- --------------------------------------------------------------------------------
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) October 15, 1998
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. (AS DEPOSITOR UNDER A POOLING
AND SERVICING AGREEMENT DATED AS OF SEPTEMBER 1, 1998 PROVIDING FOR,
INTER ALIA, THE ISSUANCE OF ASSET-BACKED
FLOATING RATE CERTIFICATES, SERIES 1998-NC4)
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-50153 13-3439681
-------- --------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Seven World Trade Center
New York, New York 10048
- ------------------ -----
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (212) 783-5659
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<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 25, 1998 (the "Closing Date"), a single series of
certificates, entitled Salomon Brothers Mortgage Securities VII, Inc.,
Asset-Backed Floating Rate Certificates, Series 1998-NC4 (the "Certificates"),
were issued pursuant to the Pooling and Servicing Agreement, dated as of
September 1, 1998 (the "Agreement") among Salomon Brothers Mortgage Securities
VII, Inc. (the "Depositor"), New Century Mortgage Corporation and U.S. Bank
National Association (the "Trustee"). On October 15, 1998 following the closing
of the initial issuance of the Certificates, the Trustee purchased from the
Depositor certain Subsequent Mortgage Loans, as defined in the Agreement, with
an aggregate principal balance equal to approximately $73,713,912 with funds on
deposit in the pre-funding account (the "Pre-Funding Account") established
pursuant to the Agreement at a purchase price equal to the principal balance
thereof, which Subsequent Mortgage Loans were conveyed to the Trustee pursuant
to a Subsequent Transfer Instrument, dated October 15, 1998, between the
Depositor and the Trustee (the "Instrument"). Attached to the Instrument is the
Mortgage Loan Schedule listing the Subsequent Mortgage Loans that are the
subject of such Instrument.
Item 5. OTHER EVENTS
Description of the Mortgage Pool
The Certificates, issued pursuant to the Agreement, evidence in the
aggregate the entire beneficial ownership interest in a trust fund (the "Trust
Fund"), consisting primarily of a segregated pool (the "Mortgage Pool") of
conventional, one- to four- family, first lien adjustable-rate mortgage loans
having original terms to maturity of not greater than 30 years (the "Mortgage
Loans"). As of the Closing Date, the Trust Fund primarily consisted of (i) the
Mortgage Pool, which consisted of Mortgage Loans having an aggregate principal
balance of approximately $221,248,416 as of September 1, 1998 and (ii) the
Pre-Funding Account, which contained approximately $73,726,584.
As more fully described above, on October 15, 1998, the Depositor
purchased the Subsequent Mortgage Loans with the funds on deposit in the
Pre-Funding Account. The tables attached as an exhibit hereto describe certain
characteristics of the Mortgage Pool as of October, 1998, the end of the
"Funding Period" (as defined in the Agreement).
2
<PAGE>
Item 7. Financial Statements AND Exhibits
---------------------------------
(a) Not applicable
(b) Not applicable
(c) Exhibits
Exhibit No. Description
----------- -----------
4.2 Subsequent Transfer Instrument, dated as of October 15,
1998 between Salomon Brothers Mortgage Securities VII,
Inc. as seller, and U.S. Bank National Association, as
trustee.
99.1 Characteristics of the Mortgage Pool as of October 15,
1998, relating to Salomon Brothers Mortgage Securities
VII, Inc., Asset-Backed Floating Rate Certificates, Series
1998-NC4
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Matthew R. Bollo
-----------------------------
Name: Matthew R. Bollo
Title: Assistant Vice President
Dated: October 15, 1998
4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
----------- ----------- ----
4.2 Subsequent Transfer Instrument
99.1 Characteristics of the Mortgage Pool
as of October 15, 1998, relating to
Salomon Brothers Mortgage Securities
VII, Inc., Asset Backed Floating Rate
Certificates, Series 1998-NC4
5
Exhibit 4.2
-----------
SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument, dated October 15, 1998
(the "Instrument"), between Salomon Brothers Mortgage Securities VII, Inc. as
seller (the "Depositor"), and U.S. Bank National Association as trustee of the
Salomon Brothers Mortgage Securities VII, Inc. Asset-Backed Floating Rate
Certificates, Series 1998-NC4, as purchaser (the "Trustee"), and pursuant to the
Pooling and Servicing Agreement, dated as of September 1, 1998 (the "Pooling and
Servicing Agreement"), among the Depositor as depositor, New Century Mortgage
Corporation as master servicer and the Trustee as trustee, the Depositor and the
Trustee agree to the sale by the Depositor and the purchase by the Trustee, on
behalf of the Trust Fund, of the Mortgage Loans listed on the attached Schedule
of Mortgage Loans (the "Subsequent Mortgage Loans").
Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Pooling and Servicing Agreement.
Section 1. Conveyance of Subsequent Mortgage Loans.
---------------------------------------
(a) The Depositor does hereby sell, transfer, assign, set over
and convey to the Trustee, on behalf of the Trust Fund, without recourse, all of
its right, title and interest in and to the Subsequent Mortgage Loans, and
including all amounts due on the Subsequent Mortgage Loans after the related
Subsequent Cut-off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.01 of the Pooling and Servicing
Agreement; provided, however that the Depositor reserves and retains all right,
title and interest in and to amounts due on the Subsequent Mortgage Loans on or
prior to the related Subsequent Cut-off Date. The Depositor, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
the Trustee each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Depositor, the Master Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Depositor to
the Trust Fund.
(b) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey to
the Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, in, to and under the Subsequent
Mortgage Loan Purchase Agreement, dated the date hereof, between the Depositor
as purchaser and the Master Servicer as seller, to the extent of the Subsequent
Mortgage Loans, a copy of which agreement is annexed hereto as Attachment G.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. Representations and Warranties; Conditions
Precedent.
------------------------------------------
(a) The Depositor hereby confirms that each of the conditions
precedent and the representations and warranties set forth in Section 2.11 of
the Pooling and Servicing Agreement are satisfied as of the date hereof.
<PAGE>
(b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict, the provisions of this Instrument shall control over the
conflicting provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Instrument.
-------------------------
To the extent permitted by applicable law, this Instrument, or
a memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the Certificateholders' expense on direction of the related
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 4. Governing Law.
-------------
This Instrument shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. Counterparts.
------------
This Instrument may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same instrument.
<PAGE>
Section 6. Successors and Assigns.
----------------------
This Instrument shall inure to the benefit of and be binding
upon the Depositor and the Trustee and their respective successors and assigns.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Matthew R. Bollo
------------------------------
Name: Matthew R. Bollo
Title: Assistant Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee for Salomon Brothers Mortgage
Securities VII, Inc., Asset-Backed Floating
Rate Certificates, Series 1998-NC4
By: /s/ JoAnn M. Schalk
----------------------------
Name: JoAnn M. Schalk
Title: Vice President
Attachments
- -----------
A. Additional terms of sale.
B. Schedule of Subsequent Mortgage Loans.
C. Depositor's Officer's certificate.
D. Opinions of Depositor's counsel (bankruptcy, corporate).
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
G. Subsequent Mortgage Loan Purchase Agreement.
<PAGE>
ATTACHMENT A
------------
ADDITIONAL TERMS OF SALE
A. General
1. Subsequent Cut-off Date: October 1, 1998
2. Subsequent Transfer Date: October 15, 1998
3. Aggregate Principal Balance of the Subsequent
Mortgage Loans as of the Subsequent Cut-off
Date: $73,713,912
4. Purchase Price: 100.00%
B. The following representations and warranties with respect to each
Subsequent Mortgage Loan determined as of the Subsequent Cut-off Date shall be
true and correct:(i) the Subsequent Mortgage Loan may not be 30 or more days
delinquent as of the related Subsequent Cut-off Date (except with respect to
1.00% of the Subsequent Mortgage Loans, by aggregate principal balance as of the
related Subsequent Cut-off Date, which may be 30 or more days delinquent but
less than 60 days delinquent as of the related Subsequent Cut-off Date); (ii)
the stated term to maturity of the Subsequent Mortgage Loan will not be less
than 60 months and will not exceed 360 months; (iii) the Subsequent Mortgage
Loan may not provide for negative amortization; (iv) the Subsequent Mortgage
Loan will not have a Loan-to-Value Ratio greater than 95%; (v) the Subsequent
Mortgage Loans will have as of the Subsequent Cut-off Date, a weighted average
term since origination not in excess of 6 months; (vi) no Subsequent Mortgage
Loan shall have a Mortgage Rate less than 5.45% or greater than 14.50%; (vii)
the Subsequent Mortgage Loan will have been serviced by the Master Servicer
since origination or purchased by the Depositor; (viii) the Subsequent Mortgage
Loan must have a first Monthly Payment due on or before November 1, 1998; and
(ix) the Subsequent Mortgage Loan will be underwritten in accordance with the
criteria set forth under the section "The Mortgage Pool--Underwriting Standards;
Representations" in the Prospectus Supplement.
C. Following the purchase of the Subsequent Mortgage Loans by the Trust
Fund, the Mortgage Loans (including the Subsequent Mortgage Loans) will, as of
the Subsequent Cut-off Date: (i) have a weighted average original term to stated
maturity of not more than 360 months; (ii) have a weighted average Mortgage Rate
of not less than 9.23% and not more than 10.03%; (iii) have a weighted average
Loan-to-Value Ratio of not more than 80%; (iv) have no Mortgage Loan with a
principal balance in excess of $1,850,000 and (v) have a weighted average Gross
Margin of not less than 5.90%, in each case, as applicable, by aggregate
principal balance of the Mortgage Loans as of the Subsequent Cut-off Date.
D. Notwithstanding the foregoing, any Subsequent Mortgage Loan may be
rejected by either Rating Agency if the inclusion of such Subsequent Mortgage
Loan would adversely affect the ratings on any class of Offered Certificates.
<PAGE>
ATTACHMENT B
[FILED BY PAPER
<PAGE>
ATTACHMENT C
<PAGE>
OFFICER'S CERTIFICATE
Salomon Brothers Mortgage Securities VII, Inc.
Asset-Backed Floating Rate Certificates
Series 1998-NC4
I, Matthew R. Bollo, hereby certify that I am a duly elected
Assistant Vice President of Salomon Brothers Mortgage Securities VII, Inc. (the
"Depositor"), a Delaware corporation, and further, to the best of my knowledge
and after due inquiry, as follows:
Each condition precedent and representation and warranty
specified in Section 2.11 of the Pooling and Servicing Agreement, dated
as of September 1, 1998, among the Depositor, New Century Mortgage
Corporation as Master Servicer and U.S. Bank National Association as
Trustee (the "Pooling and Servicing Agreement") and each condition
precedent specified in the Subsequent Transfer Instrument has been
satisfied by the Depositor.
Capitalized terms not defined herein have the meanings set
forth in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: October 15, 1998
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Matthew R. Bollo
---------------------------
Name: Matthew R. Bollo
Title: Assistant Vice President
<PAGE>
ATTACHMENT D
<PAGE>
October 15, 1998
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Opinion: True Sale
Salomon Brothers Mortgage Securities VII, Inc.
Asset-Backed Floating Rate Certificates, Series 1998-NC4
--------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Salomon Brothers Mortgage Securities VII,
Inc. (the "Depositor") in connection with the conveyance of approximately
$73,713,912 of certain adjustable-rate mortgage loans (the "Subsequent Mortgage
Loans") by the Depositor to U.S. Bank National Association as trustee (the
"Trustee") under the Pooling and Servicing Agreement, dated as of September 1,
1998 (the "Pooling and Servicing Agreement"), among the Depositor as depositor,
New Century Mortgage Corporation as master servicer and the Trustee, pursuant to
a Subsequent Transfer Instrument, dated October 15, 1998 (the "Subsequent
Transfer Instrument"), between the Depositor and the Trustee (the Subsequent
Transfer Instrument and the Pooling and Servicing Agreement, together, the
"Agreements"). The Depositor purchased the Subsequent Mortgage Loans from New
Century Mortgage Corporation (in such capacity, the "Seller") pursuant to a
Subsequent Mortgage Loan Purchase Agreement, dated October 15, 1998, between the
Depositor and the Seller. On the Closing Date, the Depositor previously
transferred to a trust fund certain adjustable-rate mortgage loans
(collectively, the "Initial Mortgage Loans"; the Subsequent Mortgage Loans and
the Initial Mortgage Loans, together, the "Mortgage Loans") and
<PAGE>
SBMS VII, 1998-NC4
October 15, 1998 Page 2.
deposited the amount of approximately $73,726,584 in a separate pre-funding
account pursuant to the Pooling and Servicing Agreement. Capitalized terms used
but not otherwise defined shall have the meaning set forth in the Pooling and
Servicing Agreement.
