds in the
Escrow Account, to the extent required by law.
The Servicer and the Special Servicer shall advance the payments (to be
treated as Servicing Advances) referred to in the preceding paragraph that are
not timely paid by the Mortgagors, including tax penalties, if any; provided,
however, that the Servicer and the Special Servicer shall be required to so
advance only to the extent that such advances, in the good faith business
judgment of the Servicer or the Special Servicer, will be recoverable by the
Servicer or the Special Servicer out of Insurance Proceeds, Liquidation Proceeds
or otherwise from the related Mortgage Loan. Notwithstanding the previous
sentence, the Servicer and the Special Servicer shall be entitled to be
reimbursed as provided in Section 8.09(b) hereof with respect to any Servicing
Advances deemed to be nonrecoverable.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) Each of the Servicer and the Special Servicer is required, not
later than each Monthly Remittance Date, to deposit into the related Principal
and Interest Account an amount equal to the sum of the interest (net of the
Servicing Fee) and scheduled principal due (except any Balloon Payment), but not
collected during the related Remittance Period, with respect to those Delinquent
Mortgage Loans that it serviced during such Remittance Period but only if, in
its good faith business judgment, the Servicer or the Special Servicer
reasonably believes that such amount will ultimately be recovered from the
related Mortgage Loan. With respect to each Balloon Loan, the Servicer and the
Special Servicer shall be required to advance an amount of principal and
interest on an assumed schedule based on the original principal amortization for
the related Balloon Loan (but only if, in its good faith business judgment, the
Servicer or the Special Servicer reasonably believes that such amount will
ultimately be recovered from the related Mortgage Loan). Any determination of
nonrecoverability shall be explained in a notice provided by the Servicer or the
Special Servicer to the Trustee, the Master Servicer, the Guarantor and the
Seller. Such amounts are "Delinquency Advances". The Servicer and the Special
Servicer shall be permitted to fund its payment of Delinquency Advances from its
own funds or from funds on deposit in the related Principal and Interest Account
that are not required to be distributed on the related Payment Date. To the
extent the Servicer or the Special Servicer uses funds not required for
distribution on a Payment Date to make Delinquency Advances with respect to such
Payment Date, it shall deposit into the related Principal and Interest Account
such amount prior to the next succeeding Monthly Remittance Date. The Servicer
and the Special Servicer shall be entitled to reimbursement for Delinquency
Advances from late collections, Liquidation Proceeds or otherwise with respect
to collections on the Mortgage Loan (including Balloon Loans) with respect to
which such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that the Servicer or the
Special Servicer determines that the aggregate unreimbursed Delinquency Advances
exceed the expected Liquidation Proceeds on a Mortgage Loan, neither the
Servicer nor the Special Servicer shall be required to make any future
Delinquency Advances with respect to that Mortgage Loan, and shall be entitled
to reimbursement for such aggregate unreimbursed Delinquency Advances from
amounts in the related Principal and Interest Account. The Servicer or the
Special Servicer, as applicable, shall give written notice of such determination
of nonrecoverability to the Trustee, the Master Servicer, the Guarantor and the
Seller, and the Trustee shall promptly furnish a copy of such notice to the
Owner of a majority of the Percentage Interests of the Class R Certificates;
provided, that the Servicer or the Special Servicer, as applicable, shall be
entitled to recover any unreimbursed Delinquency Advances from the aforesaid
Liquidation Proceeds prior to the payment of the Liquidation Proceeds to any
other party to this Agreement.
(b) The Servicer and the Special Servicer will each pay all customary,
reasonable and necessary "out-of-pocket" costs and expenses incurred in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) Preservation Expenses, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of REO Property,
(iv) the escrow expenditures required pursuant to Section 8.08(f) hereof (but
the Servicer and the Special Servicer are only required to pay such costs and
expenses to the extent the Servicer
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or the Special Servicer reasonably believes that such amounts will ultimately be
recovered from the related Mortgage Loan) and (v) fees and expenses for opinions
of counsel pursuant to Section 8.13. Each such amount so paid will constitute a
"Servicing Advance". The Servicer and the Special Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage Loans,
(y) from Liquidation Proceeds realized upon the liquidation of the related
Mortgage Loan, and (z) as provided in Section 7.03(j) hereof. Except as provided
in the previous sentence, and in Sections 7.03(j) and 8.13, in no case may the
Servicer or the Special Servicer recover Servicing Advances from principal and
interest payments on any Mortgage Loan or from any amounts relating to any other
Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans. (a) On
or prior to each Monthly Remittance Date and with respect to Mortgage Loans
serviced by it, the Servicer and the Special Servicer shall deposit into the
related Principal and Interest Account with respect to any full Prepayment made
by the Mortgagor during the preceding Remittance Period, an amount equal to the
excess, if any, of (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period over (y) to the extent not previously
advanced, the interest paid by the Mortgagor with respect to the Mortgage Loan
for the related Remittance Period (any such amount, "Compensating Interest"),
which amount shall be included in the Monthly Remittance Amount to be made
available to the Trustee on each Monthly Remittance Date.
(b) The Special Servicer with respect to Specially Serviced Mortgage
Loans may, but is not obligated to, purchase for its own account (or, during the
two year period beginning on the Startup Day, substitute a Qualified Replacement
Mortgage for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which
enforcement proceedings have been brought by the Special Servicer pursuant to
Section 8.13. Any such Mortgage Loan so purchased shall be purchased by the
Special Servicer on a Monthly Remittance Date at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be deposited in the
related Principal and Interest Account.
Section 8.11 Maintenance of Insurance. (a) The Servicer and the Special
Servicer shall cause to be maintained with respect to each Mortgage Loan
serviced by it a hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage, and which provides for a recovery
by the Servicer or the Special Servicer on behalf of the Trust of insurance
proceeds relating to such Mortgage Loan in an amount not less than the least of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the minimum
amount required to compensate for damage or loss on a replacement cost basis and
(iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is located in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, as identified to the Servicer and the
Special Servicer by the Originator in the related Mortgage Loan Schedule, and
flood insurance has been made available, the Servicer or the Special Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Servicer or the Special
Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage
Loan of not less than the least of (i) the outstanding principal balance of the
Mortgage Loan, (ii) the minimum amount required to compensate for damage or loss
on a replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973.
(c) In the event that the Servicer of the Special Servicer shall obtain
and maintain a blanket policy insuring against fire, flood and hazards of
extended coverage on all the Mortgage Loans, then, to the extent such policy
names the Servicer or the Special Servicer as loss payee and provides coverage
in an amount equal to the aggregate unpaid principal balance on the Mortgage
Loans without co-insurance and otherwise complies with the requirements of this
Section 8.11, the Servicer or the Special Servicer shall be deemed conclusively
to have satisfied its obligations with respect to fire and hazard insurance
coverage under this Section 8.11, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case the Servicer or
the Special Servicer shall, in the event that there shall not have been
maintained on the related Property a policy complying with the preceding
paragraphs of this Section 8.11, and there shall have been a loss which would
have been covered by such policy, deposit in the related Principal and Interest
Account from the Servicer's or the Special Servicer's own funds the difference,
if any, between the amount that would have been payable under a policy complying
with the preceding paragraphs of this Section 8.11 and the amount paid under
such blanket policy. Upon the request of the Trustee, the Guarantor or the
Master Servicer, the Servicer or the Special Servicer shall cause to be
delivered an Officer's Certificate to the Trustee and the Master Servicer to the
effect that the Servicer or the Special Servicer maintains such policy.
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(d) The Servicer or the Special Servicer also shall maintain on related
REO Property, fire and hazard insurance with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property, liability insurance and, to the extent required and available under
the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act
of 1973, as amended, flood insurance in an amount as provided above.
(e) If the Servicer or the Special Servicer shall fail to maintain or
cause to be maintained any insurance required by this Section 8.11, and there
shall have been a loss which would have been covered by such policy, the
Servicer or the Special Servicer shall deposit in the related Principal and
Interest Account from the Servicer's or the Special Servicer's own funds the
amount, if any, that would have been payable under a policy complying with the
preceding paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the Servicer or the Special Servicer shall, to the extent a
responsible officer thereof has actual knowledge of such conveyance or
prospective conveyance, exercise the rights of the Trust to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Note; provided, however, that neither the Servicer
nor the Special Servicer shall exercise any such right if the "due-on-sale"
clause, in the reasonable belief of the Servicer or the Special Servicer, is not
enforceable under applicable law or if the Servicer or the Special Servicer
reasonably believes in good faith it is not in the best interests of the Trust.
In such event, the Servicer or the Special Servicer is authorized to enter into
an assumption and modification agreement with the Person to whom such Property
has been or is about to be conveyed, pursuant to which such Person becomes
liable under the Note and, unless prohibited by applicable law or the Mortgage
Documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer or the Special Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent that any such substitution of liability agreement
would not otherwise have been delivered by the Servicer or the Special Servicer
in its usual procedures for mortgage loans held in its own portfolio, the
Servicer or the Special Servicer shall prior to executing and delivering such
agreement, obtain the prior written consent of the Seller. The Trustee shall
execute any agreements required to effectuate the foregoing. The Mortgage Loan,
as assumed, shall conform in all respects to the requirements, representations
and warranties of this Agreement. The Servicer or the Special Servicer of such
Mortgage Loan shall notify the Trustee and the Master Servicer that any such
assumption or substitution agreement has been completed by forwarding to the
Trustee and the Master Servicer the original copy of such assumption or
substitution agreement, which copy shall be added by the Trustee to the related
File and which shall, for all purposes, be considered a part of such File to the
same extent as all other documents and instruments constituting a part thereof.
The Servicer and the Special Servicer shall be responsible for recording any
such assumption or substitution agreements relating to Mortgage Loans serviced
by it at the expense of the Servicer or the Special Servicer. In connection with
any such assumption or substitution agreement, no material term of the Mortgage
Loan, including the required monthly payment on the related Mortgage Loan shall
be changed but all terms thereof shall remain as in effect as immediately prior
to the assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required monthly
payments of principal or interest be deferred or forgiven. Any fee collected by
the Servicer or the Special Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer or the Special Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, neither the Servicer nor the Special Servicer shall be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or any assumption which
such Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) The
Servicer or the Special Servicer shall foreclose upon or otherwise comparably
convert the ownership on behalf of the Trust of Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of Delinquent payments and which the Servicer and the Special
Servicer has not purchased pursuant to Section 8.10(b). In connection with such
foreclosure or other conversion, the Servicer or the Special Servicer shall
exercise such of the rights and powers vested in it hereunder, and use the same
degree of care and skill in its exercise or use as prudent mortgage lenders
would exercise or use under the circumstances in the conduct of their own
affairs, including, but not limited to, advancing funds deemed
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by the Servicer and the Special Servicer in its good faith business judgment to
be recoverable from the related Mortgage Loan for the payment of taxes, amounts
due with respect to senior liens and insurance premiums. Any amounts so advanced
shall constitute "Servicing Advances" within the meaning of Section 8.09(b)
hereof. The Servicer and the Special Servicer shall sell any REO Property
managed by it within 35 months of its acquisition by the Trust, unless the
Servicer and the Special Servicer obtains for the Trustee an Opinion of Counsel
(the cost of which shall be advanced by the Servicer and the Special Servicer as
a Servicing Advance) experienced in federal income tax matters and reasonably
acceptable to the Depositor, the Master Servicer, the Guarantor and the Trustee,
addressed to the Trustee and Servicer or the Special Servicer, to the effect
that the holding by the Trust of such REO Property for any greater period will
not result in the imposition of taxes on "Prohibited Transactions" of the Trust
as defined in Section 860F of the Code or cause the Trust or any REMIC therein
to fail to qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are outstanding, or the Servicer or the Special Servicer produces
evidence that it has properly requested from, and has received the approval of,
the applicable tax authorities at least 60 days before the day on which the
three year grace period would otherwise expire, an extension of the three year
grace period, in which case the Servicer or the Special Servicer shall sell any
REO Property by the end of any extended period specified in any such opinion or
extension.
Notwithstanding the generality of the foregoing provisions, the
Servicer or Special Servicer shall manage, conserve, protect and operate each
REO Property managed by it solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Servicer or the Special
Servicer shall either itself or through an agent selected by the Servicer or the
Special Servicer protect and conserve such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests of
the Owners and after consultation with the holder of a majority in interest of
the Class R Certificates, rent the same, or any part thereof, as the Special
Servicer deems to be in the best interest of the Owners for the period prior to
the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, or
exercising control over the Mortgaged Property so that the Trust would be
considered a mortgagee-in-possession, owner or operator of the Mortgaged
Property under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.) or a comparable
law, in the event any responsible officer of the Servicer or the Special
Servicer has actual knowledge that a Property is in any way affected by
hazardous or toxic substances or wastes and determines that it may be reasonable
to convert such Property ownership to the Trust, or the holder of a majority in
interest of the Class R Certificates otherwise requests in writing an
environmental inspection to be conducted and the Guarantor consents, the
Servicer or the Special Servicer shall cause an environmental inspection or
review of such Property to be conducted by a qualified inspector and shall be
reimbursed for the amount of such environmental inspection in the manner
described herein for reimbursement of Servicing Advances in the same manner as
set forth in the immediately following paragraph. Upon completion of the
inspection, the Servicer or the Special Servicer shall promptly provide the
Owner of the majority of the Class R Certificates, the Master Servicer, the
Guarantor and the Trustee with a written report of the environmental inspection.
In the absence of such determination or a written request from the Owner of the
majority of the Class R Certificates, and if such Property is a Group I Mortgage
Loan, the Guarantor, for an environmental inspection, neither the related
Servicer nor the Trustee shall be liable for any liability, cost or expense
incurred by the Trust due to the decision of the Servicer or the Special
Servicer not to cause an environmental inspection of a Property.
After reviewing the environmental inspection report, the Owner of the
majority of the Class R Certificates, and if such Property is a Group I Mortgage
Loan, the Guarantor, shall determine how the Servicer or the Special Servicer
shall proceed with respect to the Property and shall notify the Servicer or the
Special Servicer within 15 Business Days of receipt of the inspection report. In
the event the environmental inspection report indicates that the Property is in
any way affected by hazardous or toxic substances or wastes the Servicer or the
Special Servicer shall only foreclose or comparably convert such Property if the
Owner of the majority of the Class R Certificates, and if such Property is a
Group I Mortgage Loan, the Guarantor, directs the Servicer or the Special
Servicer to proceed with foreclosure or acceptance of a deed-in-lieu of
foreclosure. In the event the Owner of the majority of the Class R Certificates
and the Guarantor require the Servicer or the Special Servicer to foreclose or
accept a deed-in-lieu of foreclosure pursuant to this Section 8.13(a), (i) the
Servicer or the Special Servicer (or the Trustee and any other successor
Servicer or successor Special Servicer) shall be reimbursed for any related
environmental clean up costs, as applicable, from the related
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Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse the Special Servicer (or the Trustee and any other successor Servicer
or successor Special Servicer), the Servicer or Special Servicer (or the Trustee
and any other successor Servicer or successor Special Servicer) shall be
entitled to be reimbursed from amounts in the related Principal and Interest
Account, and (ii) such Class R Owner hereby indemnifies the Trust, the Trustee,
the Master Servicer and the Servicer or the Special Servicer with respect to any
costs, liabilities and expenses incurred by any such party in connection with
any such hazardous or toxic substances or wastes with respect to such
foreclosure or comparable conversion. In the event the Owner of the majority of
the Class R Certificates and the Guarantor direct the Servicer or the Special
Servicer not to proceed with foreclosure or acceptance of a deed-in-lieu of
foreclosure, the Servicer or the Special Servicer (or the Trustee and any other
successor Special Servicer) shall be reimbursed for all Servicing Advances made
with respect to the related Property from such Principal and Interest Account
pursuant to Section 8.08(d)(B) hereof.
(b) The Servicer and the Special Servicer shall determine, with respect
to each defaulted Mortgage Loan serviced by it, when it has recovered, whether
through trustee's sale, foreclosure sale or otherwise, all amounts it expects to
recover from or on account of such defaulted Mortgage Loan (exclusive of any
possibility of a deficiency judgment), whereupon such Mortgage Loan shall become
a "Liquidated Loan".
Upon such a determination, the Servicer or the Special Servicer shall
prepare and submit to the Seller, the Master Servicer and the Trustee a
Liquidation Report in substantially the form of Exhibit K hereto.
(c) The Trustee shall be deemed to have repurchased, on behalf of the
Owners of the Class B-1F Certificates, the Class C-FIO Certificates, the Class D
Certificates and the Class R Certificates that are or may be affected by a
Realized Loss on a Liquidated Loan, the ownership interest in such Liquidated
Loan held by the Owners of the Guaranteed Certificates; provided, that nothing
in the preceding clause shall be deemed to affect the rights and obligations of
any party hereto. For purposes of the preceding sentence, a Class of
Certificates shall be deemed to be affected to the extent that they have
outstanding Certificate Principal Balances or Notional Principal Amounts.
Section 8.14 Trustee and Custodian to Cooperate; Release of Files.
(a)(i) Upon the payment in full of any Mortgage Loan (including the repurchase
of any Mortgage Loan or any liquidation of such Mortgage Loan through
foreclosure or otherwise) or the receipt by the Servicer or the Special Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Servicer or the Special Servicer shall deliver to the
Custodian, on behalf of the Trustee, a Servicer's Trust Receipt in the form of
Exhibit H hereto. Upon receipt of such Servicer's Trust Receipt, the Custodian,
on behalf of the Trustee shall promptly release the related File, in trust to
(i) the Servicer or the Special Servicer, (ii) an escrow agent or (iii) any
employee, agent or attorney of the Trustee, in each case pending its release by
the Servicer or the Special Servicer, such escrow agent or such employee, agent
or attorney of the Trustee, as the case may be. Upon any such payment in full or
the receipt of such notification that such funds have been placed in escrow, the
Servicer or the Special Servicer is authorized to give, as attorney-in-fact for
the Trustee and the mortgagee under the Mortgage which secured the Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the related Principal and Interest Account. In lieu of executing
any such satisfaction or assignment, as the case may be, the Servicer or the
Special Servicer may prepare and submit to the Trustee a satisfaction (or
assignment without recourse, if requested by the Person or Persons entitled
thereto) in form for execution by the Trustee with all requisite information
completed by the Servicer or the Special Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related File, as aforesaid.
(ii) Each Servicer's Trust Receipt may be delivered to the
Custodian, on behalf of the Trustee, (A) via mail or courier, (B) via facsimile
or (C) by such other means, including, without limitation, electronic or
computer readable medium, as the Servicer or the Special Servicer and the
Custodian, on behalf of the Trustee, shall mutually agree. The Custodian, on
behalf of the Trustee, shall promptly release the related File(s) within five
(5) Business Days of receipt of a properly completed Servicer's Trust Receipt
pursuant to clause (A), (B) or (C) above, which shall be authorization to the
Custodian, on behalf of the Trustee, to release such Files, provided the
Custodian, on behalf of the Trustee, has determined that such Servicer's Trust
Receipt has been executed, with respect to clause (A) or (B) above, or approved,
with respect to clause (C) above, by an authorized Servicing Officer of the
Servicer or the Special Servicer, and so long as the Trustee complies with its
duties and obligations under this Agreement. If the
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Custodian, on behalf of the Trustee, is unable to release the Files within the
time frames previously specified, the Custodian, on behalf of the Trustee, shall
immediately notify the Servicer or the Special Servicer indicating the reason
for such delay, but in no event shall such notification be later than five
Business Days after receipt of a Servicer's Trust Receipt.
On each day that the Servicer or the Special Servicer remits to the
Custodian, on behalf of the Trustee, Servicer's Trust Receipts pursuant to
clauses (B) or (C) above, the Servicer or the Special Servicer shall also submit
to the Custodian, on behalf of the Trustee, a summary of the total amount of
such Servicer's Trust Receipts requested on such day by the same method as
described in such clauses (B) and (C) above.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Custodian, on behalf of the Trustee shall (except in the case of the
payment or liquidation pursuant to which the related File is released to an
escrow agent or an employee, agent or attorney of the Trustee), upon request of
the Servicer or the Special Servicer and delivery to the Custodian, on behalf of
the Trustee, of a Servicer's Trust Receipt substantially in the form of Exhibit
H hereto, release the related File to the Servicer or the Special Servicer and
shall execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Servicer or the Special Servicer. The Custodian,
on behalf of the Trustee, shall complete in the name of the Trustee any
endorsement in blank on any Note prior to releasing such Note to the Servicer or
the Special Servicer. Such receipt shall obligate the Servicer or the Special
Servicer to return the File to the Custodian, on behalf of the Trustee, when the
need therefor by the Servicer or the Special Servicer no longer exists unless
the Mortgage Loan shall be liquidated in which case, upon receipt of the
liquidation information, in physical or electronic form, such Servicer's Trust
Receipt shall be released by the Custodian, on behalf of the Trustee, to the
Servicer or the Special Servicer.
(c) Each of the Servicer and the Special Servicer shall have the right
to approve applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations and (iii) removal, demolition or division of
properties subject to Mortgages. No application for approval shall be considered
by either the Servicer or the Special Servicer unless: (x) the provisions of the
related Note and Mortgage have been complied with; (y) the Originator certifies
to the Servicer or the Special Servicer that the Loan-to-Value Ratio and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting guidelines for a
similar credit grade borrower; and (z) the lien priority of the related Mortgage
is not adversely affected. Upon receipt by the Trustee and the Master Servicer
of an Officer's Certificate executed on behalf of the Servicer or the Special
Servicer setting forth the action proposed to be taken in respect of a
particular Mortgage Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Servicer or the Special Servicer the consent or partial
release so requested by the Servicer or the Special Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any Officer's
Certificate delivered by the Servicer and the Special Servicer pursuant to this
paragraph. No action shall be taken by the Servicer or the Special Servicer if
such action would constitute a significant modification under Treasury
Regulation ss. 1.1001-3.
(d) Costs associated with preparing assignments, satisfactions and
releases described in this Section 8.14 shall not be an expense of the Trust or
the Trustee, but rather shall be borne directly by the Servicer or the Special
Servicer; provided, however, that the Custodian shall be liable for the cost
associated with the shipping of documents from the Custodian to the Servicer or
the Special Servicer pursuant to this Section 8.14 and for any penalty solely
associated with late reconveyance that results from the Custodian's failure to
perform its duties hereunder.
Section 8.15 Servicing Compensation. As compensation for their
activities hereunder, the Servicer shall be entitled to the Servicing Fee for
each Mortgage Loan other than the Specially Serviced Mortgage Loans and the
Special Servicer shall be entitled to the Servicing Fee for each Specially
Serviced Mortgage Loan. Such Servicing Fee shall be payable on a monthly basis
out of interest payments on the related Mortgage Loans and shall equal
one-twelfth of the related Servicing Fee Rate multiplied by the outstanding
principal amount of such Mortgage Loan as of the prior Monthly Remittance Date.
Additional servicing compensation in the form of release or satisfaction fees,
bad check charges, assumption fees, late payment charges, any other
servicing-related fees, and similar items may, to the extent collected from
Mortgagors, be retained by the Servicer and the Special Servicer. In addition,
the Special Servicer shall be entitled to the Special Servicing Fee and the
Incentive Fee pursuant to the provisions of Section 7.03 hereof.
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Section 8.16 Annual Statement as to Compliance. (a) Each of the
Servicer and the Special Servicer, at its own expense, will deliver to the
Trustee, the Master Servicer, the Seller, the Depositor, the Guarantor and the
Rating Agencies on or before April 15 of each year, commencing in 1999, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of the Servicer or the Special Servicer, as applicable, during
such preceding calendar year and of performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer or the Special Servicer, as
applicable, has fulfilled all its obligations under this Agreement for such
year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officer and the nature
and status thereof including the steps being taken by the Servicer or the
Special Servicer to remedy such defaults.
(b) The Servicer and the Special Servicer shall deliver to the Trustee,
the Master Servicer, the Seller, the Depositor, the Guarantor and the Rating
Agencies promptly after a responsible officer of the Servicer or the Special
Servicer obtains actual knowledge thereof but in no event later than five
Business Days thereafter, written notice by means of an Officer's Certificate of
any event which with the giving of notice or lapse of time, or both, such
officer knows would become an Event of Servicing Termination.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
(a) On or before April 15 of each year, commencing in 1999, the Servicer and the
Special Servicer shall cause to be delivered to the Trustee, the Master
Servicer, the Guarantor and the Rating Agencies a letter or letters of a firm of
independent, nationally- recognized certified public accountants stating that
such firm has, with respect to the Servicer's and the Special Servicer's overall
servicing operations examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
(b) The Servicer and the Special Servicer will deliver to the Seller as
soon as available and in any event within 45 days after the end of each of the
first three fiscal quarterly periods of each fiscal year of the Servicer and the
Special Servicer, an unaudited consolidated statement of operations and retained
earnings and consolidated statements of changes in financial position of the
Servicer and the Special Servicer for such period and the Servicer and the
Special Servicer will deliver to the Seller as soon as available and in any
event within 90 days after the end of each fiscal year of the Servicer and the
Special Servicer, audited consolidated statements of income, retained earnings
and changes in financial position of the Servicer and the Special Servicer for
the preceding fiscal year.
Section 8.18 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Servicer and the Special Servicer shall provide to the Trustee,
the Master Servicer, the Guarantor, the Seller, the FDIC and the supervisory
agents and examiners of each of the foregoing access to the documentation and
electronic data regarding the Mortgage Loans not in the possession of the
Trustee, such access being afforded without charge but only upon prior written
reasonable request and during normal business hours at the offices of the
Servicer and the Special Servicer designated by them.
(b) Upon any change in the format of the computer tape by the Servicer
or the Special Servicer in respect of the Mortgage Loans, the Servicer or the
Special Servicer, as applicable, shall deliver a copy of such computer tape to
the Trustee and Master Servicer. In addition, the Servicer and the Special
Servicer shall provide a copy of such computer tape to the Trustee or the Master
Servicer at such other times as the Trustee or the Master Servicer may
reasonably request upon reasonable notice to the Servicer and the Special
Servicer and upon payment of all reasonable expenses associated with such
request by the Trustee or the Master Servicer. Nothing contained herein shall
limit the obligation of the Servicer and the Special Servicer to observe any
applicable law prohibiting disclosure of information relating to the Mortgage
Loans or Mortgagors.
(c) The Servicer shall provide a copy of this Agreement, promptly
following receipt of a written request therefor, to any investor in the
certificates issued by the Guarantor which have been offered pursuant to the
Information Circular and which are backed by the Guaranteed Certificates.
(d) Within 90 days after the Startup Day or such later time as the
Servicer and the Guarantor may agree, the Guarantor will be permitted, upon
reasonable notice and during normal business hours, at the office of the
Servicer, to review copies of the contents of the Files and the underwriting
documentation with respect to up to 800 of the Mortgage Loans in Group I (a
"Mortgage Loan Sample"), in order to ascertain whether each such Mortgage Loan
was originated generally in accordance with the Seller's underwriting programs.
If, as a result of such investigation, the
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Guarantor determines that more than 20% (by number) of the Mortgage Loans in
Group I in such Mortgage Loan Sample were not so underwritten, the Servicer will
permit the Guarantor to review an additional 10% (by number) of such Files and
underwriting documents in accordance with the procedures set forth above,
including the provision that, if 20% (by number) of such Mortgage Loan Sample
were not originated generally in accordance with the same procedures, the
Guarantor may review an additional Mortgage Loan Sample in accordance with the
same procedures until the Guarantor has reviewed a Mortgage Loan Sample that
contains fewer than 20% (by number) of Mortgage Loans in Group I that were not
originated generally in accordance with the Program.
(e) The Guarantor will have the right to collect data on an additional
1200 Mortgage Loans over and above the Mortgage Loan Sample.
(f) If any Mortgage Loan in Group I is in foreclosure the Special
Servicer or the Servicer will forward to the Guarantor, upon written request,
copies of the contents of the related File and all underwriting documentation
with respect to such Mortgage Loan.
(g) The Seller shall permit the Guarantor to review its files for the
purpose of collecting data required to be collected pursuant to the Home
Mortgage Disclosure Act.