In rendering this opinion letter, we have examined the documents
described above and such other documents as we have deemed necessary including,
where we have deemed appropriate, representations or certifications of officers
of parties thereto or public officials. In rendering this opinion letter, except
for the matters that are specifically addressed in the opinions expressed below,
we have assumed (i) the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents submitted to us
as copies, (ii) the necessary entity formation and continuing existence in the
jurisdiction of formation, and the necessary licensing and qualification in all
jurisdictions, of all parties to all documents, (iii) the necessary
authorization, execution, delivery and enforceability of all documents, and the
necessary entity power with respect thereto and (iv) that there is not any other
agreement that modifies or supplements the agreements expressed in the documents
to which this opinion letter relates and that renders any of the opinions
expressed below inconsistent with such documents as so modified or supplemented.
In rendering this opinion letter, we have made no inquiry, have conducted no
investigation and assume no responsibility with respect to (a) the accuracy of
and compliance by the parties thereto with the representations, warranties and
covenants contained in any document or (b) the conformity of the underlying
assets and related documents to the requirements of the agreements to which this
opinion letter relates.
In rendering this opinion letter, we do not express any opinion
concerning any law other than Title 11 of the United States Code (the
"Bankruptcy Code"; a proceeding thereunder, a "Bankruptcy") and the law of the
State of New York to the extent applicable. We do not express any opinion herein
with respect to (i) the ability of any person or entity to obtain any property
prior to a final resolution of any judicial proceeding involving any claim
contrary to or inconsistent with any opinion expressed herein or (ii) the
securities laws of any jurisdiction or any other matter not specifically
addressed in the opinions expressed below.
Based upon and subject to the foregoing, it is our opinion that in the
event of the Bankruptcy of the Depositor, a court in such a proceeding (i) would
not hold that the transfer of the Subsequent Mortgage Loans by the Depositor to
the Trustee should be characterized as a loan to the Depositor secured by the
Subsequent Mortgage Loans rather than as a sale of the interest in the
Subsequent Mortgage Loans and (ii) accordingly, on the basis of such a
characterization would not hold that the Subsequent Mortgage Loans or any
proceeds thereof constitute property of the estate of the Depositor pursuant to
Bankruptcy Code Section 541, thereby subject to the automatic stay provisions of
Bankruptcy Code Section 362(a) that would be applicable to the property of the
Depositor in such a proceeding.
<PAGE>
SBMS VII, 1998-NC4
October 15, 1998 Page 3.
This opinion letter is rendered for the sole benefit of each addressee
hereof, and no other person or entity is entitled to rely hereon. Copies of this
opinion letter may not be made available, and this opinion letter may not be
quoted or referred to in any other document made available, to any other person
or entity, except to any rating agency or any accountant or attorney for any
person or entity entitled hereunder to rely hereon or to whom or which this
opinion letter may be disclosed as provided herein, or as otherwise required by
law.
Very truly yours,
Thacher Proffitt & Wood
By /s/ Richard M. Horowitz
-----------------------
<PAGE>
ATTACHMENT E
<PAGE>
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
October 15, 1998
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
New Century Mortgage Corporation
18400 Von Karman, Suite 1000
Irvine, California 92612
Re: Pooling and Servicing Agreement, dated as of September 1, 1998,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation and U.S. Bank National Association,
Asset-Backed Floating Rate Certificates, Series 1998-NC4 Subsequent
Transfer on October 15, 1998
-------------------------------------------------------------------
Ladies and Gentlemen:
Attached is the Trustee's preliminary exception report with
respect to the Subsequent Mortgage Loans delivered in accordance with Section
2.02 of the referenced Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Pooling and Servicing Agreement.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in the Mortgage File pertaining to
the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or (iii) whether any Mortgage File included any of the documents specified
in clause (v) of Section 2.01 of the Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ JoAnn M. Schalk
------------------------------
Name: JoAnn M. Schalk
Title: Vice President
<PAGE>
ATTACHMENT F
<PAGE>
OPINION OF TRUSTEE'S COUNSEL
October 15, 1998
Salomon Brothers Mortgage New Century Mortgage Corporation
Securities VII, Inc. 18400 Von Karman, Suite 1000
Seven World Trade Center Irvine, California 92612
New York, New York 10048
Salomon Brothers Inc Standard & Poor's Rating Services
Seven World Trade Center 26 Broadway
New York, New York 10048 New York, New York 10004
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Re: Salomon Brothers Mortgage Securities VII, Inc.
New Century Asset-Backed Floating Rate Certificates,
Series 1998-NC4
Ladies and Gentlemen:
We are counsel for U.S. Bank Trust National Association, a national
banking association (the "Trustee"). As such, we have reviewed the provisions of
the (i) Pooling and Servicing Agreement, dated as of September 1, 1998 (the
"Pooling and Servicing Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (the "Depositor"), New Century Mortgage Corporation and the Trustee,
relating to the New Century Asset-Backed Floating Rate Certificates, Series
1998-NC4 (the "Certificates"), and (ii) the Subsequent Transfer Instrument dated
of even date herewith (the "Subsequent Transfer Instrument"), between the
Depositor and the Trustee, and are generally familiar with the Articles of
Association and the Bylaws of the Trustee and are also familiar with the
corporate proceedings of the Trustee with regard to its authorization, execution
and delivery of the Pooling and Servicing Agreement and the Certificates.
Capitalized terms used herein shall have the respective meanings ascribed to
them in the Pooling and Servicing Agreement, except as otherwise defined herein.
In such review, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with originals of all documents submitted to us as copies. Where questions of
fact material to our opinion expressed below were not established independently,
we have relied upon statements of officers of the Trustee as contained in their
certificates.
Based upon the foregoing, we are of the opinion that:
1. The Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America.
<PAGE>
2. The Trustee has duly authorized, executed and delivered the
Pooling and Servicing Agreement and the Subsequent Transfer Instrument. Assuming
the due authorization, execution and delivery thereof by the other parties
thereto, each of the Pooling and Servicing Agreement and Subsequent Transfer
Instrument is the legal, valid and binding agreement of the Trustee, enforceable
in accordance with its terms against the Trustee.
3. The Trustee is duly authorized and empowered to exercise
trust powers under applicable law.
4. The execution, delivery and performance of the Pooling and
Servicing Agreement and the Subsequent Transfer Instrument do not now, and will
not hereafter, (a) conflict with, result in a breach of or constitute a default
under any term or provision of the Articles of Association or Bylaws of the
Trustee, any term or provision of any agreement, contract, instrument or
indenture of any nature whatsoever, known to us, to which the Trustee is a party
or by which it is bound, or, to the best of our knowledge, any order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Trustee, or (b) to the best of our knowledge, result in
the creation or imposition of any lien, charge or encumbrance upon the Trust
Estate established in the Pooling and Servicing Agreement or upon the
Certificates.
5. To the best of our knowledge, there are no actions,
proceedings or investigations pending or threatened against the Trustee before
any court, administrative agency or tribunal (a) asserting the invalidity of the
Certificates, the Pooling and Servicing Agreement or the Subsequent Transfer
Instrument, (b) seeking to prevent the consummation of any of the transactions
contemplated by the Certificates, the Pooling and Servicing Agreement or the
Subsequent Transfer Instrument, or (c) that might materially and adversely
affect the performance by the Trustee of its obligations under, or the validity
or enforceability of, the Certificates, the Pooling and Servicing Agreement or
the Subsequent Transfer Instrument.
6. The execution, delivery and performance by the Trustee of
the Pooling and Servicing Agreement and the Subsequent Transfer Instrument will
not violate any provisions of any law or regulation governing the banking and
trust powers of the Trustee. Such execution, delivery and performance will not
require the authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action in respect of any
governmental authority or agency regulating the activities of the Trustee.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) The opinions are subject to the effect of any applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
or other similar laws of general application affecting creditors'
rights.
(b) The opinions are subject to the effect of general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair
<PAGE>
dealing, and other similar doctrines affecting the enforceability of
agreements generally (regardless of whether considered in a proceeding
in equity or at law).
(c) Minnesota Statutes ss.290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report
does not have a cause of action upon which it may bring suit under
Minnesota law unless the corporation has filed a Notice of Business
Activities Report and further provides that the use of the courts of
the State of Minnesota for all contracts executed and all causes of
action that arose before the end of any period for which a corporation
failed to file a required report is precluded. Insofar as the foregoing
opinions may relate to the valid, binding and enforceable character of
any agreement under Minnesota law or in a Minnesota court, we have
assumed that any party seeking to enforce such agreement has at all
times been, and will continue at all times to be, exempt from the
requirement of filing a Notice of Business Activities Report or, if not
exempt, has duly filed, and will continue to duly file, all Notice of
Business Activities Reports.
Our opinions expressed above are limited to the laws of the
State of Minnesota and the federal laws of the United States of America.
The foregoing opinions are being furnished to you solely for
your benefit and may not be relied upon by, nor may copies be delivered to, any
other person without our prior written consent.
Very truly yours,
/s/ Dorsey & Whitney LLP
-----------------------------
<PAGE>
ATTACHMENT G
<PAGE>
SUBSEQUENT MORTGAGE LOAN PURCHASE AGREEMENT
This is a Subsequent Mortgage Loan Purchase Agreement (this
"Agreement"), dated October 15, 1998, between Salomon Brothers Mortgage
Securities VII, Inc., a Delaware corporation (the "Purchaser") and New Century
Mortgage Corporation, a California corporation (the "Seller").
Preliminary Statement
---------------------
The Seller intends to sell the Subsequent Mortgage Loans (as
hereinafter identified) to the Purchaser on the terms and subject to the
conditions set forth in this Agreement. The Purchaser intends to deposit the
Subsequent Mortgage Loans into a mortgage pool comprising the Trust Fund. The
Trust Fund will be evidenced by a single series of asset-backed floating rate
certificates designated as Series 1998-NC4 (the "Certificates"). The
Certificates will consist of nine classes of certificates. The Class CE
Certificates, the Class P Certificates, the Class R-I Certificates, the Class
R-II Certificates and the Class R-III Certificates (collectively, the "New
Century Certificates") will be delivered to the Seller as partial consideration
for the Subsequent Mortgage Loans as further described below. The Certificates
will be issued pursuant to a Pooling and Servicing Agreement, dated as of
September 1, 1998 (the "Pooling and Servicing Agreement"), among the Purchaser
as depositor, the Seller as master servicer (in such capacity, the "Master
Servicer") and U.S. Bank National Association as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell,
and the Purchaser agrees to purchase, on or before October 15, 1998 (the
"Subsequent Transfer Date"), certain conventional, one- to four-family,
adjustable-rate residential mortgage loans (the "Subsequent Mortgage Loans"),
having an aggregate principal balance as of the close of business on October 1,
1998 (the "Subsequent Cut-off Date") of approximately $73,713,912 (the "Closing
Balance"), after giving effect to all payments due on the Subsequent Mortgage
Loans on or before the Subsequent Cut-off Date, whether or not received,
including the right to any Prepayment Charges payable by the related Mortgagors
in connection with any Principal Prepayments on the Subsequent Mortgage Loans.
SECTION 2. SUBSEQUENT MORTGAGE LOAN SCHEDULE. The Purchaser
and the Seller have agreed upon which of the mortgage loans owned by the Seller
are to be purchased by the Purchaser pursuant to this Agreement and the Seller
will prepare or cause to be prepared on or prior to the Subsequent Transfer Date
a final schedule (the "Closing Schedule") that shall describe such Subsequent
Mortgage Loans and set forth all of the Subsequent Mortgage Loans to be
purchased under this Agreement, including the Prepayment Charges. The Closing
Schedule will conform to the requirements set forth in this Agreement and to the
definition of "Mortgage Loan Schedule" under the Pooling and Servicing
Agreement. The Closing Schedule shall be used as the Mortgage Loan Schedule
under the Pooling and Servicing Agreement.
<PAGE>
-2-
SECTION 3. Consideration.
-------------
(a) In consideration for the Subsequent Mortgage Loans to be
purchased hereunder, the Purchaser shall, as described in Section 8, pay to or
upon the order of the Seller in immediately available funds an amount (the
"Purchase Price") equal to the Closing Balance.
(b) The Purchaser or any assignee, transferee or designee of
the Purchaser shall be entitled to all scheduled payments of principal due after
the Subsequent Cut-off Date, all other payments of principal due and collected
after the Subsequent Cut-off Date, and all payments of interest on the
Subsequent Mortgage Loans allocable to the period after the Subsequent Cut-off
Date. All scheduled payments of principal and interest due on or before the
Subsequent Cut-off Date and collected after the Subsequent Cut-off Date shall
belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Subsequent Mortgage Loans, together with its rights under this Agreement, to the
Trustee for the benefit of the Certificateholders.
SECTION 4. Transfer of the Subsequent Mortgage Loans.