Section 8.19 Assignment of Agreement. The Servicer may not assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller, the Guarantor, the Master Servicer and the Trustee, which such
consent shall not be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section 8.21(f) hereof for a
successor Servicer. Notice of any such assignment shall be given by such
Servicer to the Trustee and the Rating Agencies. The Special Servicer may not
assign its obligations under this Agreement, in whole or in part, unless it
shall have first obtained the prior written consent of the Seller, the Master
Servicer, the Guarantor and the Trustee, which such consent shall not be
unreasonably withheld. Notice of any such assignment shall be given by the
Special Servicer to the Trustee, the Guarantor and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Trustee (acting
upon the request of the Owners of at least 50% of the Percentage Interests of
the Offered Certificates then Outstanding with respect to either of the Mortgage
Loan Groups) may immediately remove the Servicer or the Special Servicer (or
both the Servicer and the Special Servicer in the case of clause (v)) as
Servicer or Special Servicer of such Mortgage Loan Group upon the occurrence of
any of the following events and the expiration of the related cure period:
(i) The Servicer or the Special Servicer, as
applicable, shall fail to deliver to the Trustee any proceeds or
required payment (including any Delinquency Advance or Compensating
Interest payment), which failure continues unremedied for two Business
Days following written notice to an Authorized Officer of the Servicer
or the Special Servicer, as applicable, from the Trustee or from any
Owner;
(ii) The Servicer or the Special Servicer, as
applicable, shall (I) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in writing its inability
to pay its debts generally as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be adjudicated a bankrupt
or insolvent, (V) commence a voluntary case under the federal
bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of
a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing;
(iii) If without the application, approval or consent of
the Servicer or the Special Servicer, as applicable, a proceeding shall
be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking in respect of the Servicer or the Special Servicer, as
applicable, an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator, custodian or similar entity with
respect to the Servicer or the Special Servicer, as applicable, or of
all or any substantial part of its assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer or the Special
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Servicer, as applicable, in good faith, the same shall (A) result in
the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of sixty (60) consecutive days;
(iv) The Servicer or the Special Servicer, as
applicable, shall fail to perform any one or more of its obligations
hereunder (other than those specified in item (i) above) and shall
continue in default thereof for a period of thirty (30) days after the
earlier of (x) notice by the Trustee of said failure or (y) actual
knowledge of a responsible officer of the Servicer and the Special
Servicer, as applicable; or
(v) The failure of the Servicer and the Special
Servicer to satisfy the Servicer Termination Test; or
(vi) The Servicer shall fail to maintain a net worth of
$20 million.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the Collection Period. Upon the Trustee's
determination that the Servicer Termination Test is not satisfied, or that a
payment of Compensating Interest, a Monthly Remittance Amount for the related
Group, or a required Delinquency Advance has not been made by the Servicer or
the Special Servicer, the Trustee shall so notify in writing an Authorized
Officer of the Servicer or the Special Servicer and the Master Servicer, the
Guarantor and the Seller as soon as is reasonably practical.
(b) Any party exercising any termination rights under subsection (a)
above shall give notice in writing to the Servicer or the Special Servicer (and
a copy to the Trustee, the Guarantor and the Master Servicer) of the termination
of all the rights and obligations of the Servicer or the Special Servicer under
this Agreement. The Trustee shall mail a copy of any notice given by it
hereunder to the Depositor, the Seller, the Owners, the Guarantor and Rating
Agencies. On or after the receipt by the Servicer or the Special Servicer of
such written notice, all authority and power of the Servicer or the Special
Servicer under this Agreement, whether with respect to the Certificates or the
Mortgage Loans or otherwise, shall without further action pass to and be vested
in the Trustee or such successor Servicer or successor Special Servicer as may
be appointed hereunder, and, without limitation, the Trustee is hereby
authorized and empowered (which authority and power are coupled with an interest
and are irrevocable) to execute and deliver, on behalf of the predecessor
Servicer or predecessor Special Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice or
termination, whether to complete the transfer and endorsement of the Mortgage
Loans and related documents or otherwise. The predecessor Servicer or
predecessor Special Servicer shall cooperate with the successor Servicer or
successor Special Servicer or the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer or predecessor Special
Servicer under this Agreement including the transfer to the successor Servicer
or successor Special Servicer or to the Trustee for administration by it of all
cash accounts that shall at the time be held by the predecessor Servicer or
predecessor Special Servicer for deposit or shall thereafter be received with
respect to a Mortgage Loan. All reasonable costs and expenses incurred in
connection with delivering the Files to the successor Servicer or the Trustee
shall be paid by the predecessor Servicer.
(c) The Seller, the Master Servicer, the Guarantor and the Trustee
agree to use their best efforts to inform each other of any materially adverse
information regarding the Servicer's or the Special Servicer's servicing
activities that comes to the attention of such party from time to time.
Section 8.21 Resignation of the Servicer or the Special Servicer and
Appointment of Successor. (a) Upon the Servicer's or the Special Servicer's
receipt of notice of termination pursuant to Section 8.20 or the Special
Servicer's receipt of notice pursuant to Section 8.37 or the Servicer's or the
Special Servicer's resignation in accordance with the terms of this Section
8.21, the predecessor Servicer or predecessor Special Servicer shall continue to
perform its functions as Servicer or Special Servicer under this Agreement, in
the case of termination, only until the date specified in such termination
notice or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the earlier of (x)
the date 45 days from the delivery to the Seller, the Guarantor, the Master
Servicer and the Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer or predecessor Special Servicer
shall become unable to act as Servicer or Special Servicer, as specified in the
notice of resignation and accompanying opinion of counsel. All collections then
being held by the predecessor Servicer or predecessor Special Servicer prior to
its removal and any collections received by the Servicer or Special Servicer
after removal or resignation shall be endorsed by it to the Trustee or the
successor Servicer or the successor Special Servicer and remitted directly and
immediately to the Trustee or the successor Servicer or the successor Special
Servicer. In the event of the Servicer's or the Special
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Servicer's resignation or termination hereunder and under Section 8.37, upon the
appointment of a successor Servicer or the successor Special Servicer pursuant
to Section 8.21(f), the successor Servicer or the successor Special Servicer
shall accept its appointment by execution of a written assumption in form
acceptable to the Trustee, the Master Servicer, the Guarantor and the Seller,
with copies of such assumption to the Trustee and the Rating Agencies, provided
that as a condition precedent to the appointment of a successor Servicer or
successor Special Servicer and the execution of the related written assumption,
such successor Servicer or successor Special Servicer shall, if applicable, also
execute either (i) a written assumption or termination of any of the
Subservicing Agreements or (ii) appropriate amendments to each of any
Subservicing Agreements.
(b) Neither the Servicer nor the Special Servicer shall resign from the
obligations and duties hereby imposed on it, except (i) upon determination that
its duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it, the other activities of the Servicer or the Special Servicer so
causing such a conflict being of a type and nature carried on by the Servicer or
the Special Servicer at the date of this Agreement or (ii) upon prior written
consent of the Seller, the Master Servicer, the Guarantor and the Trustee and
confirmation from the Rating Agencies that the ratings on any Class of the
Offered Certificates will not be reduced as a result of such resignation. Any
such determination referred to in clause (i) permitting the resignation of the
Servicer or the Special Servicer shall be evidenced by an Opinion of Counsel to
such effect which shall be delivered to the Trustee, the Master Servicer and the
Seller.
(c) No removal or resignation of the Servicer or the Special Servicer
shall become effective until the Trustee or a successor Servicer or the
successor Special Servicer shall have assumed the Servicer's or the Special
Servicer's responsibilities and obligations in accordance with this Section.
(d) Upon removal or resignation of the Servicer or the Special
Servicer, the Servicer or the Special Servicer also shall, at such party's cost,
promptly deliver or cause to be delivered to the successor Servicer or the
Trustee all the books and records (including, without limitation, records kept
in electronic form) that the Servicer or the Special Servicer has maintained for
the Mortgage Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's or the Special Servicer's possession.
(e) Any collections received by the Servicer or the Special Servicer
after removal or resignation thereof shall be endorsed by it to the Trustee and
remitted directly and immediately to the Trustee or the successor Servicer or
successor Special Servicer.
(f) Upon removal pursuant to Section 8.20 or resignation pursuant to
Section 8.21 of the Servicer or the Special Servicer, the Trustee, with the
cooperation of the Seller, (x) shall solicit bids for a successor Servicer or
successor Special Servicer as described below and (y) pending the appointment of
a successor Servicer as a result of soliciting such bids, shall serve as
Servicer of the Mortgage Loans serviced by the predecessor Servicer or the
predecessor Special Servicer. The Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer or Special
Servicer, (I) appoint, or petition a court of competent jurisdiction to appoint,
any housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved servicer by Freddie Mac for first and
second mortgage loans and having equity of not less than $25,000,000 (or such
lower level as may be acceptable to the Owners of a majority of the Class R
Certificates and the Guarantor) and is reasonably acceptable to the Seller, the
Guarantor and the Owners of the Class R Certificates, as indicated in writing as
the successor to the Servicer or the Special Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer or the Special Servicer hereunder and (II) give notice thereof to
the Seller, the Master Servicer, the Owners and the Rating Agencies. The
compensation of any successor Servicer (including, without limitation, the
Trustee) so appointed shall be the amount agreed by such successor Servicer, the
Guarantor and theTrustee, such compensation not to exceed the Aggregate
Servicing Fee Rate. The compensation of any successor Special Servicer
(including without limitation, the Trustee) so appointed shall be the amount
agreed to by such successor Special Servicer, the Guarantor and the Trustee,
such amount not to exceed the Aggregate Servicing Fee Rate plus the Incentive
Fee and the Special Servicing Fee. Any reasonable out of pocket set-up costs or
expenses incurred by the Trustee as interim successor Servicer or Special
Servicer as specified in subclause (y) of this Section 8.21(f) shall be at the
expense of the Trust and shall be payable pursuant to Section 7.03(j).
(g) In the event that the Trustee is able to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify
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that the successor Servicer or the successor Special Servicer shall be entitled
to the servicing compensation agreed upon between the Trustee, the successor
Servicer or the successor Special Servicer and the Seller; provided, however,
that no such fee shall exceed the Aggregate Servicing Fee Rate, the Special
Servicing Fee and the Incentive Fee. Within thirty days after any such public
announcement, the Trustee, with the cooperation of the Seller, shall negotiate
in good faith and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid as to the price they will pay to obtain such servicing
so long as the Guarantor consents to such successive Servicer. The Trustee upon
receipt of the purchase price shall pay such purchase price to the Servicer or
Special Servicer being so removed (except in the case of subsection (h) below,
in which case the Trustee shall pay such purchase price to the Seller), after
deducting from any sum received by the Trustee from the successor to the
Servicer or the Special Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities reasonably
incurred hereunder. After such deductions, the remainder of such sum shall be
paid by the Trustee to the Servicer or Special Servicer at the time of such
sale.
(h) The Trustee and the successor Servicer or the successor Special
Servicer shall take such action consistent with this Agreement as shall be
necessary to effectuate any such succession, including the notification to all
Mortgagors of the transfer of servicing if such notification is not done by the
predecessor Servicer or the predecessor Special Servicer as required by
subsection (j) below. The predecessor Servicer or predecessor Special Servicer
agrees to cooperate with the Trustee and the successor Servicer or the successor
Special Servicer in effecting the termination of the Servicer's or the Special
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer or the successor Special
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's or Special Servicer's functions hereunder and
shall promptly also transfer to the Trustee or the successor Servicer or the
successor Special Servicer, as applicable, all amounts which then have been or
should have been deposited in the related Principal and Interest Account by such
Servicer, or which are thereafter received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor Servicer or successor Special
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the predecessor Servicer or the predecessor Special Servicer to
deliver, or any delay in delivery, cash, documents or records to it or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Servicer or the Special Servicer.
(i) The Trustee, or any other successor Servicer or any other successor
Special Servicer, upon assuming the duties of Servicer or the Special Servicer
hereunder, shall as soon as reasonably practicable pay all Compensating Interest
and, if applicable, Delinquency Advances which have theretofore not been
remitted to the extent required by this Agreement with respect to the Mortgage
Loans; provided, however, that if the Trustee is acting as successor Servicer or
the successor Special Servicer, the Trustee shall only be required to make such
Delinquency Advances if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related Mortgage
Loans. Any Delinquency Advances and Servicing Advances previously made by the
predecessor Servicer or the predecessor Special Servicer and accrued and unpaid
Servicing Fees shall be recoverable by it and paid to it by the successor
Servicer or the successor Special Servicer to the extent such Delinquency
Advances, Servicing Advances and accrued and unpaid Servicing Fees would
otherwise have been recoverable had the predecessor Servicer or the predecessor
Special Servicer not been terminated.
(j) The Servicer or the Special Servicer which is being removed or is
resigning shall (x) give notice to the Rating Agencies of the transfer of the
servicing to the successor Servicer or the successor Special Servicer and (y)
provide a "goodbye" notice to each of the Mortgagors of Mortgage Loans that it
is servicing.
(k) Upon appointment, the successor Servicer or the successor Special
Servicer shall be the successor in all respects to the predecessor Servicer or
the predecessor Special Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer or the
predecessor Special Servicer including, but not limited to, the maintenance of
the hazard insurance policy(ies), the fidelity bond and an errors and omissions
policy pursuant to Section 8.26 and shall be entitled to such fees as may be
agreed upon between the Seller and such successor Servicer or the successor
Special Servicer (such amount not to exceed the Aggregate Servicing Fee Rate),
and all of the rights granted to the predecessor Servicer or the predecessor
Special Servicer by the terms and provisions of this Agreement; provided, that,
unless otherwise agreed upon by the Trustee and the Seller, if the Trustee shall
be the successor Servicer or the successor Special Servicer, the Trustee shall
be entitled to fees calculated on the basis of the Aggregate Servicing Fee Rate.
The appointment of a successor Servicer or the successor Special Servicer
(including the Trustee) shall not affect any liability of the predecessor
Servicer which may have arisen under this Agreement prior to its termination as
Servicer
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or Special Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer or successor Special Servicer
(including the Trustee) be liable for any acts or omissions of the predecessor
Servicer or for any breach by the Servicer or Special Servicer of any of its
representations or warranties contained herein or in any related document or
agreement.
(l) The Trustee shall give notice to the Rating Agencies, the Guarantor
and the Owners or the Seller of the occurrence of any event specified in Section
8.20 of which a Responsible Officer of the Trustee has actual knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination. Subject to
the rights of the Trustee (acting upon the request of the Owners of the majority
of the Percentage Interests of the Offered Certificates then Outstanding as a
whole and not on a Class by Class basis) and the Seller pursuant to Section 8.20
to terminate all of the rights and obligations of the Servicer or the Special
Servicer under this Agreement, the Owners of a majority of the Percentage
Interests of the Offered Certificates may, and so long as the Guaranteed
Certificates are Outstanding, with the consent of the Guarantor waive any
default by the Servicer or the Special Servicer in the performance of its
obligations hereunder and its consequences; provided, that no such waiver will
be effective unless it is agreed to by the Guarantor. Upon any such waiver of a
past default, such default shall cease to exist, and any Event of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement By the
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer or the
Special Servicer hereunder by the Trustee pursuant to Section 8.21, it is
understood and agreed that the Servicer's and the Special Servicer's rights and
obligations under any Subservicing Agreement then in force between the Servicer
and the Special Servicer and a Subservicer shall be assumed simultaneously by
the Trustee without act or deed on part of the Trustee; provided, however, the
Trustee in its sole discretion may terminate any Subservicer notwithstanding the
provisions of the related Subservicing Agreement.
The Servicer and the Special Servicer shall, upon the reasonable
request of the Trustee, but at the expense of the Servicer or the Special
Servicer, deliver to the assuming party documents and records relating to each
Subservicing Agreement and an accounting of amounts collected and held by it and
otherwise use its best reasonable efforts (through the execution of any
documents or otherwise) to effect the orderly and efficient transfer of the
Subservicing Agreements to the assuming party and shall cooperate with the
Trustee in any other manner reasonably requested by the Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor Servicer or
Successor Special Servicer. Following the termination of the Servicer or the
Special Servicer hereunder and pending the appointment of any other Person as
successor Servicer or successor Special Servicer, the Trustee is hereby
empowered to perform the duties of the Servicer or the Special Servicer
hereunder; it being expressly understood, however, by all parties hereto, and
the Owners, that prior to any termination of the Servicer or the Special
Servicer pursuant to Section 8.21, the Servicer or the Special Servicer shall
perform such duties. Specifically, and not in limitation of the foregoing, the
Trustee shall upon termination or resignation of the Servicer or the Special
Servicer, and pending the appointment of any other Person as successor Servicer
or successor Special Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14 hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency Advances
and to pay Compensating Interest (and to be reimbursed therefor as
provided herein).
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Section 8.25 Liability of the Servicer or the Special Servicer. Neither
the Servicer or the Special Servicer nor any of their directors, officers,
employees or agents shall be under any liability on any Certificate or otherwise
to the Seller, the Master Servicer, the Trustee or any Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement or for errors in judgment except as required hereunder; provided,
however, that this provision shall not protect the Servicer or the Special
Servicer, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Each of the Servicer and the Special Servicer and any director, officer,
employee or agent of the Servicer or the Special 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. Neither the Servicer nor the
Special Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, that the
Guarantor, the Servicer or the Special Servicer may in its discretion undertake
any such action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto and interests of the
Trustee and the Owners hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust, and the Servicer or the Special Servicer shall be
entitled to be reimbursed therefor out of the Principal and Interest Account.
The Servicer or the Special Servicer and any director, officer, employee or
agent of the Servicer or the Special Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any audit, controversy or judicial proceeding relating to a governmental
taxing authority or any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of negligent action, negligent failure
to act, willful misconduct in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder.
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time upon prior written
and reasonable notice, the Trustee, the Master Servicer, the Guarantor, the
Seller or any agents or thereof may inspect the Servicer's or the Special
Servicer's servicing operations and discuss the servicing operations of the
Servicer or the Special Servicer with a responsible officer designated by the
Servicer or the Special Servicer. The reasonable costs and expenses incurred by
the Servicer or the Special Servicer or its agents or representatives in
connection with any such examinations or discussions shall be paid by the
Servicer or the Special Servicer.
(b) The Servicer and the Special Servicer shall maintain, each at its
own expense, a blanket fidelity bond and an errors and omissions insurance
policy, with broad coverage with responsible companies that meet the
requirements of Freddie Mac on all officers, employees or other persons acting
in any capacity with regard to the Mortgage Loan to handle funds, money,
documents and papers relating to the Mortgage Loans it services. The fidelity
bond and errors and omissions insurance shall be in the form of Mortgage
Banker's Blanket bond and shall protect and insure the Servicer or the Special
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Servicer and the Special Servicer against losses in
connection with the failure to maintain any insurance policies required pursuant
to this Agreement and the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 8.26 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer or the Special
Servicer from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the corresponding amounts required by Freddie Mac in the Freddie Mac
Sellers' and Servicers' Guide. Upon the written request of the Owners of a
majority of the Percentage Interests of the Class R Certificates to the Trustee
and request by the Trustee to the Servicer or the Special Servicer, the Servicer
or the Special Servicer shall cause to be delivered to the Trustee, who shall
deliver to the Owners of the Class R Certificates an Officer's Certificate as to
the maintenance of the fidelity bond and insurance policy that such fidelity
bond and insurance policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to
Business of Servicer or the Special Servicer. Any corporation into which the
Servicer or the Special Servicer may be merged or converted or with which it may
be consolidated, or corporation resulting from any merger, conversion or
consolidation to which the Servicer or the Special Servicer shall be a party or
any corporation succeeding to all or substantially all of the business of the
Servicer or the Special Servicer shall be the successor of the Servicer or the
Special Servicer hereunder, without the
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execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any responsible officer
of the Servicer's or the Special Servicer's actual knowledge thereof, the
Servicer or the Special Servicer shall give prompt notice to the Trustee, the
Master Servicer, the Guarantor, the Seller, and the Rating Agencies of the
occurrence of any of the following events:
(a) Any default or any fact or event which such officer knows results,
or which with notice or the passage of time, or both, would result in the
occurrence of a default by the Servicer or the Special Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the Servicer or
the Special Servicer of which it has knowledge, in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon the Servicer's
or the Special Servicer's ability to perform its obligations under any Operative
Document;
(c) The commencement of any proceedings of which it has knowledge or
has received service of process by or against the Servicer or the Special
Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Servicer or the Special
Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of the Servicer's or the Special Servicer's business
that the Servicer or the Special Servicer is to cease and desist, or to
undertake any practice, program, procedure or policy employed by the Servicer or
the Special Servicer in the conduct of the business of any of them, and such
cessation or undertaking will materially and adversely affect the conduct of the
Servicer or the Special Servicer's business or its ability to perform under the
Operative Documents or materially and adversely affect the financial affairs of
the Servicer or the Special Servicer.
Section 8.29 Servicer's Monthly Servicing Report; Aggregate Monthly
Servicing Report; Reconciliation; Cooperation Procedures. (a) The Servicer and
the Special Servicer with respect to the Mortgage Loans serviced by it shall
deliver to the Master Servicer, and, upon request, to the Seller not later than
the Servicing Report Delivery Date, a Servicer's Monthly Servicing Report (in an
electronic format and hard copy format reasonably agreeable to both such
Servicer and the Master Servicer) containing all information necessary for the
Master Servicer to make such calculations and provide such reports as may be
required under this Agreement, including all loan level information necessary to
determine the following:
(i) (A) scheduled interest due (net of the Servicing Fee); (B)
Compensating Interest paid; (C) scheduled principal due; (D)
Prepayments; (E) Loan Balance of Mortgage Loans repurchased; (F)
Substitution Amounts; and (G) Net Liquidation Proceeds (related to
principal);
(ii) The Servicing Fee withheld by the Servicer or the Special
Servicer;
(iii) The principal and interest payments remitted by the Servicer
or the Special Servicer to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the
Mortgage Loans that were not made by the related Mortgagors as of the
last day of the related Remittance Period;
(v) The number and aggregate Loan Balances (computed in
accordance with the terms of the Mortgage Loans) and the percentage of
the total number of Mortgage Loans and of the Loan Balance which they
represent of Delinquent Mortgage Loans, if any, (1) 30 to 59 days, (2)
60 to 89 days and (3) 90 days or more, respectively, as of the last day
of the prior Collection Period;
(vi) The number and aggregate Loan Balances of Mortgage Loans, if
any, in foreclosure and the number and unpaid principal balance of any
REO Properties as of the last day of the related Collection Period;
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(vii) The loan numbers and Loan Balances (immediately prior to
being classified as Liquidated Mortgage Loans) of Liquidated Mortgage
Loans as of the last day of the related Collection Period;
(viii) Liquidation Proceeds received during the related Remittance
Period;
(ix) The amount of any Liquidation Expenses being deducted from
Liquidation Proceeds or otherwise being charged to the Principal and
Interest Account(s) with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related Remittance
Period which are not being deducted from Liquidation Proceeds or
otherwise being charged to the Principal and Interest Account with
respect to such Monthly Remittance Date;
(xi) Net Liquidation Proceeds as of the last day of the related
Remittance Period;
(xii) The scheduled principal balance of each Mortgage Loan as of
the first day of the related Remittance Period and the date through
which interest has been paid as of the last day of the related
Remittance Period;
(xiii) The number and aggregate Loan Balances and Loan Purchase
Prices of Mortgage Loans required to be repurchased by each Originator
as of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by the Servicer
or the Special Servicer during the related Remittance Period and any
unreimbursed Delinquency Advances as of such Monthly Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage Loans;
(xvi) Any additional information reasonably requested by the
Trustee;
(xvii) The number and aggregate Loan Balances of Mortgage Loans, if
any, currently in bankruptcy proceedings as of the last day of the
related Remittance Period and any Preference Amounts to the extent the
Servicer or the Special Servicer has knowledge thereof; and
(xviii) The amount of unreimbursed Servicing Advances.
In addition to the report described in this Section 8.29(a) to be provided by
the Servicer or the Special Servicer, information as the Master Servicer and the
Servicer or the Special Servicer may agree upon shall be provided by such
Servicer to the Master Servicer or such other party as may be requested by the
Master Servicer or the Trustee by electronic transmission or hard copy.
(b) Reserved.
(c) The Servicer and the Special Servicer with respect to the Mortgage
Loans in Group II each agrees that, in addition to the report described in
Section 8.29(a) hereof, it shall upon the reasonable request of the Master
Servicer, prepare reports detailing the Mortgage Loans serviced by it by index
and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to the Master
Servicer, the Guarantor and the Trustee on the Startup Day in hard copy and on
electronic tape in a form acceptable to the Master Servicer and the Trustee (the
"Tape") detailing the information required to be set forth on the Schedules of
Mortgage Loans as of the close of business on the Cut-Off Date.
(e) The Master Servicer shall review the Servicer's Monthly Servicing
Reports against the information, as updated by the Master Servicer on the basis
of the current and all previous Servicer's Monthly Servicing Reports received by
the Master Servicer, and shall notify the Servicer or the Special Servicer, as
the case may be, and the Seller of any material inconsistencies between the
Servicer's Monthly Servicing Report and such information. The Servicer or the
Special Servicer, as the case may be, shall cooperate with the Master Servicer
to rectify such inconsistencies.
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(f) In addition to notifying the Servicer or the Special Servicer of
inconsistencies between the Servicer's Monthly Servicing Report and the Tape, at
least three Business Days prior to each Monthly Remittance Date, the Master
Servicer shall notify the Servicer or the Special Servicer of such party's
portion of the Monthly Remittance Amount to be remitted on each Monthly
Remittance Date broken out by interest and principal. To the extent the Master
Servicer and the Servicer or the Special Servicer have not rectified
inconsistencies prior to a Monthly Remittance Date and disagree as to the amount
to be remitted by the Servicer or the Special Servicer, the Servicer or the
Special Servicer shall defer to the Master Servicer's judgment; provided,
however, if the Master Servicer's calculations prove to be incorrect and the
Servicer or the Special Servicer has overadvanced, the Servicer or the Special
Servicer may withdraw any such overadvanced amount from the Principal and
Interest Account pursuant to Section 8.08(d)(c).
(g) Not later than the Reporting Date, the Master Servicer, based on
the reconciled Servicer's Monthly Servicing Reports, shall provide to the
Trustee the Aggregate Monthly Servicing Report (which report shall be in a
format reasonably agreeable to the Master Servicer and the Trustee). The
Aggregate Monthly Servicing Report shall contain the information set out in
Section 8.29(a)(i)-(xviii), both individually for the Servicer and the Special
Servicer and on an aggregate basis.
(h) Within 45 days after each Remittance Period, the Servicer and the
Special Servicer agree to provide the Master Servicer with a reconciliation of
such Servicer's or Special Servicer's Principal and Interest Account for such
Remittance Period including a test of the expected principal and interest
balance.
(i) Subject to Section 7.09(c), the Master Servicer, the Seller, the
Servicer, the Special Servicer and the Trustee covenant to provide each other
with all data and information required to be provided by them hereunder at the
times required hereunder, and additionally covenant reasonably to cooperate with
each other in providing any additional information required to be obtained by
any of them in connection with their respective duties hereunder.
Section 8.30 Indemnification by the Servicer and the Special Servicer.
The Servicer and the Special Servicer agrees to indemnify and hold the Trustee,
the Master Servicer, the Guarantor, the Seller and the Depositor and their
employees, officers, directors and agents harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Seller, the Master Servicer, the
Guarantor, the Depositor and the Trustee and their employees, officers,
directors and agents may sustain in any way caused by or arising directly out of
the negligent failure of the Servicer or the Special Servicer, or any
Subservicer appointed by it, to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement and which, in the case of
the Seller, the Master Servicer or the Depositor, materially and adversely
affects such party. The Servicer or the Special Servicer shall immediately
notify the Trustee, the Master Servicer, the Seller, the Guarantor, the
Depositor and the Rating Agencies if a claim is made by a third party with
respect to this Agreement, and the Servicer or the Special Servicer may assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Seller, the Master Servicer, the Guarantor, the Trustee and the
Depositor and their employees, officers, directors and agents. The Trustee shall
reimburse the Servicer or the Special Servicer from amounts in the related
Principal and Interest Account for all amounts advanced by it pursuant to the
preceding sentence except when the claim relates directly to the failure of the
Servicer or the Special Servicer to service and administer the Mortgage Loans in
compliance with the terms of this Agreement.
Section 8.31 Servicing Standard. The Servicer, the Special Servicer and
the Master Servicer shall perform its servicing functions with respect to the
Mortgage Loans in the best interests of and for the benefit of the Owners
subject to the terms hereof.
Section 8.32 No Solicitation. The Servicer and the Special Servicer
agree that it will not take any action or permit or cause any action to be taken
by any of its agents and Affiliates, or by any independent contractors or
independent mortgage brokerage companies on the Servicer's or the Special
Servicer's behalf, to personally, by telephone or mail, solicit the borrower or
Mortgagor under any Mortgage Loan for any purpose whatsoever, including to
refinance a Mortgage Loan. Notwithstanding the foregoing, it is understood and
agreed that promotions undertaken by the Servicer or the Special Servicer or any
Affiliate thereof which are directed to the general public at large, including,
without limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this paragraph, nor is the Servicer or the Special Servicer prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor; provided further, that the Servicer or the Special
Servicer may solicit any Mortgagor (i) for whom the Servicer or the
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Special Servicer has received a request for verification of mortgage from an
originator of mortgage loan products similar to the Mortgage Loans that
indicates that such Mortgagor intends to refinance his or her Mortgage Loan and
(ii) otherwise in accordance with the Seller's policy, if such policy is
delivered to the Servicer or the Special Servicer in writing. It is understood
and agreed that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to the list of
Mortgagors and data relating to their Mortgages shall be retained by Seller.
Section 8.33 Powers and Duties of the Master Servicer. (a) The Master
Servicer undertakes to perform such duties and only such duties as are
specifically set forth in this agreement.
(b) The Master Servicer shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any
Mortgage Loan pursuant to this Agreement or the eligibility of any Mortgage Loan
for purposes of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Master Servicer from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Master Servicer shall be
determined solely by the express provisions of this Agreement, the
Master Servicer 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 Master Servicer and, in absence of bad faith on the part of
the Master Servicer, the Master Servicer 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
Master Servicer and conforming to the requirements of this Agreement;
(ii) The Master Servicer shall not be liable for an error of
judgment made in good faith by an Authorized Officer or other officers
of the Master Servicer, unless it shall be proved that the Master
Servicer was negligent in ascertaining the pertinent facts; and
(iii) Subject to the other provisions of this Agreement and
without limiting the generality of this Section 8.33, the Master
Servicer shall have no duty (A) to see to any recording, filing or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security
interest or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust Estate.