-----------------------------------------
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Subsequent Mortgage Loans, including the related Prepayment
Charges. The contents of each Mortgage File not delivered to the Purchaser or to
any assignee, transferee or designee of the Purchaser on or prior to the
Subsequent Transfer Date are and shall be held in trust by the Seller for the
benefit of the Purchaser or any assignee, transferee or designee of the
Purchaser. Upon the sale of the Subsequent Mortgage Loans, the ownership of each
Mortgage Note, the related Mortgage and the other contents of the related
Mortgage File is vested in the Purchaser and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or that come
into the possession of the Seller on or after the Subsequent Transfer Date shall
immediately vest in the Purchaser and shall be delivered immediately to the
Purchaser or as otherwise directed by the Purchaser.
(b) DELIVERY OF SUBSEQUENT MORTGAGE LOAN DOCUMENTS. The Seller
will, on or prior to the Subsequent Transfer Date, deliver or cause to be
delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser each of the following documents for each Subsequent Mortgage Loan:
(i) the original Mortgage Note, endorsed in the
following form: "Pay to the order of U.S. Bank National Association, as
Trustee for the registered holders of Salomon Brothers Mortgage
Securities VII, Inc., under the applicable pooling and servicing
agreement, without recourse," with all prior and intervening
endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the Trustee;
<PAGE>
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(ii) the original Mortgage with evidence of recording
thereon;
(iii) an original Assignment of Mortgage executed in
the following form: "U.S. Bank National Association, as Trustee for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc.,
under the applicable pooling and servicing agreement";
(iv) the original recorded Assignment or Assignments
of the Mortgage showing a complete chain of assignment from the
originator to the Person assigning the Mortgage to the Trustee as
contemplated by the immediately preceding clause (iii);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy,
together with all endorsements or riders that were issued with or
subsequent to the issuance of such policy, insuring the priority of the
Mortgage as a first lien on the Mortgaged Property represented therein
as a fee interest vested in the Mortgagor.
The Seller promptly shall (within sixty Business Days
following the later of the Subsequent Transfer Date and the date of receipt by
the Seller of the recording information for a Mortgage, but in no event later
than ninety days following the Subsequent Transfer Date) submit or cause to be
submitted for recording, at no expense to the Purchaser (or the Trust Fund or
the Trustee under the Pooling and Servicing Agreement), in the appropriate
public office for real property records, each Assignment referred to in clauses
(b)(iii) and (b)(iv) of this Section 4. In the event that any such Assignment is
lost or returned unrecorded because of a defect therein, the Seller promptly
shall prepare a substitute Assignment or cure such defect, as the case may be,
and thereafter cause each such Assignment to be duly recorded.
Notwithstanding anything to the contrary contained in this
Section 4, with respect to a maximum of approximately 1.0% of the Subsequent
Mortgage Loans, by aggregate principal balance of the Subsequent Mortgage Loans,
if any original Mortgage Note referred to in Section 4(b)(i) above cannot be
located, the obligations of the Seller to deliver such documents shall be deemed
to be satisfied upon delivery to the Purchaser or any assignee, transferee or
designee of the Purchaser of a photocopy of such Mortgage Note, if available,
with a lost note affidavit substantially in the form of Exhibit 6 attached
hereto. If any of the original Mortgage Notes for which a lost note affidavit
was delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser is subsequently located, such original Mortgage Note shall be
delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser within three Business Days; and if any document referred to in Section
4(b)(ii) or 4(b)(iv) above has been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Seller hereunder shall be deemed to have been satisfied
upon delivery to the Purchaser or any assignee, transferee or designee of the
Purchaser promptly upon receipt thereof
<PAGE>
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by or on behalf of the Seller of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original.
In the event that the original lender's title insurance policy
has not yet been issued, the Seller shall deliver to the Purchaser or any
assignee, transferee or designee of the Purchaser a written commitment or
interim binder or preliminary report of title issued by the title insurance or
escrow company. The Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser promptly upon receipt by the Seller of
any such original title insurance policy or original Primary Mortgage Insurance
Policy.
Each original document relating to a Subsequent Mortgage Loan
which is not delivered to the Purchaser or its assignee, transferee or designee,
if held by the Seller, shall be so held for the benefit of the Purchaser, its
assignee, transferee or designee.
(c) ACCEPTANCE OF SUBSEQUENT MORTGAGE LOANS. The documents
delivered pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or
any assignee, transferee or designee of the Purchaser at any time before or
after the Subsequent Transfer Date (and with respect to each document permitted
to be delivered after the Subsequent Transfer Date, within seven days of its
delivery) to ascertain that all required documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Subsequent Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller, and the assignee shall succeed to
the rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser or the Trustee in connection with
enforcing any obligations of the Seller under this Agreement will be promptly
reimbursed by the Seller.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Subsequent
Transfer Date, the Seller shall either (i) deliver in escrow to the Purchaser or
to any assignee, transferee or designee of the Purchaser for examination the
Mortgage File pertaining to each Subsequent Mortgage Loan, or (ii) make such
Mortgage Files available to the Purchaser or to any assignee, transferee or
designee of the Purchaser for examination. Such examination may be made by the
Purchaser or the Trustee, and their respective designees, upon reasonable notice
to the Seller during normal business hours before the Subsequent Transfer Date
and within 60 days after the Subsequent Transfer Date. If any such person makes
such examination prior to the Subsequent Transfer Date and identifies any
Subsequent Mortgage Loans that do not conform to the requirements of the
Purchaser as described in this Agreement, such Subsequent Mortgage Loans shall
be deleted from the Closing Schedule. The Purchaser may, at its option and
without notice to the Seller, purchase all or part of the Subsequent Mortgage
Loans without conducting any partial or complete examination. The fact that the
Purchaser or any person has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the rights of the
Purchaser
<PAGE>
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or any assignee, transferee or designee of the Purchaser to demand repurchase or
other relief as provided herein or under the Pooling and Servicing Agreement.
SECTION 5. Representations, Warranties And Covenants Of
The Seller.
--------------------------------------------
The Seller hereby represents and warrants, as of the date
hereof and as of the Subsequent Transfer Date, and covenants, that:
(i) The Seller is duly organized, validly existing
and in good standing as a corporation under the laws of the State of California
with full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Seller had the full corporate power and authority to
own the Subsequent Mortgage Loans and to transfer and convey the Subsequent
Mortgage Loans to the Purchaser and has the full corporate power and authority
to execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of this Agreement.
(ii) The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding obligation of
the Seller, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
reorganization or by general principles of equity.
(iii) The execution, delivery and performance of this
Agreement by the Seller (x) does not conflict and will not conflict with, does
not breach and will not result in a breach of and does not constitute and will
not constitute a default (or an event, which with notice or lapse of time or
both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Seller, (B) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or by which the Seller or any of its property is bound, or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Seller or any of its
property and (y) does not create or impose and will not result in the creation
or imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Subsequent Mortgage Loans or any documents or
instruments evidencing or securing the Subsequent Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Seller of, or compliance by the Seller with, this Agreement or the consummation
by the Seller of any other transaction contemplated hereby and by the Pooling
and Servicing Agreement; provided, however, that the Seller makes no
representation or warranty regarding federal or state securities laws in
connection with the sale or distribution of the Certificates.
<PAGE>
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(v) This Agreement does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained herein not misleading. The written statements, reports
and other documents prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the transactions
contemplated hereby taken in the aggregate do not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements contained therein not misleading.
(vi) The Seller is not in violation of, and the
execution and delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Seller or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Seller or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.
(vii) The Seller is a HUD approved mortgagee pursuant
to Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Seller unable
to comply with HUD eligibility requirements or that would require notification
to HUD.
(viii) The Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement.
(ix) Immediately prior to the sale of the Subsequent
Mortgage Loans to the Purchaser as herein contemplated, the Seller was the owner
of the related Mortgage and the indebtedness evidenced by the related Mortgage
Note, and, upon the payment to the Seller of the Purchase Price, in the event
that the Seller retains or has retained record title, the Seller shall retain
such record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Purchaser as the owner
thereof from and after the date hereof.
(x) There are no actions or proceedings against, or
investigations known to it of, the Seller before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Subsequent Mortgage Loans by the Seller or
the consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or validity or enforceability of, this Agreement.
(xi) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller are not subject to the bulk transfer or any similar
statutory provisions.
<PAGE>
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(xii) [intentionally omitted]
(xiii) The Seller has not dealt with any broker,
investment banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Subsequent Mortgage Loans (except that an entity that
previously financed the Seller's ownership of the Subsequent Mortgage Loans may
be entitled to a fee to release its security interest in the Subsequent Mortgage
Loans, which fee shall have been paid and which security interest shall have
been released on or prior to the Subsequent Transfer Date).
(xiv) There is no litigation currently pending or, to
the best of the Seller's knowledge without independent investigation, threatened
against the Seller that would reasonably be expected to adversely affect the
transfer of the Subsequent Mortgage Loans, the issuance of the Certificates or
the execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition of the
Seller.
SECTION 6. Representations and Warranties of the Seller
Relating to the Subsequent Mortgage Loans.
------------------------------------------
REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL SUBSEQUENT
MORTGAGE LOANS. The Seller hereby represents and warrants to the Purchaser that
as to each Subsequent Mortgage Loan as of the Subsequent Transfer Date:
(i) The information set forth in the Subsequent Mortgage Loan
Schedule, including the field concerning any related Prepayment Charge, is
complete, true and correct as of the Subsequent Cut-off Date;
(ii) The Subsequent Mortgage Loan is in compliance with all
requirements set forth on Exhibit 4, and the characteristics of the Subsequent
Mortgage Loans as set forth on Exhibit 4 are true and correct;
(iii) (a) All payments required to be made on or before the
first day of the month prior to the month of the Subsequent Transfer Date, with
respect to such Subsequent Mortgage Loan under the terms of the Mortgage Note
have been made; and (b) the Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the owner of
the related Mortgaged Property, directly or indirectly, for the payment of any
amount required by the Mortgage Note or Mortgage; as of the Subsequent Cut-off
Date, the payment required under any Subsequent Mortgage Loan has not been 30 or
more days delinquent more than once during the last twelve months;
<PAGE>
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(iv) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments,
including assessments payable in future installments or other outstanding
charges affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage; the substance of any such waiver,
alteration or modification has been approved by the title insurer, to the extent
required by the related policy, and is reflected on the Subsequent Mortgage Loan
Schedule. No instrument of waiver, alteration or modification has been executed,
and 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 the terms of which are reflected in the Subsequent
Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by
a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to insurance policies conforming to the
requirements of the Pooling and Servicing Agreement. All such insurance policies
contain a standard mortgagee clause naming the Seller, its successors and
assigns as mortgagee and all premiums thereon have been paid. If upon
origination of the Subsequent Mortgage Loan, the Mortgaged Property was in an
area identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of FNMA and FHLMC. The
Mortgage obligates the Mortgagor thereunder to maintain all such insurance at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at Mortgagor's
cost and expense and to seek reimbursement therefor from the Mortgagor;
(viii) 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 origination and servicing of the Subsequent
Mortgage Loan have been complied with. Any and all statements or acknowledgments
required to be made by the Mortgagor relating to such requirements are and will
remain in the Mortgage File;
<PAGE>
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(ix) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged 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 satisfaction,
cancellation, subordination, rescission or release;
(x) The Mortgage is a valid, existing and enforceable first
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property subject only to (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 being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Subsequent Mortgage Loan and which do not adversely affect the
appraised value of the Mortgaged Property and (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 Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Subsequent Mortgage Loan establishes and
creates a valid, existing and enforceable first lien and first priority security
interest on the property described therein and the Seller has full right to sell
and assign the same to the Purchaser. The Mortgaged Property was not, as of the
date of origination of the Subsequent Mortgage Loan, subject to a mortgage, deed
of trust, deed to secured debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Subsequent Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties. The Mortgagor is
a natural person who is a party to the Mortgage Note and the Mortgage is in an
individual capacity or family trust that is guaranteed by a natural person;
(xiii) The proceeds of the Subsequent Mortgage Loan have been
fully disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds 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 Subsequent Mortgage
Loan and the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant to
the Mortgage Note or Mortgage;
(xiv) As of the Subsequent Transfer Date and prior to the sale
of the Subsequent Mortgage Loan hereunder, the Seller was the sole legal,
beneficial and equitable owner of the Mortgage Note and the Mortgage and has
full right to transfer and sell the Subsequent Mortgage Loan to the Purchaser
free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest;
<PAGE>
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(xv) All parties which have had any interest in the Subsequent
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) in
compliance with any and all applicable "doing business" and licensing
requirements of the laws of the state wherein the Mortgaged Property is located;