(d) The right of the Master Servicer to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Master
Servicer shall not be answerable for other than its negligence or willful
misconduct in the performance of such act, and the delivery hereunder to the
Master Servicer of any notice, document or report shall not give rise to an
affirmative obligation on the part of the Master Servicer to take any action
with respect thereto, except as otherwise expressly provided herein.
(e) The Master Servicer makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Master Servicer shall not be accountable for the use or
application by the Seller or the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Servicers in respect of the Mortgage Loans or deposited in or withdrawn
from the Principal and Interest Account by the Servicer.
Section 8.34 Liability of the Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein. Neither
the Master Servicer nor any of the directors, officers, employees or agents of
the Master Servicer shall be under any liability to the Seller, the Depositor,
the Servicer, the Special Servicer or any Owner for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement or for errors in judgment except as required hereunder; provided,
however, that this provision shall not protect the Master Servicer, its
directors, officers,
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employees or agents or any such Person against any liability which would
otherwise be imposed by reason of negligent action, negligent failure to act,
willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Except as expressly provided
herein, the Master Servicer shall not be liable for the performance of the
Servicer or the Special Servicers. The Master Servicer and any director,
officer, employee or agent of the Master Servicer may rely and shall be
protected in acting or refraining from acting in good faith on any certificate,
notice or other document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters arising
hereunder.
Section 8.35 Master Servicer Not to Resign. (a) The Master Servicer
shall not resign from the obligations and duties hereby imposed on it under this
Agreement except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Notice of any such determination permitting the resignation of the
Master Servicer shall be communicated to the Trustee, the Guarantor, the
Servicer and the Special Servicer promptly (and, if such communication is not in
writing, shall be promptly confirmed in writing), and any such determination
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee.
(c) In the event that the Master Servicer is permitted to resign
pursuant to Section 8.35(b) hereof (or if the Master Servicer is otherwise
unable to continue as Master Servicer), the Trustee shall automatically become
Master Servicer hereunder.
Section 8.36 Indemnification by Master Servicer. The Master Servicer
hereby agrees to, and does hereby indemnify and hold harmless the Servicer, the
Special Servicer, the Guarantor and the Trustee and each of its respective
directors, officers, employees and agents, and their respective successors and
assigns, as applicable, from and against any and all losses, liabilities,
claims, charges, damages, fines, penalties, judgments, actions, suits, costs and
expenses of any kind or nature (including reasonable attorneys' fees and
expenses and reasonable fees and expenses of experts) imposed on, incurred by,
or asserted against the Servicer and the Special Servicer, the Guarantor or the
Trustee or any of its directors, officers, employees, agents, or any of their
respective successors or assigns, in any way related to or arising out of the
performance of the Master Servicer of its obligations under this Agreement.
Section 8.37 Appointment of Special Servicer. Notwithstanding the
provisions of Section 8.20 regarding the removal of the Special Servicer as a
result of an event of servicer termination or Section 8.21 regarding the
resignation of the Special Servicer, Owners representing greater than 50% of the
Percentage Interests of the Class R Certificates, with the consent of the
Guarantor, at any time shall be entitled to remove the Special Servicer with or
without cause and to appoint a successor Special Servicer, provided that each
Rating Agency confirms to the Trustee in writing that such appointment, in and
of itself, would not have caused a downgrade, qualification or withdrawal of the
then current ratings assigned to any Class of Offered Certificates. In such
event the successor Special Servicer and the Owners of the Class R Certificates
shall mutually agree on the compensation of the successor Special Servicer.
Section 8.38 Transfer of Servicing Between Servicer and Special
Servicer. Upon determining that any Mortgage Loan has become a Specially
Serviced Mortgage Loan, the Servicer shall immediately give notice thereof,
together with a copy of the related File, to the Special Servicer and shall use
its best efforts to provide the Special Servicer with all information, documents
(but excluding the original documents constituting the File) and records
(including records stored electronically on computer tapes, magnetic disks and
the like) relating to the Mortgage Loan and reasonably requested by the Special
Servicer to enable it to assume its duties hereunder with respect thereto. The
Servicer shall use its best efforts to comply with the preceding sentence within
five Business Days of the date such Mortgage Loan became a Specially Serviced
Mortgage Loan and in any event shall continue to act as Servicer and
administrator of such Mortgage Loan until the Special Servicer has commenced the
servicing of such Mortgage Loan, which shall occur upon the receipt by the
Special Servicer of the information, documents and records referred to in the
preceding sentence. With respect to each Mortgage Loan that becomes a Specially
Serviced Mortgage Loan, the Servicer shall instruct the related Mortgagor to
continue to remit all payments in respect of such Mortgage Loan to the Servicer.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included within the REMIC
Estate is effected as described below. To effect a termination of this Agreement
pursuant to clause (c), the Owners of all Certificates then Outstanding shall
(i) unanimously direct the Trustee on behalf of the Upper-Tier REMIC and the
Lower-Tier REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the death
of the last survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of Saint James's, living on the
date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Auction Termination; Servicer Termination.
(a) Within 90 days after the Auction Sale Bid Date, the Trustee will
notify the investment banking or whole-loan trading firm selected by the Owners
of the majority of the Class R Certificates (such investment bank or trading
firm, the "Advisor") who will solicit on behalf of the Trustee competitive bids
for the purchase of all of the Mortgage Loans then remaining in the Trust Estate
for fair market value (such bidders may include the Owners of the Class R
Certificates). Such solicitation shall be conducted substantially in the manner
described in Exhibit M hereto. In the event that satisfactory bids are received
as described below, the proceeds of the sale of such assets shall be deposited
into the Certificate Account. The Trustee will ask the Advisor to solicit, on
behalf of the Trustee, good-faith bids from no fewer than two prospective
purchasers that are considered at the time to be competitive participants in the
home equity market. The Advisor will consult with any securities brokerage
houses as then making a market in the Offered Certificates to obtain a
determination as to whether the fair market value of such assets has been
offered.
If the highest good-faith bid received by the Advisor from a
qualified bidder is, in the judgment of the Advisor, not less than the fair
market value of the Mortgage Loans and if such bid would equal or exceed the
amount set forth in the following sentence, the Trustee, following consultation
with and written direction from the Advisor, will sell and assign the Mortgage
Loans without representation, warranty or recourse to such highest bidder and
will redeem the Certificates. For the Trustee to consummate the sale, the bid
must be at least equal to the Termination Price set forth in Section 9.02(b)
hereof as to both Mortgage Loan Groups. In addition, the bid must be in an
amount sufficient to pay the fees and expenses of the Trustee owing hereunder.
If such conditions are not met, the Trustee will, following consultation with
the Advisor, decline to consummate such sale. In addition, the Trustee will
decline to consummate such sale unless it receives from the Advisor a REMIC
Opinion. In the event such sale is not consummated in accordance with the
foregoing, the Trustee will not be under any obligation to solicit any further
bids or otherwise to negotiate any further sale of the Mortgage Loans. In such
event, however, if requested by the Owners of the Class R Certificates (and at
the expense of the Owners of the Class R Certificates) the Trustee may solicit
bids from time to time in the future for the purchase of the Mortgage Loans upon
the same terms described above. The Trustee may consult with the Advisor and the
advice of the Advisor shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder.
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(b) On any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date, the Servicer and the Special Servicer, collectively or individually,
may determine to purchase and may cause the purchase from the Trust of all (but
not fewer than all) Mortgage Loans in the Trust and all property theretofore
acquired in respect of any Mortgage Loan by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining, at a price (such price the
"Termination Price") equal to 100% of the aggregate Loan Balances of the
Mortgage Loans (including any REO Property) as to both Mortgage Loan Groups as
of the day of purchase minus amounts remitted from the Principal and Interest
Account to the Certificate Account representing collections of principal on the
related Mortgage Loans during the current Remittance Period, plus one month's
interest on such amount computed at the weighted average Coupon Rate on all
Mortgage Loans in the Trust, plus in all cases all accrued and unpaid Servicing
Fees plus the aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and Delinquency Advances which the Servicer or the Special
Servicer has theretofore failed to remit and any unreimbursed Guarantor
Reimbursement Amounts. In connection with such purchase, the Servicer and the
Special Servicer shall remit to the Trustee all amounts then on deposit in the
Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(c) In the event that a purchase of the Mortgage Loans as provided in
section (a) or (b) above has not occurred with respect to both Mortgage Loan
Groups and the Servicer and the Special Servicer fail to exercise their option
to purchase all of the Mortgage Loans in both Mortgage Loan Groups, the Owners
of the Class R Certificates are required to purchase all of the Mortgage Loans
in both Mortgage Loan Groups on the Monthly Remittance Date in September 2028 at
the Termination Price.
(d) In the event that an auction sale occurs pursuant to Section
9.02(a) or the Servicer and the Special Servicer purchase all Mortgage Loans and
each REO Property remaining in the Trust pursuant to Section 9.02, the Owners of
the Class R Certificates or the Servicer and the Special Servicer shall direct
the Trustee to adopt and the Trustee shall adopt, as to the Lower-Tier REMIC and
the Upper-Tier REMIC, a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code. Furthermore, the Trust Estate shall be terminated in
accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the Lower-Tier REMIC and the Upper-Tier REMIC created hereunder
pursuant to Treasury Regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder,
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Estate to the purchaser
thereof for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Owners of the Class R Certificates or
the Servicer and the Special Servicer all cash on hand in the Trust
Estate (other than cash retained to meet claims), and the Trust Estate
shall terminate at that time.
(e) By their acceptance of the Certificates, the Owners thereof hereby
authorize the Trustee to specify the first day in the 90-day liquidation period
in a statement attached to the Trust Estate's final Tax Return, which shall be
binding upon all successor Owners.
(f) In connection with any such purchase, such Owners of the Class R
Certificates or the Servicer and the Special Servicer shall provide to the
Trustee and the Guarantor an opinion of counsel experienced in federal income
tax matters at the expense of such party and acceptable to the Trustee to the
effect that such purchase and liquidation constitutes a Qualified Liquidation of
the Lower-Tier REMIC and the Upper-Tier REMIC.
(g) Promptly following any purchase or sale described in this Section
9.02, the Trustee will release the Files to the Owners of the Class R
Certificates or otherwise upon their order or to the Servicer and the Special
Servicer, if applicable, in accordance with Section 8.14 hereof. Upon such
release, the servicing of the Mortgage Loans shall remain with the Servicer and
the Special Servicer, subject to the servicing provisions provided for herein.
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Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
Estate does not and will no longer qualify as a REMIC pursuant to Section 860D
of the Code (the "Final Determination"), at any time on or after the date which
is 30 calendar days following such Final Determination the Owners of a majority
in Percentage Interests represented by the Offered Certificates related to
either Mortgage Loan Group then Outstanding may direct the Trustee on behalf of
the Trust to adopt a plan of complete liquidation, as contemplated by Section
860F(a)(4) of the Code.
The Trustee shall notify the Servicer, the Special Servicer and the
Owners of the Class R Certificates of such election to liquidate or such
determination to purchase, as the case may be (the "Termination Notice"). The
Owners of a majority of the Class R Certificates may, within 60 days from the
date of receipt of the Termination Notice (the "Purchase Option Period"), at
their option, purchase from the Trust all (but not fewer than all) Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a purchase price equal to the Termination Price. If the Owners
of a majority of the Class R Certificates have not exercised the option
described in the immediately preceding paragraph, then upon the expiration of
the Purchase Option Period the Trustee shall sell the Mortgage Loans and
reimburse the Servicer and the Special Servicer for unreimbursed (including
nonrecoverable) Delinquency Advances, Servicing Advances and Servicing Fees and
distribute the remaining proceeds of the liquidation of the Trust Estate, each
in accordance with the plan of complete liquidation, such that, if so directed,
the liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Owners of the Offered Certificates
shall permit or direct in writing, after the expiration of the Purchase Option
Period. In connection with such purchase, the Servicer and the Special Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Class R Certificates then Outstanding may, at their option and upon delivery to
the Trustee of an Opinion of Counsel experienced in federal income tax matters
acceptable to the Trustee selected by such Owners of the Class R Certificates
which opinion shall be reasonably satisfactory in form and substance to the
Trustee, the Guarantor and the Seller to the effect that the effect of the Final
Determination is to increase substantially the probability that the gross income
of the Trust will be subject to federal taxation, purchase from the Trust all
(but not fewer than all) Mortgage Loans and REO Properties at a purchase price
equal to the Termination Price.
(c) In connection with any purchase pursuant to this Section 9.03, the
Trustee shall adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an Opinion of Counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unreimbursed Guarantor Reimbursement Amounts and
unrecovered Delinquency Advances and Servicing Advances which a Servicer
determined to be nonrecoverable and unreimbursed Delinquency Advances and
Servicing Advances and Servicing Fees theretofore funded by the Servicer or the
Special Servicer from the Servicer's or the Special Servicer's own funds shall
be paid by the Trustee to theGuarantor or the Servicer or the Special Servicer,
as applicable, from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B)
shall serve as the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicer and the Special
Servicer hereunder, the Trustee is hereby empowered to perform the duties of the
Servicer and the Special Servicer it being expressly understood, however, that
the foregoing describes a power and not an obligation of the Trustee, and that
all parties hereto agree that, prior to any termination of the Servicer and the
Special Servicer, the Servicer and the Special Servicer and, thereafter, the
Trustee or any other successor servicer shall perform such duties. Specifically,
and not in limitation of the foregoing, the Trustee shall upon termination or
resignation of the Servicer and the Special Servicer, and pending the
appointment of any other Person as successor Servicer or successor Special
Servicer have the power and duty during its performance as successor Servicer or
successor Special Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest (and to be reimbursed therefor as
provided herein).
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the Owners of a majority in Percentage
Interest of the Certificates of the affected Class or Classes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicers under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer and the Special Servicer in accordance with the terms of this
Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) None of the Servicer, the Special Servicer, the Master Servicer,
the Seller and the Trustee knowingly shall take any action (other than any
action expressly required by this Agreement) that would cause the Class A-7
Certificates, the Class A-8 Certificates or the Class M-1A Certificates to fail
to qualify as "mortgage related securities" within the meaning of the Securities
Exchange Act of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any material covenant or agreement of the Trustee in this Agreement, or
if any representation or warranty of the Trustee made in this Agreement
or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Offered
Certificates then Outstanding, or, if there are no Offered Certificates
then Outstanding, by such Percentage Interests represented by the Class
R Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency
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or reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Guarantor and the Rating Agencies
notice of the occurrence of any such event of which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is continuing,
then and in every such case the Depositor or the Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding
related to either Mortgage Loan Group or if there are no Offered Certificates
then Outstanding by a majority of the Class R Certificates, may, whether or not
the Trustee resigns pursuant to Section 10.09(b), immediately, concurrently with
the giving of notice to the Trustee, and without delaying the 30 days required
for notice therein, appoint a successor Trustee pursuant to the terms of Section
10.09.