(xvi) The Subsequent Mortgage Loan is covered by an ALTA
lender's title insurance policy with an adjustable rate mortgage endorsement,
such endorsement substantially in the form of ALTA Form 6.0 or 6.1, acceptable
to FNMA or FHLMC, issued by a title insurer acceptable to FNMA and FHLMC and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring (subject to the exceptions contained in (x)(a) and (b) above)
the Seller, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Subsequent Mortgage Loan and
against any loss by reason of the invalidity or unenforceability of the lien
resulting rom the provisions of the Mortgage providing for adjustment in the
Mortgage Rate and monthly payment. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress to and from the Mortgaged
Property, and against encroachments by or upon the Mortgaged Property or any
interest therein. The Seller is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy;
(xvii) Other than as specified in paragraph (iii) above, there
is no default, breach, violation or event of acceleration existing under the
Mortgage or the Mortgage Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration, and the Seller has not
waived any default, breach, violation or event of acceleration;
(xviii) 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 law could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining
the appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(xx) The Subsequent Mortgage Loan was (i) originated by the
Seller or by a savings and loan association, a savings bank, a commercial bank
or similar banking institution which is supervised and examined by a federal or
state authority, or by a mortgagee approved as such by the Secretary of HUD or
(ii) acquired by the Seller directly through loan brokers or
<PAGE>
-11-
correspondents such that (a) the Subsequent Mortgage Loan was originated in
conformity with the Seller's underwriting guidelines, (b) the Seller approved
the Subsequent Mortgage Loan prior to funding and (c) the Seller provided the
funds used to originate the Subsequent Mortgage Loan and acquired the Subsequent
Mortgage Loan on the date of origination thereof;
(xxi) Principal payments on the Subsequent Mortgage Loan
commenced no more than two months after the proceeds of the Subsequent Mortgage
Loan were disbursed. The Subsequent Mortgage Loan bears interest at the Mortgage
Rate. The Mortgage Note is payable on the first day of each month in Monthly
Payments which are changed on each Adjustment Date to an amount which will
amortize the Stated Principal Balance of the Mortgage Loan over its remaining
term at the Mortgage Rate. Interest on the Subsequent Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Mortgage Note does not permit negative amortization. The Mortgage Loan does
not permit the Mortgagor to convert the Mortgage Loan to a fixed rate Mortgage
Loan;
(xxii) The origination and collection practices used by the
Seller with respect to each Mortgage Note and Mortgage have been in all respects
legal, proper, prudent and customary in the mortgage origination and servicing
industry. The Subsequent Mortgage Loan has been serviced by the Seller (directly
or through a subservicer) and any predecessor servicer in accordance with the
terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments,
if any, all such payments are in the possession of, or under the control of, the
Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under any Mortgage or the related Mortgage Note;
(xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation thereof;
(xxiv) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (b)
otherwise by judicial foreclosure. Since the date of origination of the
Subsequent Mortgage Loan, the Mortgaged Property has not been subject to any
bankruptcy proceeding or foreclosure proceeding and the Mortgagor has not filed
for protection under applicable bankruptcy laws. There is no homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. The Mortgagor has not notified the Seller and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under the Soldiers
and Sailors Civil Relief Act of 1940;
(xxv) The related Mortgaged Property is not a leasehold estate
or, if such Mortgaged Property is a leasehold estate, the remaining term of such
lease is at least ten (10) years greater than the remaining term of the related
Mortgage Note;
<PAGE>
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(xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Subsequent
Mortgage Loan application, by a qualified appraiser, approved by the Seller, who
had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, whose compensation is not affected by the approval
or disapproval of the Subsequent Mortgage Loan and who met the minimum
qualifications of FNMA and FHLMC;
(xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxix) No Subsequent Mortgage Loan contains provisions
pursuant to which Monthly Payments are (a) paid or partially paid with funds
deposited in any separate account established by the Seller, the Mortgagor, or
anyone on behalf of the Mortgagor, (b) paid by any source other than the
Mortgagor or (c) contains any other similar provisions which may constitute a
"buydown" provision. The Subsequent Mortgage Loan is not a graduated payment
mortgage loan and the Subsequent Mortgage Loan does not have a shared
appreciation or other contingent interest feature;
(xxx) The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law; and if the Subsequent Mortgage Loan is a Refinanced Mortgage Loan, the
Mortgagor has received all disclosure and rescission materials required by
applicable law with respect to the making of a Refinanced Mortgage Loan, and
evidence of such receipt is and will remain in the Mortgage File;
(xxxi) No Subsequent Mortgage Loan was made in connection with
(a) the construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property;
(xxxii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect to each
Subsequent Mortgage Loan pursuant to the Pooling and Servicing Agreement, have
been delivered to the Trustee all in compliance with the specific requirements
of the Pooling and Servicing Agreement;
(xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same,
<PAGE>
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including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Subsequent Mortgage Loan has taken
place on the part of any person, including, without limitation, the Mortgagor,
any appraiser, any builder or developer, or any other party involved in the
origination of the Subsequent Mortgage Loan or in the application of any
insurance in relation to such Subsequent Mortgage Loan;
(xxxv) The Assignment of Mortgage, is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxvi) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. 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
FNMA and FHLMC. The consolidated principal amount does not exceed the original
principal amount of the Subsequent Mortgage Loan;
(xxxvii) No Subsequent Mortgage Loan has a balloon payment
feature;
(xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development (other
than a de minimis planned unit development) such condominium or planned unit
development project meets the FNMA's eligibility requirements;
(xxxix) Neither the Seller nor any affiliate of the Seller has
made a mortgage on any Mortgaged Property other than the Subsequent Mortgage
Loan;
(xl) Any Subsequent Mortgage Loan subject to the provisions of
the Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160
was originated in compliance therewith;
(xli) The Subsequent Mortgage Loan was not intentionally
selected by the Seller in a manner intended to adversely affect the interest of
the Purchaser;
(xlii) The Seller has not dealt with any broker or agent or
other Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement other than the
Purchaser except as set forth in the parenthetical in Section
5(xiii) hereof;
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(xliii) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a single family residence erected
thereon, or a two to four-family dwelling, or an individual condominium unit in
a low-rise or high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is improved with a Residential
Dwelling. Without limiting the foregoing, the Mortgaged Property does NOT
consist of any of the following property types: (a) co-operative units, (b) log
homes, (c) earthen homes, (d) underground homes, (e) mobile homes and (f)
manufactured homes (as defined in the FNMA Originator-Servicer's Guide), except
when the appraisal indicates that the home is of comparable construction to a
stick or beam construction home, is readily marketable, has been permanently
affixed to the site and is not in a mobile home "park." The Mortgaged Property
is either a fee simple estate or a long-term residential lease. If the
Subsequent Mortgage Loan is secured by a long-term residential lease, unless
otherwise specifically disclosed in the Mortgage Loan Schedule, (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 the Mortgage File) and the acquisition by
the holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protection; (B) the terms of such lease do not (x) 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 or (y) prohibit the holder of the Mortgage from being insured under
the hazard insurance policy relating to the Mortgaged Property; (C) the original
term of such lease is not less than 15 years; (D) the term of such lease does
not terminate earlier than ten years after the maturity date of the Mortgage
Note; and (E) the Mortgaged Property is located in a jurisdiction in which the
use of leasehold estates for residential properties is an accepted practice;
(xliv) At the time of origination, the Loan-To-Value Ratio of
the Subsequent Mortgage Loan was not greater than 95%;
(xlv) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of the payment
of the unpaid principal balance of the Subsequent Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior written
consent of the Mortgagee, at the option of the Mortgagee;
(xlvi) The Subsequent Mortgage Loan either contains a
customary due-on-sale clause or may be assumed by a creditworthy purchaser of
the related Mortgaged Property; and
(xlvii) As of any Adjustment Date for such Mortgage Loan, the
Index applicable to the determination of the Mortgage Rate on such Mortgage Loan
will be the average of the interbank offered rates for six-month United States
dollar deposits in the London market, generally as published in The Wall Street
Journal and as most recently available as of either (i) the first business day
45 days prior to such Adjustment Date or (ii) the first business day of the
month preceding the month of such Adjustment Date, as specified in the related
Mortgage Note.
<PAGE>
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SECTION 7. Repurchase Obligation for Defective
Documentation and for Breach of
Representation and Warranty.
-----------------------------------
(a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Subsequent Mortgage Loans or any failure
on the part of the Seller or the Purchaser to review or examine such documents
and shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of the Certificates.
With respect to the representations and warranties contained herein as to which
the Seller has no knowledge, if it is discovered that the substance of any such
representation and warranty was inaccurate as of the date such representation
and warranty was made or deemed to be made, and such inaccuracy materially and
adversely affects the value of the related Subsequent Mortgage Loan or the
interest therein of the Purchaser or the Purchaser's assignee, transferee or
designee, then notwithstanding the lack of knowledge by the Seller with respect
to the substance of such representation and warranty being inaccurate at the
time the representation and warranty was made, the Seller shall take such action
described in the following paragraph in respect of such Subsequent Mortgage
Loan.
Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller (as listed on
the Trustee's Preliminary Exception Report) as part of any Mortgage File, or of
a breach of any of the representations and warranties contained in Section 6
that materially and adversely affects the value of any Subsequent Mortgage Loan
or the interest therein of the Purchaser or the Purchaser's assignee, transferee
or designee, the party discovering such breach shall give prompt written notice
to the other. Within sixty (60) days of its discovery or its receipt of notice
of any such missing documentation that was not transferred by the Seller as
described above, or of materially defective documentation, or of any such breach
of a representation and warranty, the Seller promptly shall deliver such missing
document or cure such defect or breach in all material respects or, in the event
the Seller cannot deliver such missing document or cannot cure such defect or
breach, the Seller shall, within ninety (90) days of its discovery or receipt of
notice, repurchase the affected Subsequent Mortgage Loan at the Purchase Price
(as such term is defined in the Pooling and Servicing Agreement). The Seller
shall amend the Closing Schedule to reflect the withdrawal of such Subsequent
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement. The Seller shall deliver to the Purchaser such amended Closing
Schedule and shall deliver such other documents as are required by this
Agreement or the Pooling and Servicing Agreement within five (5) days of any
such amendment. Any repurchase pursuant to this Section 7(a) shall be
accomplished by transfer to an account designated by the Purchaser of the amount
of the Purchase Price in accordance with Section 2.03 of the Pooling and
Servicing Agreement. Any repurchase required by this Section shall be made in a
manner consistent with Section 2.03 of the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the
Seller set forth in this Section 7 to cure or repurchase a defective Subsequent
Mortgage Loan constitute the sole remedies
<PAGE>
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of the Purchaser against the Seller respecting a missing document or a breach of
the representations and warranties contained in Section 6.
SECTION 8. CLOSING; PAYMENT FOR THE SUBSEQUENT MORTGAGE LOANS.
The closing of the purchase and sale of the Subsequent Mortgage Loans shall be
held at the New York City office of Thacher Proffitt & Wood at 10:00 a.m. New
York City time on the Subsequent Transfer Date.
The closing shall be subject to each of the following
conditions:
(a) All of the representations and warranties of the
Seller under this Agreement shall be true and correct
in all material respects as of the date as of which
they are made and no event shall have occurred which,
with notice or the passage of time, would constitute
a default under this Agreement;
(b) The Purchaser shall have received, or the attorneys
of the Purchaser shall have received in escrow (to be
released from escrow at the time of closing), all
Closing Documents as specified in Section 9 of this
Agreement, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required
pursuant to the respective terms thereof;
(c) The Seller shall have delivered or caused to be
delivered and released to the Purchaser or to its
designee, all documents (including without
limitation, the Subsequent Mortgage Loans) required
to be so delivered by the Purchaser pursuant to
Section 2.01 of the Pooling and Servicing Agreement;
and
(d) All other terms and conditions of this Agreement and
the Pooling and Servicing Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Subsequent Transfer Date,
against delivery and release by the Seller to the Trustee of all documents
required pursuant to the Pooling and Servicing Agreement, the consideration for
the Subsequent Mortgage Loans as specified in Section 3 of this Agreement, by
delivery to the Seller of (i) the Purchase Price in immediately available funds
and (ii) the New Century Certificates.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality
of Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the
Subsequent Transfer Date, upon which the Purchaser
and Salomon Brothers Inc (the "Underwriter") may
rely, in the form of Exhibit 1 hereto, and attached
thereto copies of the
<PAGE>
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certificate of incorporation, by-laws and certificate
of good standing of the Seller under the laws of
California;
(b) An Officers' Certificate of the Seller, dated the
Subsequent Transfer Date, upon which the Purchaser
and the Underwriter may rely, in the form of Exhibit
2 hereto, with respect to certain facts regarding the
sale of the Subsequent Mortgage Loans by the Seller
to the Purchaser;
(c) An Opinion of Counsel of the Seller, dated the
Subsequent Transfer Date and addressed to the
Purchaser and the Underwriter, substantially in the
form attached hereto as Exhibit 3;
(d) Such opinions of counsel as the Rating Agencies or
the Trustee may request in connection with the sale
of the Subsequent Mortgage Loans by the Seller to the
Purchaser or the Seller's execution and delivery of,
or performance under, this Agreement;
(e) A letter from KPMG Peat Marwick, L.L.P., certified
public accountants, dated the date hereof, to the
effect that they have performed certain specified
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature set forth in the Purchaser's
Prospectus Supplement, dated September 22, 1998,
under the captions "Summary-- The Mortgage Pool,"
"Risk Factors-- Additional Risks Associated with the
Mortgage Loans," "The Mortgage Pool" and "Pooling and
Servicing Agreement-- The Master Servicer" agrees
with the records of the Seller; and
(f) Such further information, certificates, opinions and
documents as the Purchaser or the Underwriter may
reasonably request.
SECTION 10. COSTS. The Seller shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Subsequent Mortgage Loans, including without
limitation, recording fees, fees for title policy endorsements and continuations
and the fees for recording Assignments of Mortgage, the fees and expenses of the
Seller's accountants and attorneys, the costs and expenses incurred in
connection with producing the Seller's or any Subservicer's loan loss,
foreclosure and delinquency experience, and the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d), 9(e) and
9(g), the costs and expenses of printing (or otherwise reproducing) and
delivering this Agreement, the Pooling and Servicing Agreement, the
Certificates, the prospectus and prospectus supplement, and any private
placement memorandum relating to the Certificates, the Insurance Agreement and
other related documents, the initial fees, costs and expenses of the Trustee,
the initial fees, the fees and expenses of the Purchaser's counsel in connection
with the preparation of all documents relating to the securitization of the
Subsequent Mortgage Loans, the filing fee
<PAGE>
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charged by the Securities and Exchange Commission for registration of the
Certificates and the fees charged by any rating agency to rate the Certificates.
All other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such
expense.
SECTION 11. SERVICING. The Seller has represented to the
Purchaser that the Subsequent Mortgage Loans are being serviced by the Seller,
and that such Mortgage Loans are not subject to any other servicing agreements
with third parties. It is understood and agreed between the Seller and the
Purchaser that the Subsequent Mortgage Loans are to be delivered free and clear
of any servicing agreements. The Seller, without reimbursement from the
Purchaser, shall pay any fees or penalties required by any servicer for
releasing the Subsequent Mortgage Loans from any such servicing agreement (it
being understood that neither the Purchaser nor any affiliate of the Purchaser
is servicing the Subsequent Mortgage Loans under any such servicing agreement
and, accordingly, that neither the Purchaser nor any affiliate of the Purchaser
is entitled to receive any fee for releasing the Subsequent Mortgage Loans from
any such servicing agreement) and shall arrange for the orderly transfer, as of
the Subsequent Cut-off Date, of such servicing from any such servicer to the
Master Servicer. The Subsequent Mortgage Loans shall be serviced by the Seller,
in its capacity as Master Servicer, in accordance with the terms of the Pooling
and Servicing Agreement. For so long as the Seller services the Subsequent
Mortgage Loans, the Seller shall be entitled to the Servicing Fee and such other
payments as provided for under the terms of the Pooling and Servicing Agreement.
SECTION 12. INDEMNIFICATION. (a) The Seller shall indemnify
and hold harmless each of (i) the Purchaser, (ii) the Underwriter, (iii) the
Person, if any, to which the Purchaser assigns its rights in and to a Subsequent
Mortgage Loan and each of their respective successors and assigns and (iv) each
person, if any, who controls the Purchaser within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "1933 Act") ((i) through (iv)
collectively, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the prospectus supplement (the "Prospectus
Supplement") or any private placement memorandum relating to the offering by the
Purchaser or an affiliate thereof, of the Class CE Certificates or the Class P
Certificates, or the omission or the alleged omission to state therein the
material fact necessary in order to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with (i) information furnished in writing to the
Purchaser or any of its affiliates by the Seller specifically for use therein,
which shall include, with respect to the Prospectus Supplement, the information
set forth under the captions "Summary -- The Mortgage Pool," "Risk Factors --
Additional Risks Associated with the Mortgage Loans," "The Mortgage Pool,"
"Pooling and Servicing Agreement -- The Master Servicer" and, with respect to
any private placement memorandum, any information of a comparable nature, or
(ii) the data files containing information with respect to the Subsequent
Mortgage Loans as transmitted by modem to the Purchaser by the Seller (as such
transmitted
<PAGE>
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information may have been amended in writing by the Seller with the written
consent of the Purchaser subsequent to such transmission), or (b) any
representation, warranty or covenant made by the Seller herein or in the Pooling
and Servicing Agreement, on which the Purchaser has relied, being, or alleged to
be, untrue or incorrect; provided, however, that to the extent that any such
losses, claims, expenses, damages or liabilities to which the Indemnified Party
may become subject arise out of or are based upon both (1) statements,
omissions, representations, warranties or covenants of the Seller described in
clause (a) or (b) above and (2) any other factual basis, the Seller shall
indemnify and hold harmless the Indemnified Party only to the extent that the
losses, claims, expenses, damages, or liabilities of the person or persons
asserting the claim are determined to rise from or be based upon matters set
forth in clause (1) above and do not result from the gross negligence or willful
misconduct of such Indemnified Party. This indemnity shall be in addition to any
liability that the Seller may otherwise have.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Subsequent Transfer Date of the Subsequent Mortgage
Loans described on the Subsequent Mortgage Loan Schedule in accordance with the
terms and conditions of this Agreement is mandatory. It is specifically
understood and agreed that each Subsequent Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser in the event of the Seller's failure to deliver the Subsequent
Mortgage Loans on or before the Subsequent Transfer Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in the
Seller's interest in each Subsequent Mortgage Loan and each document and
instrument evidencing each such Subsequent Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Subsequent Mortgage Loans in custody for the Purchaser,
subject to the Purchaser's (i) right, prior to the Subsequent Transfer Date, to
reject any Subsequent Mortgage Loan to the extent permitted by this Agreement,
and (ii) obligation to deliver or cause to be delivered the consideration for
the Subsequent Mortgage Loans pursuant to Section 8 hereof. Any Subsequent
Mortgage Loans rejected by the Purchaser shall concurrently therewith be
released from the security interest created hereby. All rights and remedies of
the Purchaser under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity and
all such rights and remedies may be exercised concurrently, independently or
successively.
Notwithstanding the foregoing, if on the Subsequent Transfer
Date, each of the conditions set forth in Section 8 hereof shall have been
satisfied and the Purchaser shall not have paid or caused to be paid the
Purchase Price, or any such condition shall not have been waived or satisfied
and the Purchaser determines not to pay or cause to be paid the Purchase Price,
the Purchaser shall immediately effect the redelivery of the Subsequent Mortgage
Loans, if delivery to the Purchaser has occurred, and the security interest
created by this Section 12 shall be deemed to have been released.
SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is
<PAGE>
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confirmed by telephone, if to the Purchaser, addressed to the Purchaser at Seven
World Trade Center, New York, New York 10048, Attention: Mortgage Finance Group,
fax (212) 783-4581, or such other address as may hereafter be furnished to the
Seller in writing by the Purchaser; and if to the Seller, addressed to the
Seller at 18400 Von Karman, Suite 1000, Irvine, California 92612, fax (714)
440-7033, or to such other address as the Seller may designate in writing to the
Purchaser.
SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Subsequent Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 16. AGREEMENT OF PARTIES. The Seller and the Purchaser
each agree to execute and deliver such instruments and take such actions as
either of the others may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement and the
Pooling and Servicing Agreement.
SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Subsequent
Mortgage Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of
<PAGE>
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which together shall constitute one and the same instrument. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the
conveyance of the Subsequent Mortgage Loans by the Seller to the Purchaser as
provided in Section 4 hereof be, and be construed as, a sale of the Subsequent
Mortgage Loans by the Seller to the Purchaser and not as a pledge of the
Subsequent Mortgage Loans by the Seller to the Purchaser to secure a debt or
other obligation of the Seller. However, in the event that, notwithstanding the
aforementioned intent of the parties, the Subsequent Mortgage Loans are held to
be property of the Seller, then (a) it is the express intent of the parties that
such conveyance be deemed a pledge of the Subsequent Mortgage Loans by the
Seller to the Purchaser to secure a debt or other obligation of the Seller and
(b) (1) this Agreement shall also be deemed to be a security agreement within
the meaning of Articles 8 and 9 of the New York Uniform Commercial Code; (2) the
conveyance provided for in Section 4 hereof shall be deemed to be a grant by the
Seller to the Purchaser of a security interest in all of the Seller's right,
title and interest in and to the Subsequent Mortgage Loans and all amounts
payable to the holders of the Subsequent Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the New York
Uniform Commercial Code; and (4) notifications to persons holding such property
and acknowledgments, receipts or confirmations from persons holding such
property shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant to
Section 4(d) hereof shall also be deemed to be an assignment of any security
interest created hereby. The Seller and the Purchaser shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Subsequent Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Matthew R. Bollo
----------------------------
Name: Matthew R. Bollo
Title: Assistant Vice President
NEW CENTURY MORTGAGE CORPORATION
By: /s/ John Kontoulis
----------------------------
Name: John Kontoulis
Title: Vice President
<PAGE>
EXHIBIT 1
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER]
I, __________________ hereby certify that I am the duly
appointed __________________________ of New Century Mortgage Corporation, a
California corporation (the "Company"), and further certify, on behalf of the
Company, as follows:
1. Attached hereto as Attachment I is a true and correct copy
of the Articles of Incorporation and By-laws of the Company as in full
force and effect on the date hereof. Attached hereto as Attachment II
is a certificate of good standing, dated September __, 1998, issued by
the State of California with respect to the Company. No event has
occurred since the date thereof that has affected the good standing of
the Company under the laws of the State of California.
2. There are no actions, suits or proceedings pending or, to
the best of my knowledge, threatened against or affecting the Company
which, if adversely determined, individually or in the aggregate, would
materially and adversely affect the Company's ability to perform its
obligations under the Subsequent Mortgage Loan Purchase Agreement,
dated October 15, 1998 (the "Subsequent Mortgage Loan Purchase
Agreement"), between Salomon Brothers Mortgage Securities VII, Inc.
(the "Purchaser") and the Company or the Pooling and Servicing
Agreement, dated as of September 1, 1998 (the "Pooling and Servicing
Agreement"), among the Purchaser as depositor, the Company as master
servicer (in such capacity, the "Master Servicer") and U.S. Bank
National Association as Trustee. No proceedings looking toward merger,
consolidation or liquidation, dissolution or bankruptcy of the Company
are pending or contemplated.
3. Each person who, as an officer or representative of the
Company, signed the Subsequent Mortgage Loan Purchase Agreement, the
Pooling and Servicing Agreement and any other document delivered prior
hereto or on the date hereof in connection with the transactions
contemplated by the Subsequent Mortgage Loan Purchase Agreement and the
Pooling and Servicing Agreement, was at the respective times of such
signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or representative, and
the signatures of such persons appearing on such documents are their
genuine signatures.
4. Each of the Mortgage Loans referred to in the Subsequent
Mortgage Loan Purchase Agreement and the Pooling and Servicing
Agreement was originated in accordance with Section 6(xx) of the
Subsequent Mortgage Loan Purchase Agreement.
5. Attached hereto as Attachment III is a true and correct
copy of the resolutions duly adopted by the Board of Directors of the
Company on September __, 1998 (the "Resolutions") with respect to the
transactions contemplated by the Subsequent Mortgage Loan Purchase
Agreement and the Pooling and Servicing Agreement; said
<PAGE>
Resolutions have not been amended or modified, annulled or revoked and
are in full force and effect on the date hereof.
6. All of the representations and warranties of the Company
contained in the Subsequent Mortgage Loan Purchase Agreement and
contained in the Pooling and Servicing Agreement are true and correct
in all material respects as of the Subsequent Transfer Date, and no
event has occurred which, with notice or the passage of time or both,
would constitute a default under the Subsequent Mortgage Loan Purchase
Agreement or an Event of Default under the Pooling and Servicing
Agreement.
7. The information set forth in the Subsequent Mortgage Loan
Schedule attached as an exhibit to the Pooling and Servicing Agreement
is true and correct in all material respects.
8. The transactions contemplated in the Subsequent Mortgage
Loan Purchase Agreement will be reported as a sale in the Company's
financial reports.
9. The information contained in the Purchaser's Prospectus
Supplement, dated September 22, 1998, relating to the Mortgage Loans,
the Company, and its loan portfolio, specifically the information, in
the summary under the subheadings "Summary-The Mortgage Pool," "Risk
Factors-Additional Risks Associated with the Mortgage Loans," "The
Mortgage Pool," and "Pooling and Servicing Agreement-The Master
Servicer" is true and accurate and 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 therein, in
light of the circumstances under which they were made, not misleading.
10. The Company has performed all of its duties and has
satisfied all of the material conditions on its part to be performed or
satisfied prior to the Subsequent Transfer Date.