(c) Neither the Servicer nor the Special Servicer shall be liable for
any costs relating to the removal of the Trustee or the appointment of a new
Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Servicer, the Special Servicer, the Master Servicer or the Owners of any Class
of Certificates mentioned herein shall, at the request of the Trustee, be in
writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within the
discretion or the rights or powers conferred upon it under this Agreement other
than as to validity and sufficiency of its authentication of the Certificates;
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(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer, the Special
Servicer and the Master Servicer are required to furnish to the Trustee from
time to time certain information and make various calculations which are
relevant to the performance of the Trustee's duties under the Agreement. The
Trustee shall be entitled to rely in good faith on any such information and
calculations in the performance of its duties hereunder, (i) unless and until an
Authorized Officer of the Trustee has actual knowledge, or is advised by any
Owner of a Certificate or any other party hereto (either in writing or orally
with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
(l) the Trustee shall not be charged with knowledge of any failure by
the Depositor, the Seller, the Master Servicer, the Special Servicer or the
Servicer to comply with any of its obligations hereunder or any breach of any
representation or warranty hereunder unless an Authorized Officer of the Trustee
obtains actual knowledge of such failure or breach or the Trustee receives
written notice of such failure or breach.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller, the Master Servicer,
the Special Servicer or the Servicer in respect of the Mortgage Loans or
deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor, the Servicer, the Special Servicer, the
Master Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
or to prepare or file any tax returns (except as provided in Section 11.16) or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(i) and (d)(i) and Section
7.05 hereof. The Trustee shall have no lien on the Trust Estate for the payment
of such fees and expenses.
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Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America and having a deposit rating of at least A2 by Moody's and, if rated by
Fitch, having a rating of at least A- from Fitch (or such lower rating as may be
acceptable to Fitch). If such Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation or association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
the Seller resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Owners at their addresses appearing on the Register; provided, that the Trustee
may not resign solely for the failure to receive the Trustee Fee. A copy of such
notice shall be sent by the resigning Trustee to the Guarantor and the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor trustee or trustees by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of the Depositor, one
copy of which instrument shall be delivered to the Trustee so resigning and one
copy to the successor trustee or trustees. If no successor trustee shall have
been appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any Owner
may, on behalf of himself and all others similarly situated, petition any such
court for the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and appropriate, appoint a
successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor, the Depositor may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Offered Certificates related to either Mortgage Loan Group or, if there are
no Offered Certificates then Outstanding, by a majority of the Class R
Certificates, may at any time remove the Trustee and appoint a successor trustee
by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor and to the Servicer, copies of the record of the act
taken by the Owners, as provided for in Section 11.03.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Seller duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller, with the consent of the Guarantor, shall promptly appoint a
successor trustee. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Seller or the Owners of a majority of the Percentage
Interests represented by the Offered Certificates then Outstanding, the
successor trustee so appointed shall forthwith upon its acceptance of such
appointment become the successor trustee and supersede the successor trustee
appointed by the Depositor. If no successor trustee shall have been so appointed
by the Depositor or the Owners and shall have accepted appointment in the manner
hereinafter provided, any Owner may, on behalf of himself and all others
similarly situated, petition any
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court of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the Rating
Agencies, the Master Servicer, the Special Servicer, the Guarantor and the
Servicer and to the Owners as their names and addresses appear in the Register.
Each notice shall include the name of the successor Trustee and the address of
its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
Regulations, and shall withhold, as required by applicable law, federal, state
or local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code. The Trustee shall provide such other information as the
Guarantor may reasonably request in such format as reasonably requested by the
Guarantor and any other information as is required by the Code and regulations
thereunder to be made available to Owners of the Guaranteed Certificates.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports required to be filed by the Trust with any
federal, state or local governmental authority having jurisdiction over the
Trust, including other reports that must be filed
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with the Owners. The Trustee shall, upon request of the Tax Matters Person,
collect any forms or reports from the Owners determined by the Tax Matters
Person to be required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Tax Matters Person shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Tax Matters Person's
responsibility shall be to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Master
Servicer, the Servicer, the Special Servicer, the Guarantor or any Owner for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors, officers, employees
or agents or any such Person against any liability which would otherwise be
imposed by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. In addition, the Depositor, the Master
Servicer and the Seller covenant and agree to indemnify the Trustee and its
employees, officers, directors and agents in its capacity as Trustee and not as
successor Servicer or successor Special Servicer (unless resulting from failure
of the related predecessor Servicer or predecessor Special Servicer to perform
in accordance with this Agreement), from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of the Trustee's duties hereunder other than those resulting from
the negligence or bad faith of the Trustee, and the Depositor shall pay all
amounts not otherwise paid pursuant to Sections 2.05 and 7.05 hereof. The
Trustee and any director, officer, employee or agent of the Trustee may rely and
shall be protected in acting or refraining from acting in good faith on any
certificate, notice or other document of any kind prima facie properly executed
and submitted by the Authorized Officer of any Person respecting any matters
arising hereunder. The provisions of this Section 10.13 shall survive the
termination of this Agreement, the resignation or removal of the Trustee
hereunder and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Depositor and the
Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment. No
co-Trustee or separate Trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 10.08 and no notice to Owner of
the appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer or the
Special Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in
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which event such rights, powers, duties and obligations (including the
holding of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
Trustee or co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Seller and the Trustee acting jointly may at any
time accept the resignation of or remove any separate Trustee or
co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement in the form of Exhibit L. Subject to this Article X, the Trustee
agrees to comply with the terms of each Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates.
Section 10.16 No Solicitation. The Trustee agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Trustee's behalf, to personally, by telephone or mail, solicit
the borrower or Mortgagor under any Mortgage Loan for any purpose whatsoever,
including to refinance a Mortgage Loan. Notwithstanding the foregoing, it is
understood and agreed that promotions undertaken by the Trustee or any Affiliate
thereof which are directed to the general public at large, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this paragraph, nor is the Trustee prohibited from responding to
unsolicited requests or inquiries made by a Mortgagor or an agent of a
Mortgagor.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Depositor, the Seller or the Owners, as the case may be, shall furnish to
the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion of
an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the
Seller, the Special Servicer or the Servicer, stating that the information with
respect to such factual matters is in the possession of the Depositor, the
Seller or such Servicer, unless such Authorized Officer or counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Trustee, stating that the information with respect to such matters is in the
possession of the Trustee, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may be based
on the written opinion of other counsel, in which event such Opinion of Counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
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Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Seller, the Master Servicer, the Special Servicer, the
Guarantor and the Servicer shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with and received by the
Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-Class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
or the Special Servicer has been removed or resigned or the Trust is terminated,
notice of any such events shall be made by overnight courier, registered mail or
telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
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Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
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(c) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Master Servicer, the Special Servicer or the
Servicer or other third-party beneficiary hereunder, as the case may be, to
serve process in any other manner permitted by law or to start legal proceedings
relating to any of the Mortgage Loans against any Mortgagor in the courts of any
jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller, the Master Servicer, the
Special Servicer, the Guarantor and the Servicer may at any time and from time
to time, and without notice to or the consent of the Owners, amend this
Agreement, subject to the provisions of Section 11.16 and 11.17 and the consent
of the Trustee to such amendment shall not be unreasonably withheld, for the
purpose of (i) curing any ambiguity, typographical error, or mistake, correcting
or supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof; or (ii) upon receipt of an Opinion of Counsel
satisfactory to the Guarantor experienced in federal income tax matters to the
effect that no entity-level tax will be imposed on the Trust, any REMIC therein
or upon the transferor of a Class R Certificate as a result of the ownership of
any Class R Certificate by a Disqualified Organization, removing the restriction
on transfer set forth in Section 5.08(b) hereof; or (iii) complying with the
requirements of the Code and the regulations proposed or promulgated thereunder
including any amendments necessary to maintain REMIC status for the Upper-Tier
REMIC or the Lower-Tier REMIC or (iv) for any other purpose, provided that in
the case of this clause (iv) such amendment will not adversely affect in any
material respect any Owners. Any such amendment shall be deemed not to adversely
affect in any material respect any Owner if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to any Class of
the Certificates. This Agreement may also be amended by the Trustee, the
Depositor, the Seller, the Special Servicer, the Guarantor, the Master Servicer
and the Servicer at any time and from time to time, with the prior written
approval of a majority of the Percentage Interest represented by each affected
Class of Certificates then Outstanding, for the purpose of adding any provisions
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Owners hereunder.
Notwithstanding anything to the contrary herein, no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Owner without the consent of the Owner of such
Certificate, (b) reduce the aforesaid percentages of Percentage Interests which
are required to consent to any such amendments, without the consent of the
Owners of all Certificates of the Class or Classes affected then Outstanding,
(c) adversely affect the qualification of either the Upper-Tier REMIC or the
Lower-Tier REMIC subject either the Upper-Tier REMIC or the Lower-Tier REMIC to
tax, as evidenced by an Opinion of Counsel satisfactory to the Trustee at the
expense of the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
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(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Servicers and the Owners by mailing notice
thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall constitute, and that the affairs of the Lower-Tier REMIC
and the Upper-Tier REMIC shall be conducted so as to qualify each as a REMIC in
accordance with the REMIC Provisions. In furtherance of such intention, Norwest
Bank Minnesota, National Association or such other person designated pursuant to
Section 11.18 hereof shall act as agent for the Trust and as Tax Matters Person
for the Trust and that in such capacity it shall: (i) prepare or cause to be
prepared and filed, in a timely manner, annual tax returns and any other tax
return required to be filed by the Lower-Tier REMIC and the Upper-Tier REMIC
established hereunder using a calendar year as the taxable year for the
Lower-Tier REMIC and the Upper-Tier REMIC established hereunder; (ii) in the
related first such tax return, make (or cause to be made) an election satisfying
the requirements of the REMIC Provisions, on behalf of the Lower-Tier REMIC and
the Upper-Tier REMIC for it to be treated as a REMIC; (iii) prepare and forward,
or cause to be prepared and forwarded, to the Owners all information, reports or
tax returns required with respect to the Lower-Tier REMIC and the Upper-Tier
REMIC as, when and in the form required to be provided to the Owners, and to the
Internal Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the Lower-Tier REMIC and the Upper-Tier REMIC, except as
provided under this Agreement; (v) represent the Trust, the Lower-Tier REMIC or
the Upper-Tier REMIC in any administrative or judicial proceedings relating to
an examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust, the Lower-Tier
REMIC or the Upper-Tier REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust, the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust, the Lower-Tier REMIC
120
<PAGE>
or the Upper-Tier REMIC therein in relation to any tax matter involving the
Trust or any REMIC therein provided to the extent that such representation
affects the Guarantor's obligations hereunder, the Trustee agrees to consult
with the Guarantor and accommodate the Guarantor's reasonable requests; (vi)
comply with all statutory or regulatory requirements with regard to its conduct
of activities pursuant to the foregoing clauses of this Section 11.16,
including, without limitation, providing all notices and other information to
the Internal Revenue Service and Owners of Class R Certificates required of a
"tax matters person" pursuant to subtitle F of the Code and the Treasury
Regulations thereunder; (vii) upon receipt of reasonable compensation, make
available information to the Internal Revenue Service and those Persons
specified by the REMIC Provisions necessary for the computation of any tax
imposed (A) on transferor of residual interests to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held by
a Disqualified Organization; and (viii) acquire and hold the Tax Matters Person
Residual Interest. The obligations of Norwest Bank Minnesota, National
Association or such other designated Tax Matters Person pursuant to this Section
11.16 shall survive the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee, the Master Servicer, the
Special Servicer and the Servicer covenant and agree for the benefit of the
Owners (i) to take no action which would result in the termination of "REMIC"
status for the Lower-Tier REMIC or the Upper-Tier REMIC, (ii) not to engage in
any "prohibited transaction", as such term is defined in Section 860F(a)(2) of
the Code, and (iii) not to engage in any other action which may result in the
imposition on the Trust of any other taxes under the Code and the Seller in
addition covenants to cause each Servicer not to take or engage in any such
action, to the extent the Seller is aware of any such proposed action by the
Servicer.
(c) Each of the Lower-Tier REMIC and the Upper-Tier REMIC shall, for
federal income tax purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to Trustee, the Seller and the
Guarantor to the effect that such transaction does not result in a tax imposed
on the Trust or cause a termination of REMIC status for the Lower-Tier REMIC or
the Upper-Tier REMIC; provided, however, that such transaction is otherwise
permitted under this Agreement.
(g) The Trustee, the Depositor, the Servicer, the Special Servicer and
Tax Matters Person each agree to indemnify the Trust for any tax imposed on the
Trust, the Lower-Tier or the Upper-Tier REMIC as a result of their own
negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee and the
Guarantor to the effect that such transaction does not result in a tax imposed
on the Trust, the Lower-Tier REMIC or the Upper-Tier REMIC or cause a
termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC,
(i) sell any assets in the Trust Estate (except as specifically provided in this
Agreement), (ii) accept any contribution of assets after the Startup Day in
violation of the REMIC Provisions or (iii) agree to any modification of this
Agreement. To the extent that sufficient amounts cannot be so retained to pay or
provide for the payment of such tax, the Trustee is hereby authorized to and
shall segregate, into a separate non-interest bearing account, the net income
from any such Prohibited Transactions of the Lower-Tier REMIC and the Upper-Tier
REMIC and use such income, to the extent necessary, to pay such tax; provided
that, to the extent that any such income is paid to the Internal Revenue
Service, the Trustee shall retain an equal amount from future amounts otherwise
distributable to the Owners of Class R Certificates and shall distribute such
retained amounts to the Owners of Offered Certificates to the extent they are
fully reimbursed and then to the Owners of the Class R Certificates. If any tax,
including interest penalties or assessments, additional amounts or additions to
tax, is imposed on the Trust, such tax shall be charged against amounts
otherwise
121
<PAGE>
distributable to the owners of the Class R Certificates on a pro rata basis. The
Trustee is hereby authorized to and shall retain from amounts otherwise
distributable to the Owners of the Class R Certificates sufficient funds to pay
or provide for the payment of, and to actually pay, such tax as is legally owed
by the Trust (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be Norwest Bank Minnesota, National Association as long
as it owns a Class R Certificate. If Norwest Bank Minnesota, National
Association does not own a Class R Certificate, the Tax Matters Person may be
any other entity that owns a Class R Certificate and accepts a designation
hereunder as Tax Matters person by delivering an affidavit in the form of
Exhibit I. The Seller shall notify the Trustee in writing of the name and
address of another person who accepts a designation as Tax Matters Person
hereunder.
Section 11.19 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Norwest Bank Minnesota, National Association
------------ Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-1026
Attn: AMRESCO 1998-3
with a copy to:
---------------
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attn: AMRESCO 1998-3
Tel: (410) 884-2000
Fax: (410) 884-2360
The Depositor: AMRESCO Residential Securities Corporation
-------------- 700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller and AMRESCO Residential Capital Markets, Inc.
Special Servicer: c/o AMRESCO Residential Credit Corporation
----------------- 16800 Aston Street
Irvine, California 92606
Attn: Capital Markets
Tel: (949) 440-1000
Fax: (949) 798-4610
122
<PAGE>
The Master
Servicer: AMRESCO Residential Capital Markets, Inc.
---------- c/o AMRESCO Residential Credit Corporation
One Lakeshore Centre
3281 Guasti Road, Suite 800
Ontario, California 91761
Attn: Investor Reporting
Tel: (909) 605-7600
Fax: (909) 605-2402
with a copy to:
---------------
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attn: AMRESCO 1998-3
Tel: (410) 884-2000
Fax: (410) 884-2360
The Servicer: AMRESCO Residential Mortgage Corporation
------------- 16800 Aston Street
Irvine, California 92606
Attn: President
Tel: (714) 440-1000
Fax: (714) 440-1535
The Guarantor: Freddie Mac
-------------- 8200 Jones Branch Drive
McLean, Virginia 22102
Attn: Vice President of Structured Finance
Tel: (703) 903-2000
Fax: (703) 903-3929
Moody's: Moody's Investors Service
-------- 99 Church Street
New York, New York 10007
Attn: The Mortgage Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
------ One State Street Plaza
New York, New York 10004
Attn: Hedi Katz
Tel: (212) 908-0500
Fax: (212) 376-6857
Custodian: Bankers Trust Company of California N.A.
---------- 3 Park Plaza, 16th Floor
Irvine, CA 92614
Attn: AMRESCO 1998-3
Tel: (714) 253-7575
Fax: (714) 253-7577
123
<PAGE>
Underwriters: Morgan Stanley & Co. Incorporated
------------- 1585 Broadway
New York, New York 10036
Attn: Valerie Kay
Tel: (212) 761-4000
Fax: (212) 761-0782
AMRESCO Securities, Inc.
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: Derek Driver
Tel: (214) 999-7187
Fax: (214) 999-7455
Bear, Stearns & Co. Incorporated
245 Park Avenue
4th Floor
New York, New York 10167
Attn: Tom Dunstan
Tel: (212) 272-2000
Fax: (212) 272-7294
Credit Suisse First Boston Corporation
55 E. 52nd St.
New York, New York 10055-0186
Attn: Nita Cherry
Tel: (212) 909-2333
Fax: (212) 479-5502
Deutsche Bank Securities Inc.
31 West 52nd Street - 23rd Floor
New York, New York 10019
Attn: Vijay Radhakishum
Tel: (212) 469-8925
Fax: (212) 469-7571
Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292
Attn: Brendan Keane
Tel: (212) 778-1000
Fax: (212) 778-7401
Owners: As set forth in the Register.
-------
END OF ARTICLE XI
124
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Master Servicer, the
Servicer, the Special Servicer, the Guarantor and the Trustee have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By: /s/ Janice M. Cott
-----------------------------------
Title: Vice President
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller, Master Servicer and Special Servicer
By: /s/ Janice M. Cott
-----------------------------------
Title: Vice President
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
as Servicer
By: /s/ Patricia L. Wayman
-----------------------------------
Title: Senior Vice President
FEDERAL HOME LOAN MORTGAGE CORPORATION
as Guarantor
By: /s/ Robert J. Patelunas
-----------------------------------
Title: Vice President - Structured Finance
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
By: /s/ Peter J. Masterman
-----------------------------------
Title: Vice President
<PAGE>
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
On the 29th day of September, 1998, before me personally came Janice M.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Costa Mesa, California, that she is a Vice President of AMRESCO
Residential Securities Corporation, a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Patti E. Womack
-------------------------------------
Notary Public
Patti Womack
Notary Public, Texas
My Commission Expires January 9, 2001
<PAGE>
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
On the 29th day of September, 1998, before me personally came Janice M.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Costa Mesa, California, that she is a Vice President of AMRESCO
Residential Capital Markets, Inc., a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Patti E. Womack
-------------------------------------
Notary Public
Patti Womack
Notary Public, Texas
My Commission Expires January 9, 2001
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On the 29th day of September, 1998, before me personally came Patricia
L. Wayman, to me known, who, being by me duly sworn, did depose and say that she
resides at Orange County, California, that she is a Senior Vice President of
AMRESCO Residential Mortgage Corporation, a Delaware corporation; and that she
signed her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Catherine L. Campbell
-------------------------------------
Notary Public
Catherine L. Campbell
Notary Public, California
Orange County
My Commission Expires August 1, 2000
<PAGE>
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
On the 28th day of September, 1998, before me personally came Robert J.
Patelunas, to me known, who, being by me duly sworn, did depose and say that he
resides at 8200 Jones Branch Drive, that he is a Vice President Structured
Finance of Federal Home Loan Mortgage Corporation, a federally chartered
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
11-30-2000
/s/ Teresa Anne Dunn
-------------------------------------
Notary Public
<PAGE>
STATE OF TEXAS ss.
ss. ss:
COUNTY OF DALLAS ss.
On the 29th of September, 1998, before me personally came Peter
Masterman, to me known, who, being by me duly sworn, did depose and say that he
resides at Baltimore, Maryland that he is Vice President of Norwest Bank
Minnesota, National Association, a national banking association; and that he
signed his name thereto by order of the Board of Directors of said national
banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Patti E. Womack
-------------------------------------
Notary Public
Patti Womack
Notary Public, Texas
My Commission Expires January 9, 2001
Exhibit 99.1
MORGAN STANLEY DEAN WITTER
3,913 records
Balance: 281,936,748
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 1
- --------------------------------------------------------------------------------
1. Geographical Distribution of Mortgaged Properties
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Geographical Distribution of Mortgaged Properties Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alaska 1 115,888.41 0.04
Arizona 57 2,887,332.14 1.02
Arkansas 94 4,466,369.90 1.58
California 539 48,947,491.58 17.36
Colorado 65 4,765,089.07 1.69
Connecticut 32 2,785,984.16 0.99
Delaware 4 337,965.55 0.12
District of Columbia 17 1,430,207.20 0.51
Florida 403 27,460,563.44 9.74
Georgia 123 9,302,013.45 3.30
Hawaii 175 26,604,778.83 9.44
Idaho 9 763,397.17 0.27
Illinois 96 6,205,821.74 2.20
Indiana 97 4,344,968.51 1.54
Iowa 5 206,034.75 0.07
Kansas 6 313,034.08 0.11
Kentucky 21 1,252,728.92 0.44
Louisiana 42 2,542,357.90 0.90
Maine 5 292,797.54 0.10
Maryland 195 14,178,051.03 5.03
Massachusetts 41 3,724,629.92 1.32
Michigan 117 7,142,388.06 2.53
Minnesota 25 1,382,161.14 0.49
Mississippi 57 2,663,775.89 0.94
Missouri 80 3,643,609.34 1.29
Montana 6 427,987.41 0.15
Nebraska 5 287,041.09 0.10
Nevada 32 2,862,523.38 1.02
New Hampshire 12 859,578.18 0.30
New Jersey 36 3,202,360.76 1.14
New Mexico 19 1,242,817.33 0.44
New York 45 4,248,153.16 1.51
North Carolina 80 4,576,538.93 1.62
Ohio 271 16,625,697.67 5.90
Oklahoma 61 3,218,603.13 1.14
Oregon 64 5,468,892.80 1.94
Pennsylvania 218 13,753,091.89 4.88
Rhode Island 8 701,433.58 0.25
South Carolina 21 927,401.16 0.33
South Dakota 1 59,786.54 0.02
Tennessee 89 5,026,459.43 1.78
Texas 433 25,768,102.03 9.14
Utah 44 3,154,600.54 1.12
Vermont 1 56,794.26 0.02
Virginia 53 3,991,932.03 1.42
Washington 47 4,332,179.44 1.54
West Virginia 5 201,372.34 0.07
Wisconsin 52 2,858,320.44 1.01
Wyoming 4 325,640.26 0.12
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
3,913 records
Balance: 281,936,748
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 1
- --------------------------------------------------------------------------------
2. Combined Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Combined Original Loan-to-Value Ratios Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10.01 - 20.00 18 626,278.43 0.22
20.01 - 30.00 50 1,924,560.31 0.68
30.01 - 40.00 83 4,031,512.49 1.43
40.01 - 50.00 161 8,952,806.17 3.18
50.01 - 60.00 291 15,944,146.25 5.66
60.01 - 70.00 813 50,678,040.80 17.97
70.01 - 75.00 547 40,501,933.99 14.37
75.01 - 80.00 825 62,160,876.40 22.05
80.01 - 85.00 535 44,128,886.76 15.65
85.01 - 90.00 432 38,382,664.45 13.61
90.01 - 95.00 158 14,605,041.45 5.18
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
3. Cut-Off Date Coupon Rates
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Cut-Off Date Coupon Rates Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7.000 and less 8 1,601,280.80 0.57
7.001 - 7.500 18 3,198,780.65 1.13
7.501 - 8.000 192 21,477,216.38 7.62
8.001 - 8.250 103 10,241,926.51 3.63
8.251 - 8.500 110 11,709,300.90 4.15
8.501 - 8.750 180 17,192,260.13 6.10
8.751 - 9.000 274 23,502,745.59 8.34
9.001 - 9.250 143 12,439,906.89 4.41
9.251 - 9.500 193 14,043,316.86 4.98
9.501 - 9.750 232 18,933,379.82 6.72
9.751 - 10.000 310 23,009,470.45 8.16
10.001 - 10.250 201 13,563,718.16 4.81
10.251 - 10.500 242 16,921,457.56 6.00
10.501 - 10.750 255 15,695,208.64 5.57
10.751 - 11.000 247 15,605,231.77 5.54
11.001 - 11.250 179 10,290,533.38 3.65
11.251 - 11.500 164 9,138,776.86 3.24
11.501 - 11.750 159 8,455,292.68 3.00
11.751 - 12.000 171 8,973,894.74 3.18
12.001 - 13.000 322 15,644,297.14 5.55
13.001 - 14.000 149 6,989,005.19 2.48
14.001 - 15.000 48 2,830,604.97 1.00
15.001 - 16.000 10 380,441.43 0.13
16.001 - 17.000 1 59,468.94 0.02
17.001 - 18.000 1 22,987.20 0.01
18.001 - 19.000 1 16,243.86 0.01
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
3,913 records
Balance: 281,936,748
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 1
- --------------------------------------------------------------------------------
4. Cut-Off Date Loan Balances
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Cut-Off Date Loan Balances Mortgage Loans Loan Balance Loan Balance
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,000.01 - 10,000.00 9 87,914.49 0.03
10,000.01 - 15,000.00 36 478,455.27 0.17
15,000.01 - 20,000.00 100 1,880,374.82 0.67
20,000.01 - 25,000.00 199 4,591,988.36 1.63
25,000.01 - 30,000.00 265 7,398,149.49 2.62
30,000.01 - 35,000.00 251 8,232,925.48 2.92
35,000.01 - 40,000.00 280 10,590,329.61 3.76
40,000.01 - 45,000.00 222 9,481,532.77 3.36
45,000.01 - 50,000.00 252 12,014,604.27 4.26
50,000.01 - 55,000.00 209 11,014,804.67 3.91
55,000.01 - 60,000.00 228 13,167,741.80 4.67
60,000.01 - 65,000.00 183 11,474,262.98 4.07
65,000.01 - 70,000.00 160 10,821,928.46 3.84
70,000.01 - 75,000.00 120 8,732,886.03 3.10
75,000.01 - 80,000.00 138 10,719,060.29 3.80
80,000.01 - 85,000.00 120 9,922,049.69 3.52
85,000.01 - 90,000.00 98 8,581,951.06 3.04
90,000.01 - 95,000.00 88 8,140,170.89 2.89
95,000.01 - 100,000.00 98 9,558,169.03 3.39
100,000.01 - 105,000.00 95 9,759,703.35 3.46
105,000.01 - 110,000.00 74 7,958,571.34 2.82
110,000.01 - 115,000.00 63 7,095,685.20 2.52
115,000.01 - 120,000.00 65 7,667,925.20 2.72
120,000.01 - 125,000.00 64 7,835,595.90 2.78
125,000.01 - 130,000.00 49 6,253,063.77 2.22
130,000.01 - 135,000.00 52 6,894,168.29 2.45
135,000.01 - 140,000.00 36 4,962,707.66 1.76
140,000.01 - 145,000.00 31 4,431,607.58 1.57
145,000.01 - 150,000.00 30 4,432,579.31 1.57
150,000.01 - 160,000.00 53 8,238,453.68 2.92
160,000.01 - 170,000.00 45 7,436,244.55 2.64
170,000.01 - 180,000.00 40 7,001,140.43 2.48
180,000.01 - 190,000.00 36 6,674,616.80 2.37
190,000.01 - 200,000.00 25 4,902,055.47 1.74
200,000.01 - 210,000.00 26 5,316,530.09 1.89
210,000.01 - 220,000.00 26 5,615,243.68 1.99
220,000.01 - 230,000.00 17 3,809,487.36 1.35
230,000.01 - 240,000.00 3 712,261.35 0.25
240,000.01 - 250,000.00 3 732,802.15 0.26
250,000.01 - 300,000.00 12 3,264,504.04 1.16
300,000.01 - 350,000.00 10 3,207,332.63 1.14
400,000.01 - 450,000.00 2 845,168.21 0.30
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
5. Types of Mortgaged Properties
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Types of Mortgaged Properties Mortgage Loans Loan Balance Loan Balance
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Single Family Residence 3,213 225,031,125.50 79.82
2-4 Family 271 23,678,910.89 8.40
PUD 202 17,717,770.44 6.28
Condo 177 12,665,999.18 4.49
Manufactured Housing 50 2,842,941.49 1.01
- --------------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
3,913 records
Balance: 281,936,748
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 1
- --------------------------------------------------------------------------------
6. Months Elapsed Since Origination