11. Capitalized terms used but not defined herein shall have
the meanings assigned in the Subsequent Mortgage Loan Purchase
Agreement and the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.
Dated: October __, 1998
By:_________________________
Name:
[Seal] Title:
I, ____________________________, an [Assistant] Secretary of
New Century Mortgage Corporation, hereby certify that __________________ is the
duly appointed, qualified and acting _______________________ of New Century
Mortgage Corporation and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: October __, 1998
By:____________________________
Name:__________________________
Title:
<PAGE>
EXHIBIT 2
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
FACTS REGARDING THE SALE OF THE SUBSEQUENT MORTGAGE LOANS]
Salomon Brothers Mortgage Securities VII, Inc.
Asset-Backed Floating Rate Certificates
Series 1998-NC4
Reference is made to the sale of subsequent mortgage loans
(the "Subsequent Mortgage Loans") by New Century Mortgage Corporation ("New
Century") to Salomon Brothers Mortgage Securities VII, Inc. (the "Depositor")
pursuant to the Subsequent Mortgage Loan Purchase Agreement, dated October 15,
1998 (the "Purchase Agreement"), between the Depositor and New Century, and the
simultaneous issuance of Asset-Backed Floating Rate Certificates, Series
1998-NC4, Class A, Class M-1, Class M-2, Class M-3, Class CE, Class P, Class
R-I, Class R-II and Class R-III (the "Certificates"), pursuant to a Pooling and
Servicing Agreement, dated as of September 1, 1998 (the "Pooling and Servicing
Agreement"), among the Depositor as depositor, New Century as master servicer
(in such capacity, the "Master Servicer") and U.S. Bank National Association as
trustee (the "Trustee"). In consideration for its purchase of the Subsequent
Mortgage Loans, the Depositor will deliver to New Century immediately available
funds, the Class CE Certificates, the Class P Certificates, the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates. The
Depositor will sell the Class A, the Class M-1, the Class M-2 and the Class M-3
Certificates to Salomon Smith Barney Inc. (the "Underwriter") for offer and sale
pursuant to the terms of an Underwriting Agreement, dated September 22, 1998
(the "Underwriting Agreement"), between the Depositor and the Underwriter. The
Purchase Agreement, the Pooling and Servicing Agreement and the Underwriting
Agreement are hereinafter collectively referred to as the "Agreements."
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Agreements.
The undersigned is a duly appointed ___________________ of New
Century Mortgage Corporation and hereby certifies after reasonable investigation
that:
1. The price to be paid to New Century for the Subsequent Mortgage
Loans will have been paid in full at the closing of the sale pursuant to the
Purchase Agreement, and no agreement or arrangement exists or will exist that
permits the modification of the consideration for the Subsequent Mortgage Loans
subsequent to that sale. New Century will not have any right or obligation to
repurchase any Subsequent Mortgage Loan, except as provided in the Purchase
Agreement.
2. Each Mortgage Note and each related Mortgage has been appropriately
prepared and duly executed and delivered by the related Mortgagor, and each
Mortgage has been appropriately recorded in the applicable jurisdiction and any
intervening endorsement of any Mortgage Note and any intervening assignment of
any Mortgage, which was required in order to
<PAGE>
transfer to New Century ownership of the Subsequent Mortgage Loans, was obtained
and completed.
3. Each Mortgage Note has been endorsed or assigned in a manner that
satisfies all requirements necessary to transfer to the Trustee all right, title
and interest of the party so endorsing or assigning, as noteholder or transferee
thereof, in and to that Mortgage Note, as provided in the Purchase Agreement and
the Pooling and Servicing Agreement. Each Assignment is in recordable form and
is sufficient to effect the assignment and transfer to the Depositor of the
benefits of the assignor, as original mortgagee or assignee thereof, under each
Mortgage to which that Assignment relates, as provided in the Purchase Agreement
and the Pooling and Servicing Agreement. Each Assignment has been or will be
appropriately recorded to the extent required under applicable law, as provided
in the Subsequent Mortgage Loan Purchase Agreement.
4. Each original Mortgage Note, each original recorded Mortgage, each
original recorded intervening Assignment and each Assignment has been delivered
to the Trustee at the direction of the Depositor.
5. Immediately prior to the transfer of the Subsequent Mortgage Loans
by New Century to the Depositor, New Century was the sole owner of each
Subsequent Mortgage Loan, free and clear of any and all prior liens, mortgages,
security interests, pledges, participation interests, adverse claims, charges or
other equities or encumbrances of any nature, and had full right and authority
to sell, assign and transfer the Subsequent Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting part of
the Mortgage File reflects or will reflect on its face any interest that is
inconsistent with the ownership interest of the Trustee in and to the Subsequent
Mortgage Loans or the transfer of the Subsequent Mortgage Loans by New Century
to the Trustee.
7. The transfer of the Subsequent Mortgage Loans by New Century to the
Depositor as provided in the Purchase Agreement is intended by New Century to
be, and is in fact, a contemporaneous exchange in which New Century receives new
value.
8. New Century was solvent at all relevant times prior to, and will not
be rendered insolvent by, the transfer of the Subsequent Mortgage Loans to the
Depositor.
9. New Century did not transfer the Subsequent Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of New Century's
creditors.
10. Neither New Century nor any agent acting on behalf of it, has been
or will become a party to any fraud or illegality affecting any Subsequent
Mortgage Loan or Certificate.
11. To the best of my knowledge, no breach of the Agreements by any
party, misrepresentation or failure by any party to perform all acts required to
be performed prior to the Subsequent Transfer Date, or fraud or mistake on the
part of any party to the Agreements in connection with the transactions
contemplated by the Agreements, has occurred or will occur.
<PAGE>
12. To the best of my knowledge, no party to the Agreements has taken
or will take any action that is unreasonable, arbitrary or capricious, or that
is not taken in good faith or in a commercially reasonable manner, affecting the
Subsequent Mortgage Loans in connection with the transactions contemplated by
the Agreements.
13. To the best of my knowledge, there is not and will not be any other
agreement among the parties to the Agreements that modifies or otherwise
supplements the agreement of the parties as expressed in the Agreements.
14. New Century does not have and will not have any right to modify or
alter the terms of the transfer of the Subsequent Mortgage Loans by New Century
to the Depositor, or to substitute or add any mortgage loan thereafter, except
as provided in the Agreements.
15. New Century will not take any action that is inconsistent with the
ownership interest in the Subsequent Mortgage Loans evidenced by the
Certificates. New Century will promptly indicate to other persons or entities,
when a response is appropriate, that the Subsequent Mortgage Loans were
transferred by New Century to the Depositor. New Century will not claim any
ownership interest directly in the Subsequent Mortgage Loans other than that
represented by Certificates in which it may have an ownership interest from time
to time and that represented by its role as Master Servicer.
16. Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, New Century will report the transfer of the
Subsequent Mortgage Loans to the Depositor, as provided in the Purchase
Agreement as a sale of all of its interest in the Subsequent Mortgage Loans. New
Century has been advised by or has confirmed with its independent public
accountants for similar transactions that the sale will be so classified under
GAAP in accordance with Statement No. 125 of the Financial Accounting Standards
Board.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the ___th day of October, 1998.
NEW CENTURY MORTGAGE CORPORATION
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 3
[FORM OF OPINION OF COUNSEL TO THE SELLER]
<PAGE>
EXHIBIT 4
References to percentage of the Mortgage Loans as set forth in this
Exhibit 4, unless otherwise noted, are calculated based on the aggregate
principal balance of the Subsequent Mortgage Loans as of the Cut-off Date.
On the Cut-off Date, the Subsequent Mortgage Loans shall comply with
the following conditions:
(i) no less than 68.00% of the Subsequent Mortgage Loans shall have a
risk grade of A+, A+MO, A- or A-MO, no more than 17.00% of such loans shall have
a risk grade of B and no more than 15.00% of such loans shall have a risk grade
of C, C- or C- HS; provided, however, with regard to the Delayed First
Adjustment Subsequent Mortgage Loans, no less than 68.00% of such loans shall
have a risk grade of A+, A+MO, A- or A-MO, no more than 18.00% of such loans
shall have a risk grade of B and no more than 15.00% of such loans shall have a
risk grade of C or C-;
(ii) any Subsequent Mortgage Loan with a loan-to-value ratio between
26.32% and 90.00% shall have a risk grade of A+, A+MO, A-, A-MO or B;
(iii) the weighted average loan-to-value ratio for each of the
Subsequent Mortgage Loans at origination shall be approximately 78.21%;
provided, however, the weighted average loan-to-value ratio for each of the
Delayed First Adjustment Subsequent Mortgage Loans at origination shall be
approximately 78.22%;
(iv) the maximum percentage concentration of Subsequent Mortgage Loans
secured by mortgaged properties in any one zip code shall be approximately
0.84%;
(v) approximately 68.13% of the Subsequent Mortgage Loans provide for
payment by the mortgagor of a prepayment charge within a specified period as
provided in the related Mortgage Note not in excess of 5 years; provided,
however, approximately 70.38% of the Delayed First Adjustment Subsequent
Mortgage Loans provide for payment by the mortgagor of a prepayment charge
within a specified period as provided in the related Mortgage Note not in excess
of 5 years; and
(vi) the Subsequent Mortgage Loans shall have a weighted average
Mortgage Rate equal to approximately 9.702% per annum and a weighted average
Gross Margin equal to approximately 6.230% per annum, provided, however, the
Delayed First Adjustment Subsequent Mortgage Loans to be purchased shall have a
weighted average Mortgage Rate equal to approximately 9.723% per annum and a
weighted average Gross Margin equal to approximately 6.232% per annum. The
Subsequent Mortgage Loans will be adjustable-rate mortgage loans, payable on the
first day of each month. Interest on the Subsequent Mortgage Loans and the
monthly payments will be adjusted on each Adjustment Date to equal the sum of
the Index and the margin, rounded to the next highest multiple of 0.125%,
subject to the Periodic Rate Cap, the Maximum Mortgage Rate and the Minimum
Mortgage Rate. The Subsequent Mortgage Loans will not be subject to negative
amortization and will not provide for graduated payments. None of the Subsequent
<PAGE>
Mortgage Loans will be convertible to a fixed mortgage interest rate. None of
the Subsequent Mortgage Loans shall be subject to temporary buydown agreements.
Each of the Subsequent Mortgage Loans shall be fully-amortizing and none of the
Subsequent Mortgage Loans shall provide for the payment of a balloon payment.
<PAGE>
EXHIBIT 5
---------
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as ____________________ of ______________________, a
________________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:
1. The Seller's address is : ________________________
________________________
________________________
2. The Seller previously delivered to the Purchaser a signed
Initial Certification with respect to such Mortgage and/or
Assignment of Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was
assigned or sold to the Purchaser by ________________________,
a ____________ corporation pursuant to the terms and
provisions of a Subsequent Mortgage Loan Purchase Agreement
dated as of July __, 1998;
4. Such Mortgage Note and/or Assignment of Mortgage is not
outstanding pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search
for the Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of
the loss; and
8. Deponent agrees that, if said Original should ever come
into Seller's possession, custody or power, Seller will
immediately and without consideration surrender the Original
to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note,
endorsed in blank by the Mortgagee and (ii) the Mortgage or
Deed of Trust (strike one) which secures the Note, which
Mortgage or Deed of Trust is recorded in the county where the
property is located.
<PAGE>
10. Deponent hereby agrees that the Seller (a) shall indemnify
and hold harmless the Purchaser, its successors and assigns,
against any loss, liability or damage, including reasonable
attorney's fees, resulting from the unavailability of any
Notes, including but not limited to any loss, liability or
damage arising from (i) any false statement contained in this
Affidavit, (ii) any claim of any party that has already
purchased a mortgage loan evidenced by the Lost Note or any
interest in such mortgage loan, (iii) any claim of any
borrower with respect to the existence of terms of a mortgage
loan evidenced by the Lost Note on the related property to the
fact that the mortgage loan is not evidenced by an original
note and (iv) the issuance of a new instrument in lieu thereof
(items (i) through (iv) above hereinafter referred to as the
"Losses) and (b) if required by any Rating Agency in
connection with placing such Lost Note into a Pass-Through
Transfer, shall obtain a surety from an insurer acceptable to
the applicable Rating Agency to cover any Losses with respect
to such Lost Note.
11. This Affidavit is intended to be relied upon by the
Purchaser, its successors and assigns. _____________________,
a ______________ corporation represents and warrants that is
has the authority to perform its obligations under this
Affidavit of Lost Note.
Executed this ____ day, of ___________ 199_.
SELLER
By:______________________
Name:
Title:
On this _____ day of ________, 199_, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.
Signature:
[Seal]
Exhibit 99.1
------------
THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of approximately 2,626 conventional,
one- to four-family, adjustable-rate Mortgage Loans (the "Mortgage Loans")
secured by first liens on residential real properties (the "Mortgaged
Properties") and having an aggregate principal balance as of October 1, 1998
(the "Cut-off Date") of approximately $294,850,853, after application of
scheduled payments due on or before the Cut-off Date whether or not received and
subject to a permitted variance of plus or minus 5%. The Mortgage Loans have
original terms to maturity of not greater than 30 years.
Each Mortgage Loan provides for semi-annual adjustment to the Mortgage
Rate thereon (in the case of approximately 87.47%, approximately 6.23% and
approximately 0.26% of the Mortgage Loans, after an initial period of
approximately two years, three years and five years, respectively, from the date
of origination thereof (each such Mortgage Loan, a "Delayed First Adjustment
Mortgage Loan")), and for corresponding adjustments to the monthly payment
amount due thereon, in each case on each adjustment date applicable thereto
(each such date, an "Adjustment Date"). On each Adjustment Date, the Mortgage
Rate on each Mortgage Loan will be adjusted to equal the sum, rounded to the
nearest multiple of 0.125%, of the Index (as described below) and a fixed
percentage amount (the "Gross Margin"); provided, however, that the Mortgage
Rate on each Mortgage Loan, including each Delayed First Adjustment Mortgage
Loan, will generally not increase or decrease by more than a specified
percentage ranging from 1.00% to 1.50% per annum (the "Periodic Rate Cap"), as
provided in the related Mortgage Note, on any related Adjustment Date and will
not exceed a specified maximum Mortgage Rate over the life of such Mortgage Loan
(the "Maximum Mortgage Rate") or be less than a specified minimum Mortgage Rate
over the life of such Mortgage Loan (the "Minimum Mortgage Rate"). Effective
with the first monthly payment due on each Mortgage Loan after each related
Adjustment Date, the monthly payment amount will be adjusted to an amount that
will amortize fully the outstanding principal balance of the related Mortgage
Loan over its remaining term and pay interest at the Mortgage Rate as so
adjusted. Due to the application of the Periodic Rate Caps and the Maximum
Mortgage Rates, the Mortgage Rate on each Mortgage Loan, as adjusted on any
related Adjustment Date, may be less than the sum of the Index and Gross Margin,
calculated as described herein. See "--The Index" herein. None of the Mortgage
Loans permits the related mortgagor to convert the adjustable Mortgage Rate
thereon to a fixed Mortgage Rate.
The Mortgage Loans have scheduled monthly payments due generally on the
first day of the month (with respect to each Mortgage Loan, a "Due Date"). Each
Mortgage Loan will contain a customary "due-on-sale" clause.
Approximately 72.03% of the Mortgage Loans provide for payment by the
mortgagor of a Prepayment Charge in limited circumstances on certain prepayments
as provided in the related Mortgage Note. Such Mortgage Loans provide for
payment of a Prepayment Charge on certain partial prepayments and all
prepayments in full made within a specified period not in excess of five years
from the date of origination of such Mortgage Loan, as provided in the related
Mortgage Note. The amount of the Prepayment Charge is as provided in the related
Mortgage Note, but is generally equal to six month's interest on any amounts
prepaid in excess of 20% of the then outstanding principal balance of the
related Mortgage Loan in any 12 month period, as permitted by law. The holders
of the Class P Certificates will be entitled to all Prepayment Charges received
on the Mortgage Loans, and such amounts will not be available for distribution
on the other classes of Certificates. Under certain instances, as described in
the Agreement, the Master Servicer may waive the payment of any otherwise
<PAGE>
applicable Prepayment Charge. Investors should conduct their own analysis of the
effect, if any, that the Prepayment Charges, and decisions by the Master
Servicer with respect to the waiver thereof, may have on the prepayment
performance of the Mortgage Loans. The Depositor makes no representation as to
the effect that the Prepayment Charges, and decisions by the Master Servicer
with respect to the waiver thereof, may have on the prepayment performance of
the Mortgage Loans.
None of the Mortgage Loans are Buydown Mortgage Loans.
The average principal balance of the Mortgage Loans at origination was
approximately $112,394. No Mortgage Loan had a principal balance at origination
greater than approximately $1,850,000 or less than approximately $18,000. The
average principal balance of the Mortgage Loans as of the Cut-off Date was
approximately $112,281. No Mortgage Loan had a principal balance as of the
Cut-off Date greater than approximately $1,846,058 or less than approximately
$17,993.
The Mortgage Loans had Mortgage Rates as of the Cut-off Date ranging
from approximately 5.450% per annum to approximately 14.500% per annum, and the
weighted average Mortgage Rate was approximately 9.645% per annum. As of the
Cut-off Date, the Mortgage Loans had Gross Margins ranging from approximately
4.450% to approximately 7.950%, Minimum Mortgage Rates ranging from
approximately 5.450% per annum to approximately 14.500% per annum and Maximum
Mortgage Rates ranging from approximately 11.450% per annum to approximately
21.500% per annum. As of the Cutoff Date, the weighted average Gross Margin was
approximately 6.212%, the weighted average Minimum Mortgage Rate was
approximately 9.643% per annum and the weighted average Maximum Mortgage Rate
was approximately 16.609% per annum. The latest first Adjustment Date following
the Cut-off Date on any Mortgage Loan occurs in August 2003 and the weighted
average next Adjustment Date for all of the Mortgage Loans following the Cut-off
Date is August 2000.
The weighted average loan-to-value ratio of the Mortgage Loans at
origination was approximately 78.45%. At origination, no Mortgage Loan will have
a loan-to-value ratio greater than approximately 94.78% or less than
approximately 18.85%.
The weighted average remaining term to stated maturity of the Mortgage
Loans will be approximately 29 years and 10 months as of the Cut-off Date. None
of the Mortgage Loans will have a first Due Date prior to August 1997 or after
November 1998, or will have a remaining term to stated maturity of less than 13
years and 9 months or greater than 30 years as of the Cut-off Date. The latest
maturity date of any Mortgage Loan is October 2028.
The Mortgage Loans are expected to have the following characteristics
as of the Cut-off Date (the sum in any column may not equal the total indicated
due to rounding):
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCES OF THE MORTGAGE LOANS AT ORIGINATION
% OF
NUMBER AGGREGATE ORIGINAL AGGREGATE ORIGINAL
RANGE ($) OF LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- -------- ----------------- -----------------
<S> <C> <C> <C>
0.01 - 50,000.00 . . . . . . . . . . . . 443 $ 16,742,392.00 5.67%
50,000.01 - 100,000.00 . . . . . . . . . . . . 1,079 78,561,851.00 26.62
100,000.01 - 150,000.00 . . . . . . . . . . . . 561 69,167,327.00 23.43
150,000.01 - 200,000.00 . . . . . . . . . . . . 251 43,634,118.00 14.78
200,000.01 - 250,000.00 . . . . . . . . . . . . 138 30,726,774.00 10.41
250,000.01 - 300,000.00 . . . . . . . . . . . . 66 18,200,608.00 6.17
300,000.01 - 350,000.00 . . . . . . . . . . . . 28 8,992,561.00 3.05
350,000.01 - 400,000.00 . . . . . . . . . . . . 20 7,624,500.00 2.58
400,000.01 - 450,000.00 . . . . . . . . . . . . 15 6,401,675.00 2.17
450,000.01 - 500,000.00 . . . . . . . . . . . . 16 7,657,550.00 2.59
500,000.01 - 550,000.00 . . . . . . . . . . . . 2 1,055,000.00 0.36
550,000.01 - 600,000.00 . . . . . . . . . . . . 5 2,807,250.00 0.95
1,700,000.01 - 1,750,000.00 . . . . . . . . . . . . 1 1,725,000.00 0.58
1,800,000.01 - 1,850,000.00 . . . . . . . . . . . . 1 1,850,000.00 0.63
----- ---------------- ------
Total............................................. 2,626 $ 295,146,606.00 100.00%
===== ================ ======
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AGGREGATE
NUMBER PRINCIPAL BALANCE PRINCIPAL BALANCE
OF OUTSTANDING AS OF OUTSTANDING AS OF
RANGE ($) LOANS THE CUT-OFF DATE THE CUT-OFF DATE
--------- ----- ---------------- ----------------
<S> <C> <C> <C>
0.01 - 50,000.00 . . . . . . . . . . 444 $ 16,761,172.13 5.68%
50,000.01 - 100,000.00 . . . . . . . . . . 1,078 78,439,303.11 26.60
100,000.01 - 150,000.00 . . . . . . . . . . 561 69,102,134.89 23.44
150,000.01 - 200,000.00 . . . . . . . . . . 252 43,793,454.90 14.85
200,000.01 - 250,000.00 . . . . . . . . . . 138 30,749,731.33 10.43
250,000.01 - 300,000.00 . . . . . . . . . . 65 17,936,118.67 6.08
300,000.01 - 350,000.00 . . . . . . . . . . 28 8,986,461.92 3.05
350,000.01 - 400,000.00 . . . . . . . . . . 20 7,616,430.50 2.58
400,000.01 - 450,000.00 . . . . . . . . . . 15 6,395,722.67 2.17
450,000.01 - 500,000.00 . . . . . . . . . . 16 7,651,291.28 2.59
500,000.01 - 550,000.00 . . . . . . . . . . 2 1,054,327.10 0.36
550,000.01 - 600,000.00 . . . . . . . . . . 5 2,798,682.49 0.95
1,700,000.01 - 1,750,000.00 . . . . . . . . . . 1 1,719,964.79 0.58
1,800,000.01 - 1,850,000.00 . . . . . . . . . . 1 1,846,057.51 0.63
----- ---------------- ------
2,626 $ 294,850,853.29 100.00%
Total......................................... ===== ================ ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE RATES OF THE MORTGAGE LOANS AT ORIGINATION
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
MORTGAGE RATE (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------- -------- ---------------- ----------------
<S> <C> <C> <C>
5.000 - 5.499 ........................................ 1 $ 34,772.80 0.01%
5.500 - 5.999 ........................................ 2 364,128.61 0.12
6.000 - 6.499 ........................................ 3 426,829.02 0.14
6.500 - 6.999 ........................................ 12 1,655,580.70 0.56
7.000 - 7.499 ........................................ 11 1,491,137.62 0.51
7.500 - 7.999 ........................................ 63 10,102,987.12 3.43
8.000 - 8.499 ........................................ 109 16,236,477.69 5.51
8.500 - 8.999 ........................................ 445 62,160,985.04 21.08
9.000 - 9.499 ........................................ 334 40,031,183.33 13.58
9.500 - 9.999 ........................................ 676 76,176,218.81 25.84
10.000 - 10.499 ........................................ 300 27,184,985.41 9.22
10.500 - 10.999 ........................................ 335 32,247,924.77 10.94
11.000 - 11.499 ........................................ 123 10,156,835.23 3.44
11.500 - 11.999 ........................................ 122 9,891,570.76 3.35
12.000 - 12.499 ........................................ 30 2,401,339.38 0.81
12.500 - 12.999 ........................................ 38 3,105,286.44 1.05
13.000 - 13.499 ........................................ 12 600,762.98 0.20
13.500 - 13.999 ........................................ 8 352,042.58 0.12
14.500 - 14.999 ........................................ 2 229,805.00 0.08
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<TABLE>
<CAPTION>
MORTGAGE RATES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
MORTGAGE RATE (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------- -------- ---------------- ----------------
<S> <C> <C> <C>
5.000 - 5.499 ........................................ 1 $ 34,772.80 0.01%
5.500 - 5.999 ........................................ 2 364,128.61 0.12
6.000 - 6.499 ........................................ 3 426,829.02 0.14
6.500 - 6.999 ........................................ 12 1,655,580.70 0.56
7.000 - 7.499 ........................................ 11 1,491,137.62 0.51
7.500 - 7.999 ........................................ 63 10,102,987.12 3.43
8.000 - 8.499 ........................................ 108 16,236,477.69 5.48
8.500 - 8.999 ........................................ 445 62,160,985.04 21.08
9.000 - 9.499 ........................................ 334 40,031,183.33 13.58
9.500 - 9.999 ........................................ 675 75,970,519.32 25.77
10.000 - 10.499 ........................................ 299 27,132,628.65 9.20
10.500 - 10.999 ........................................ 337 32,530,166.77 11.03
11.000 - 11.499 ........................................ 124 10,209,191.99 3.46
11.500 - 11.999 ........................................ 122 9,891,570.76 3.35
12.000 - 12.499 ........................................ 30 2,401,339.38 0.81
12.500 - 12.999 ........................................ 38 3,105,286.44 1.05
13.000 - 13.499 ........................................ 12 600,762.98 0.20
13.500 - 13.999 ........................................ 8 352,042.58 0.12
14.500 - 14.999 ........................................ 2 229,805.00 0.08
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM MORTGAGE RATES OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
MAXIMUM NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
MORTGAGE RATE (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------- -------- ---------------- ----------------
<S> <C> <C> <C>
11.000 - 11.499......................................... 1 $ 34,772.80 0.01%
12.500 - 12.999......................................... 7 982,527.21 0.33
13.000 - 13.499......................................... 4 513,692.86 0.17
13.500 - 13.999......................................... 11 1,461,919.72 0.50
14.000 - 14.499......................................... 12 1,778,873.45 0.60
14.500 - 14.999......................................... 74 12,142,653.57 4.12
15.000 - 15.499......................................... 117 17,369,287.62 5.89
15.500 - 15.999......................................... 446 61,752,302.60 20.94
16.000 - 16.499......................................... 330 39,097,803.84 13.26
16.500 - 16.999......................................... 668 74,613,025.75 25.31
17.000 - 17.499......................................... 302 27,359,975.70 9.28
17.500 - 17.999......................................... 333 32,004,985.77 10.85
18.000 - 18.499......................................... 116 9,573,401.12 3.25
18.500 - 18.999......................................... 117 9,736,325.62 3.30
19.000 - 19.499......................................... 31 2,434,686.45 0.83
19.500 - 19.999......................................... 36 2,845,355.72 0.97
20.000 - 20.499......................................... 11 567,415.91 0.19
20.500 - 20.999......................................... 8 352,042.58 0.12
21.500 - 21.999......................................... 2 229,805.00 0.08