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Months Elapsed Since Origination Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 826 58,228,049.04 20.65
1 - 6 2,682 199,465,204.63 70.75
7 - 12 363 22,103,316.96 7.84
13 - 18 42 2,140,176.87 0.76
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
7. Remaining Term to Maturity
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Remaining Term to Maturity Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 - 60 3 42,009.18 0.01
61 - 120 29 1,147,209.77 0.41
121 - 180 1,048 53,917,368.99 19.12
181 - 240 108 6,079,165.52 2.16
241 - 300 2 196,315.47 0.07
301 - 360 2,723 220,554,678.57 78.23
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
8. Occupancy Status
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Aggregate % of Aggregate
Group I Group I Group I
Occupancy Status Mortgage Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Owner-Occupied 3,335 247,450,754.92 87.77
Non-Owner Occupied 578 34,485,992.58 12.23
- ----------------------------------------------------------------------------------------------------------------------
Total: 3,913 281,936,747.50 100.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
1. Geographical Distribution of Mortgaged Properties
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Geographical Distribution of Mortgaged Properties Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alaska 9 1,037,138.44 0.14
Arizona 158 16,540,546.32 2.30
Arkansas 32 2,543,555.37 0.35
California 1,080 181,788,752.25 25.32
Colorado 215 22,929,796.44 3.19
Connecticut 70 9,608,961.69 1.34
Delaware 7 583,964.41 0.08
District of Columbia 15 2,104,239.72 0.29
Florida 445 43,341,921.07 6.04
Georgia 87 9,183,386.24 1.28
Hawaii 67 17,635,580.06 2.46
Idaho 29 2,869,751.19 0.40
Illinois 507 51,613,521.23 7.19
Indiana 123 8,777,988.04 1.22
Iowa 27 1,298,072.13 0.18
Kansas 25 1,988,521.12 0.28
Kentucky 41 3,356,178.88 0.47
Louisiana 28 2,605,645.16 0.36
Maine 7 719,733.28 0.10
Maryland 135 16,682,736.96 2.32
Massachusetts 190 23,747,310.61 3.31
Michigan 166 13,462,502.74 1.87
Minnesota 112 11,621,190.01 1.62
Mississippi 28 1,907,485.46 0.27
Missouri 191 14,782,738.03 2.06
Montana 18 1,521,936.86 0.21
Nebraska 7 301,432.77 0.04
Nevada 88 10,499,404.67 1.46
New Hampshire 42 3,688,895.80 0.51
New Jersey 138 18,421,680.01 2.57
New Mexico 61 6,693,841.98 0.93
New York 61 8,120,590.93 1.13
North Carolina 141 11,004,159.30 1.53
North Dakota 1 73,161.80 0.01
Ohio 505 41,343,127.41 5.76
Oklahoma 28 2,397,726.17 0.33
Oregon 197 25,660,164.12 3.57
Pennsylvania 160 12,950,646.43 1.80
Rhode Island 42 3,517,606.00 0.49
South Carolina 30 2,232,632.57 0.31
South Dakota 3 232,972.53 0.03
Tennessee 59 4,939,449.03 0.69
Texas 280 27,962,290.70 3.89
Utah 185 23,891,534.19 3.33
Vermont 2 150,691.26 0.02
Virginia 47 5,866,000.52 0.82
Washington 257 32,086,537.36 4.47
West Virginia 12 501,776.38 0.07
Wisconsin 167 10,760,567.22 1.50
Wyoming 6 513,408.09 0.07
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
2. Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Original Loan-to-Value Ratios Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10.01 - 20.00 5 319,189.03 0.04
20.01 - 30.00 24 1,089,221.58 0.15
30.01 - 40.00 45 3,154,256.19 0.44
40.01 - 50.00 98 7,027,892.46 0.98
50.01 - 60.00 277 24,203,347.35 3.37
60.01 - 70.00 1,042 101,765,061.96 14.17
70.01 - 80.00 2,486 282,047,310.08 39.28
80.01 - 90.00 2,140 270,561,659.94 37.68
90.01 - 100.00 214 27,895,512.36 3.88
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
3. Cut-Off Date Coupon Rates
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Cut-Off Date Coupon Rates Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7.000 and less 19 3,387,994.09 0.47
7.001 - 7.500 41 7,067,588.36 0.98
7.501 - 8.000 159 27,402,000.06 3.82
8.001 - 8.250 98 15,894,416.27 2.21
8.251 - 8.500 252 37,226,650.38 5.18
8.501 - 8.750 257 36,785,629.17 5.12
8.751 - 9.000 464 63,396,273.76 8.83
9.001 - 9.250 315 40,860,680.81 5.69
9.251 - 9.500 539 66,199,613.67 9.22
9.501 - 9.750 471 55,004,845.96 7.66
9.751 - 10.000 703 82,506,253.38 11.49
10.001 - 10.250 418 44,574,587.70 6.21
10.251 - 10.500 490 49,701,183.82 6.92
10.501 - 10.750 458 44,396,418.82 6.18
10.751 - 11.000 458 43,962,257.23 6.12
11.001 - 11.250 259 21,555,957.11 3.00
11.251 - 11.500 233 19,344,118.33 2.69
11.501 - 11.750 179 15,160,417.27 2.11
11.751 - 12.000 142 14,063,842.82 1.96
12.001 - 13.000 261 20,809,666.89 2.90
13.001 - 14.000 78 6,294,943.27 0.88
14.001 - 15.000 34 2,081,540.57 0.29
15.001 - 16.000 2 338,993.16 0.05
16.001 - 17.000 1 47,578.05 0.01
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
4. Cut-Off Date Loan Balances
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Cut-Off Date Loan Balances Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,000.01 - 10,000.00 1 6,330.51 0.00
10,000.01 - 15,000.00 4 54,578.89 0.01
15,000.01 - 20,000.00 18 336,808.58 0.05
20,000.01 - 25,000.00 75 1,718,962.60 0.24
25,000.01 - 30,000.00 98 2,725,281.54 0.38
30,000.01 - 35,000.00 173 5,674,799.10 0.79
35,000.01 - 40,000.00 202 7,679,315.38 1.07
40,000.01 - 45,000.00 207 8,857,171.94 1.23
45,000.01 - 50,000.00 264 12,646,852.64 1.76
50,000.01 - 55,000.00 254 13,369,296.67 1.86
55,000.01 - 60,000.00 288 16,590,236.64 2.31
60,000.01 - 65,000.00 250 15,681,058.71 2.18
65,000.01 - 70,000.00 290 19,676,715.64 2.74
70,000.01 - 75,000.00 266 19,291,429.32 2.69
75,000.01 - 80,000.00 244 18,970,526.30 2.64
80,000.01 - 85,000.00 244 20,159,879.39 2.81
85,000.01 - 90,000.00 252 22,124,356.92 3.08
90,000.01 - 95,000.00 172 15,909,608.24 2.22
95,000.01 - 100,000.00 229 22,370,593.79 3.12
100,000.01 - 105,000.00 190 19,523,096.27 2.72
105,000.01 - 110,000.00 172 18,467,450.86 2.57
110,000.01 - 115,000.00 177 19,950,738.93 2.78
115,000.01 - 120,000.00 172 20,224,227.48 2.82
120,000.01 - 125,000.00 132 16,165,059.56 2.25
125,000.01 - 130,000.00 142 18,104,326.78 2.52
130,000.01 - 135,000.00 137 18,179,258.06 2.53
135,000.01 - 140,000.00 116 15,990,841.19 2.23
140,000.01 - 145,000.00 95 13,561,302.74 1.89
145,000.01 - 150,000.00 87 12,839,945.43 1.79
150,000.01 - 160,000.00 148 22,937,149.87 3.19
160,000.01 - 170,000.00 140 23,103,194.58 3.22
170,000.01 - 180,000.00 133 23,278,814.47 3.24
180,000.01 - 190,000.00 105 19,463,177.08 2.71
190,000.01 - 200,000.00 100 19,559,364.61 2.72
200,000.01 - 210,000.00 73 14,974,458.91 2.09
210,000.01 - 220,000.00 71 15,261,397.95 2.13
220,000.01 - 230,000.00 62 13,943,254.09 1.94
230,000.01 - 240,000.00 67 15,762,580.24 2.20
240,000.01 - 250,000.00 46 11,285,842.67 1.57
250,000.01 - 300,000.00 214 58,399,930.07 8.13
300,000.01 - 350,000.00 99 32,119,652.38 4.47
350,000.01 - 400,000.00 59 22,053,751.04 3.07
400,000.01 - 450,000.00 32 13,812,973.38 1.92
450,000.01 - 500,000.00 25 11,927,936.53 1.66
500,000.01 - 550,000.00 3 1,556,504.93 0.22
550,000.01 - 600,000.00 3 1,773,418.05 0.25
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
5. Types of Mortgaged Properties
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Types of Mortgaged Properties Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Single Family Residence 5,160 581,509,070.87 80.98
2-4 Family 518 58,809,612.59 8.19
PUD 320 46,331,306.55 6.45
Condo 266 26,494,712.77 3.69
Manufactured Housing 67 4,918,748.17 0.69
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6. Months Elapsed Since Origination
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Months Elapsed Since Origination Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 751 79,624,225.97 11.09
1 - 6 3,523 410,757,656.87 57.20
7 - 12 2,028 225,093,919.19 31.35
13 - 18 28 2,498,646.79 0.35
25 - 30 1 89,002.13 0.01
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
7. Remaining Term to Maturity
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Remaining Term to Maturity Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
61 - 120 2 63,300.00 0.01
121 - 180 83 7,698,573.60 1.07
181 - 240 11 960,292.23 0.13
241 - 300 5 473,696.45 0.07
301 - 360 6,230 708,867,588.67 98.72
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
8. Occupancy Status
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Occupancy Status Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Owner-Occupied 5,607 652,908,207.97 90.93
Non-Owner Occupied 724 65,155,242.98 9.07
- ----------------------------------------------------------------------------------------------------------------
Total: 6,331 718,063,450.95 100.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
9. Margins
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Margins Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2.001 - 2.500 1 55,262.87 0.01
3.501 - 4.000 3 597,343.13 0.09
4.001 - 4.500 48 5,468,329.68 0.80
4.501 - 5.000 353 41,355,155.61 6.03
5.001 - 5.500 1,221 145,626,237.22 21.23
5.501 - 6.000 1,436 165,151,096.33 24.08
6.001 - 6.500 1,401 147,155,067.54 21.46
6.501 - 7.000 856 94,849,988.38 13.83
7.001 - 7.500 467 47,363,008.87 6.91
7.501 - 8.000 230 21,297,536.79 3.11
8.001 - 8.500 95 9,980,767.09 1.46
8.501 - 9.000 43 3,713,796.43 0.54
9.001 - 9.500 20 2,538,493.80 0.37
9.501 - 10.000 8 673,442.52 0.10
10.001 - 10.500 1 47,201.21 0.01
- ----------------------------------------------------------------------------------------------------------------
Total: 6,183 685,872,727.47 100.00
- ----------------------------------------------------------------------------------------------------------------
The information in this table relates only to
the adjustable rate Mortgage Loans in Group II.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
10. Maximum Coupon Rates
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Maximum Coupon Rates Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11.001 - 11.500 1 99,809.32 0.01
11.501 - 12.000 1 56,008.38 0.01
12.001 - 12.500 10 1,193,154.08 0.17
12.501 - 13.000 21 3,098,309.35 0.45
13.001 - 13.500 27 4,459,152.60 0.65
13.501 - 14.000 63 9,465,319.35 1.38
14.001 - 14.500 101 15,971,388.08 2.33
14.501 - 15.000 250 36,566,274.02 5.33
15.001 - 15.500 437 59,448,715.99 8.67
15.501 - 16.000 776 100,789,171.29 14.70
16.001 - 16.500 922 111,533,754.38 16.26
16.501 - 17.000 1,090 119,433,187.21 17.41
17.001 - 17.500 916 87,891,115.88 12.81
17.501 - 18.000 694 66,052,571.69 9.63
18.001 - 18.500 374 29,637,560.02 4.32
18.501 - 19.000 222 19,681,740.75 2.87
19.001 - 19.500 115 8,441,464.77 1.23
19.501 - 20.000 79 6,038,635.84 0.88
20.001 - 20.500 33 2,264,615.15 0.33
20.501 - 21.000 23 1,927,332.44 0.28
21.001 - 21.500 17 944,999.52 0.14
21.501 - 22.000 8 491,876.15 0.07
22.001 - 22.500 1 234,099.75 0.03
22.501 - 23.000 1 104,893.41 0.02
23.001 - 23.500 1 47,578.05 0.01
- ----------------------------------------------------------------------------------------------------------------
Total: 6,183 685,872,727.47 100.00
- ----------------------------------------------------------------------------------------------------------------
The information in this table relates only to
the adjustable rate Mortgage Loans in Group II.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER
6,331 records
Balance: 718,063,451
Amresco Residential Securities
Mortgage Loan Trust 1998-3
Group 2
- --------------------------------------------------------------------------------
11. Next Rate Adjustment Date
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number of
Group II Aggregate % of Aggregate
Mortgage Group II Group II
Next Rate Adjustment Date Loans Loan Balance Loan Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998-09 27 2,716,961.98 0.40
1998-10 72 8,022,151.99 1.17
1998-11 34 3,973,878.20 0.58
1998-12 66 6,932,556.27 1.01
1999-01 177 19,461,369.81 2.84
1999-02 173 22,214,198.14 3.24
1999-03 189 24,372,620.34 3.55
1999-04 15 2,017,681.68 0.29
1999-05 2 100,566.56 0.01
1999-06 3 296,587.78 0.04
1999-07 10 756,259.78 0.11
1999-08 8 794,742.10 0.12
1999-09 12 1,392,567.87 0.20
1999-10 89 9,299,765.54 1.36
1999-11 112 12,432,807.28 1.81
1999-12 442 41,415,069.22 6.04
2000-01 402 43,443,273.61 6.33
2000-02 294 32,586,783.11 4.75
2000-03 456 51,644,130.52 7.53
2000-04 577 62,030,197.07 9.04
2000-05 363 45,428,340.52 6.62
2000-06 431 50,397,693.83 7.35
2000-07 454 51,955,582.86 7.58
2000-08 479 50,337,868.16 7.34
2000-09 420 42,192,507.00 6.15
2000-10 198 19,602,015.97 2.86
2000-11 2 260,278.98 0.04
2000-12 16 1,257,390.86 0.18
2001-01 36 5,513,038.96 0.80
2001-02 16 2,516,821.48 0.37
2001-03 46 6,014,849.26 0.88
2001-04 79 7,908,225.11 1.15
2001-05 74 7,835,888.12 1.14
2001-06 80 7,182,280.17 1.05
2001-07 11 1,071,051.78 0.16
2001-08 11 1,699,705.49 0.25
2001-09 2 136,800.00 0.02
2001-10 4 355,197.00 0.05
2002-11 1 262,469.76 0.04
2002-12 20 2,052,510.10 0.30
2003-01 242 31,779,009.67 4.63
2003-02 3 207,694.93 0.03
2003-03 6 954,201.26 0.14
2003-04 2 203,557.42 0.03
2003-05 4 376,176.78 0.05
2003-06 5 400,529.82 0.06
2003-07 3 256,327.27 0.04
2003-08 6 1,071,374.06 0.16
2003-09 6 493,822.00 0.07
2003-10 3 245,350.00 0.04
- ----------------------------------------------------------------------------------------------------------------
Total: 6,183 685,872,727.47 100.00
- ----------------------------------------------------------------------------------------------------------------
The information in this table relates only to
the adjustable rate Mortgage Loans in Group II.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