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<TABLE>
<CAPTION>
MINIMUM MORTGAGE RATES OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
MINIMUM NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
MORTGAGE RATE (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------- -------- ---------------- ----------------
<S> <C> <C> <C>
5.000 - 5.499.......................................... 1 $ 34,772.80 0.01%
5.500 - 5.999.......................................... 2 364,128.61 0.12
6.000 - 6.499.......................................... 3 426,829.02 0.14
6.500 - 6.999.......................................... 12 1,655,580.70 0.56
7.000 - 7.499.......................................... 11 1,491,137.62 0.51
7.500 - 7.999.......................................... 63 10,102,987.12 3.43
8.000 - 8.499.......................................... 109 16,236,477.69 5.51
8.500 - 8.999.......................................... 445 62,160,985.04 21.08
9.000 - 9.499.......................................... 335 40,196,769.62 13.63
9.500 - 9.999.......................................... 675 76,010,632.52 25.78
10.000 - 10.499......................................... 300 27,184,985.41 9.22
10.500 - 10.999......................................... 335 32,247,924.77 10.94
11.000 - 11.499......................................... 123 10,156,835.23 3.44
11.500 - 11.999......................................... 122 9,891,570.76 3.35
12.000 - 12.499......................................... 30 2,401,339.38 0.81
12.500 - 12.999......................................... 38 3,105,286.44 1.05
13.000 - 13.499......................................... 12 600,762.98 0.20
13.500 - 13.999......................................... 8 352,042.58 0.12
14.500 - 14.999......................................... 2 229,805.00 0.08
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS MARGINS OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
GROSS MARGIN (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ---------------- -------- ---------------- ----------------
<S> <C> <C> <C>
4.250 - 4.499........................................... 1 $ 34,772.80 0.01%
4.750 - 4.999........................................... 3 520,972.31 0.18
5.000 - 5.249........................................... 8 1,033,771.49 0.35
5.250 - 5.499........................................... 13 1,870,974.24 0.63
5.500 - 5.749........................................... 51 7,572,035.49 2.57
5.750 - 5.999........................................... 778 87,637,602.97 29.72
6.000 - 6.249........................................... 478 54,386,764.13 18.45
6.250 - 6.499........................................... 164 20,783,175.28 7.05
6.500 - 6.749........................................... 707 76,246,808.26 25.86
6.750 - 6.999........................................... 410 42,918,474.75 14.56
7.250 - 7.499........................................... 4 269,212.33 0.09
7.500 - 7.749........................................... 4 1,295,408.46 0.44
7.750 - 7.999........................................... 5 280,880.78 0.10
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL LOAN-TO-VALUE RATIOS OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
LOAN-TO-VALUE RATIO (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------------- -------- ---------------- ----------------
<S> <C> <C> <C>
Less than or equal to 25.00............................. 5 $ 175,109.97 0.06%
25.01 - 30.00........................................... 5 211,415.50 0.07
30.01 - 35.00........................................... 7 613,621.40 0.21
35.01 - 40.00........................................... 13 717,239.04 0.24
40.01 - 45.00........................................... 19 1,776,060.19 0.60
45.01 - 50.00........................................... 28 2,100,946.55 0.71
50.01 - 55.00........................................... 37 3,846,245.61 1.30
55.01 - 60.00........................................... 59 6,099,442.27 2.07
60.01 - 65.00........................................... 115 10,531,734.52 3.57
65.01 - 70.00........................................... 286 26,230,052.69 8.90
70.01 - 75.00........................................... 430 42,783,273.28 14.51
75.01 - 80.00........................................... 799 89,181,714.40 30.25
80.01 - 85.00........................................... 504 66,869,495.66 22.68
85.01 - 90.00........................................... 305 41,489,467.91 14.07
90.01 - 95.00........................................... 14 2,225,034.30 0.75
----- ---------------- ------
Total.............................................. 2,626 $ 294,850,853.29 100.00%
===== ================ ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
LOCATION OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- -------- -------- ---------------- ----------------
<S> <C> <C> <C>
Alabama................................................. 1 $ 47,567.69 0.02%
Arizona................................................. 78 9,300,605.59 3.15
Arkansas................................................ 2 78,359.76 0.03
California.............................................. 482 83,191,782.33 28.21
Colorado................................................ 86 9,415,121.31 3.19
Connecticut............................................. 1 167,900.00 0.06
Delaware................................................ 5 247,180.72 0.08
District of Columbia.................................... 1 156,551.11 0.05
Florida................................................. 75 7,798,402.32 2.64
Georgia................................................. 53 6,102,469.50 2.07
Hawaii.................................................. 10 2,009,266.22 0.68
Idaho................................................... 9 770,398.66 0.26
Illinois................................................ 324 33,064,669.25 11.21
Indiana................................................. 54 4,190,011.39 1.42
Iowa.................................................... 25 2,009,300.59 0.68
Kansas.................................................. 54 5,123,227.50 1.74
Kentucky................................................ 9 534,708.14 0.18
Louisiana............................................... 1 90,915.75 0.03
Maryland................................................ 51 4,711,639.86 1.60
Massachusetts........................................... 29 7,633,317.66 2.59
Michigan................................................ 112 10,413,396.60 3.53
Minnesota............................................... 123 10,347,387.28 3.51
Missouri................................................ 88 5,958,426.23 2.02
Montana................................................. 7 515,483.36 0.17
Nebraska................................................ 1 30,990.62 0.01
Nevada.................................................. 64 8,240,597.31 2.79
New Hampshire........................................... 5 640,327.90 0.22
New Jersey.............................................. 4 493,169.42 0.17
New Mexico.............................................. 54 5,769,739.77 1.96
North Carolina.......................................... 37 3,274,950.54 1.11
North Dakota............................................ 1 54,380.60 0.02
Ohio.................................................... 246 19,724,483.74 6.69
Oklahoma................................................ 10 682,466.88 0.23
Oregon.................................................. 61 7,605,359.68 2.58
Pennsylvania............................................ 83 6,569,673.61 2.23
South Carolina.......................................... 18 1,449,408.72 0.49
South Dakota............................................ 2 118,201.57 0.04
Tennessee............................................... 23 2,233,000.06 0.76
Texas................................................... 48 4,179,967.89 1.42
Utah.................................................... 57 6,935,221.72 2.35
Vermont................................................. 2 240,019.99 0.08
Virginia................................................ 22 2,008,248.03 0.68
Washington.............................................. 88 11,254,463.82 3.82
West Virginia........................................... 6 288,890.64 0.10
Wisconsin............................................... 113 9,137,939.81 3.10
Wyoming................................................. 1 41,262.15 0.01
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00
===== =============== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MORTGAGED PROPERTY TYPES OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
PROPERTY TYPE OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ------------- -------- ---------------- ----------------
<S> <C> <C> <C>
Single Family........................................... 2,183 $241,567,644.81 81.93%
Two- to Four-Family..................................... 190 20,786,074.61 7.05
Condominium............................................. 116 13,009,831.62 4.41
Planned Unit Development................................ 108 17,410,796.27 5.90
Manufactured Housing.................................... 29 2,076,505.98 0.70
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
<TABLE>
<CAPTION>
MORTGAGED PROPERTY OCCUPANCY STATUS OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
OCCUPANCY STATUS OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ---------------- -------- ---------------- ----------------
<S> <C> <C> <C>
Owner-Occupied.......................................... 2,210 $261,891,129.53 88.82%
Secondary............................................... 18 2,221,402.50 0.75
Non Owner Occupied...................................... 398 30,738,321.26 10.43
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
The occupancy status of a Mortgaged Property is as represented by the
mortgagor in its loan application.
<TABLE>
<CAPTION>
PURPOSE OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
LOAN PURPOSE OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ------------ -------- ---------------- ----------------
<S> <C> <C> <C>
Purchase................................................ 965 $ 96,985,575.99 32.89%
Equity-out Refinance.................................... 1,264 151,608,944.90 51.42
Rate-term Refinance..................................... 397 46,256,332.40 15.69
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
<TABLE>
<CAPTION>
LOAN PROGRAMS OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
LOAN PROGRAM OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ------------ -------- ---------------- ----------------
<S> <C> <C> <C>
Full or Limited Documentation Program................... 1,678 $188,418,110.43 63.90%
Stated Income Documentation Program..................... 948 106,432,742.86 36.10
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEXT ADJUSTMENT DATES FOR THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
MONTH OF NEXT ADJUSTMENT DATE OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- ----------------------------- -------- ---------------- ----------------
<S> <C> <C> <C>
November 1998........................................... 3 $ 519,051.55 0.18%
December 1998........................................... 6 1,169,205.63 0.40
January 1999............................................ 36 5,218,044.87 1.77
February 1999........................................... 50 5,947,279.16 2.02
March 1999.............................................. 17 1,183,313.47 0.40
April 1999.............................................. 30 3,775,430.76 1.28
July 1999............................................... 1 30,594.23 0.01
September 1999.......................................... 5 270,624.67 0.09
November 1999........................................... 1 53,640.04 0.02
December 1999........................................... 2 675,133.36 0.23
January 2000............................................ 1 68,449.07 0.02
March 2000.............................................. 3 378,720.84 0.13
April 2000.............................................. 7 1,318,291.35 0.45
May 2000................................................ 5 2,056,721.59 0.70
June 2000............................................... 16 1,507,738.81 0.51
July 2000............................................... 186 19,444,211.55 6.59
August 2000............................................. 1,304 146,560,334.05 49.71
September 2000.......................................... 253 30,235,681.38 10.25
October 2000............................................ 522 55,483,724.70 18.82
November 2000........................................... 1 365,028.67 0.12
December 2000........................................... 1 110,749.91 0.04
May 2001................................................ 1 61,762.60 0.02
July 2001............................................... 13 1,397,251.55 0.47
August 2001............................................. 101 10,559,934.38 3.58
September 2001.......................................... 23 2,159,279.97 0.73
October 2001............................................ 36 3,532,950.00 1.20
November 2002........................................... 1 567,961.09 0.19
August 2003............................................. 1 199,744.04 0.07
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
<TABLE>
<CAPTION>
PERIODIC RATE CAPS ON THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
PERIODIC RATE CAP (%) OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- --------------------- -------- ---------------- ----------------
<S> <C> <C> <C>
1.00.................................................... 91 $ 10,587,412.21 3.59%
1.50.................................................... 2,535 284,263,441.08 96.41
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RISK CATEGORIES OF THE MORTGAGE LOANS
AGGREGATE % OF AGGREGATE
PRINCIPAL BALANCE PRINCIPAL BALANCE
NUMBER OUTSTANDING AS OF OUTSTANDING AS OF
RISK CATEGORIES OF LOANS THE CUT-OFF DATE THE CUT-OFF DATE
- --------------- -------- ---------------- ----------------
<S> <C> <C> <C>
A+...................................................... 939 $109,967,029.13 37.30%
A+MO*................................................... 1 123,374.02 0.04
A-...................................................... 743 91,154,764.68 30.92
A-MO*................................................... 19 1,685,591.51 0.57
B....................................................... 430 46,731,487.26 15.85
C....................................................... 351 32,162,325.16 10.91
C-..................................................... 91 7,825,955.33 2.65
C-HS**.................................................. 52 5,200,326.20 1.76
----- --------------- ------
Total.............................................. 2,626 $294,850,853.29 100.00%
===== =============== ======
</TABLE>
* Underwritten pursuant to the Mortgage Credit Only program.
** Underwritten pursuant to the Home Saver program.
